Parents with children under the age of 18 years have a responsibility to financially support and provide for their children. When marriages or de facto relationships break down causing the parents to separate, that financial responsibility to their children does not end. As a result, the primary carer is usually entitled to receive money from the non-primary carer to assist with providing for the children. This is to pay for food, clothing, education expenses and the day to day expenses in raising children. This payment occurs by way of child support.
How is child support assessed?
The Child Support Agency as part of the Department of Human Services has an assessment calculator tool that calculates the amount of child support the primary carer is entitled to receive from the non-primary carer. This formula is based upon the number of nights per fortnight the primary carer has care of the children in combination with the non-primary carer’s income (being their capacity to pay) and their standard of living.
Once a child support assessment is made, this amount is registered with the child support agency. If parties pay on time, then the process can be seamless. However, if one party fails to pay, then the amount of child support payable becomes a government debt that must be paid. If the non-carer parent fails to pay, then the primary carer can seek to enforce the payment of that debt through the agency. This may result in the non-carer parent’s wages being garnished to recover those funds or being grounded from travelling overseas until their debt has been repaid.
In most child support cases, clients will arrange a child support assessment directly with the Child Support Agency and manage that process themselves.
However, if parties seek to reach an alternative agreement where they would like the inclusion of items such as private school fees, private medical insurance or extracurricular activities to be financially shared between the parties then the parties may choose to enter into a Binding Child Support Agreement.
What is a Binding Child Support Agreement?
A Binding Child Support Agreement is an agreement drafted by way of a legally binding deed, whereby each party signing the agreement must seek independent legal advice to understand their rights and obligations under the agreement. The Binding Child Support Agreement usually sets a fixed price of child support to be paid each week or month as an example. It may include periodic payment such as school fees or non-periodic payments for extracurricular activities may be shared equally. The specific terms will vary for different parties as they negotiate mutually agreeable terms. The agreed terms are then drafted into the agreement.
A Binding Child Support Agreement provides security for each party to know the amount they may receive or be required to pay. It also provides financial security if one party loses their job or has a change in position, whereby their wage increases or decreases but their child support amount will remain. This may be advantageous or disadvantageous depending upon the primary or non-primary parent’s position.
It requires the provision of independent legal advice. This is to ensure that parties understand the advantages and disadvantages of the agreement.
Once the parties have agreed to the terms, sought independent legal advice and signed the agreement, the agreement is registered with the Child Support Agency to become binding and enforceable. The parties are then legally bound to comply with the terms of that agreement until the children attain the age of 18 years.
If you are separating and need advice about a Binding Child Support Agreement, then please contact Katherine McCarthy at kmccarthy@franklaw.com.au.
This is not legal advice.
