When parents get a divorce, it’s best that they consider whether child support is necessary. You need to carefully think about custody arrangements for the best interests of the child. Sometimes, parents will share parenting responsibilities equally.
However, usually, one parent will become the primary caregiver. If that parent isn’t as financially well-off as their former partner, the Court may require the former partner to pay child support. There are different ways to organise periodic payments, including a binding child support arrangement.
In this article, we’ll look at binding child support agreements and analyse their advantages and disadvantages relative to other options.
Key takeaways
A binding child support agreement ensures financial help for a parent with parenting duties.
Parties must agree, meet care thresholds, and receive legal advice.
Care percentage varies based on the number of nights the child stays with you.
Proof of care percentage may be required by Services Australia.
Consider key factors before entering a binding child support agreement.
Benefits include drafting flexibility, agreement security, and legal guidance.
Drawbacks include costs, long-term commitment, and risks of poor drafting.
What is a binding child support agreement?
A binding child support agreement is one way for parents to arrange child support payments for the benefit of their children. It is a type of private child support agreement and one of several options available. Before the agreement can be considered legally binding, the parties must satisfy certain criteria. Limited child support agreements are another option for arranging child support, offering different levels of flexibility and structure.
The child support can be paid as a lump sum or ongoing child support payments. If you opt for a lump sum, you’ll need to get an assessment from Services Australia. They will use an 8-step formula to determine the amount payable. This arrangement can be formalised, such as a private child support agreement or a limited child support agreement, depending on the level of flexibility and legal requirements.
Legal Requirements
Here are the requirements to make a binding child support agreement or a private child support agreement legally enforceable for arranging child support and ensuring consistent child support payments.
Limited child support agreement
Both parties must mutually agree to the terms of the private child support agreement, including the amount of child support payments payable to the receiving parent. The agreement, whether it’s a private child support agreement, must be entered into voluntarily and cannot be made through force or undue influence. Additionally, a valid child support assessment may be required to support the terms outlined in the child support agreements.
Care percentage
In order to receive child support payments, you must meet a minimum threshold in the amount of care you provide. Services Australia, which manages agreements in Australia, requires a parent to provide at least 35% of care to qualify for a child support assessment. This assessment forms the basis for determining the amount payable under a child support agreement, including private child support agreements, ensuring that financial assistance is directed to the parent meeting the care requirements.
Legal advice
Parties cannot enter a support agreement alone. Before signing anything, each party must obtain independent legal advice from a child support lawyer. This ensures that both parties fully understand their rights and obligations under the terms of the agreement. Whether it’s a private child support agreement, legal advice helps safeguard the fairness and enforceability of the arrangement. The lawyer also ensures that the agreement aligns with the requirements of a child support assessment and facilitates the proper execution of child support payments, providing clarity and security for both parties involved in child support agreements.
The lawyer’s advice will also ensure the parties involved understand the agreement’s effects and how its terms impact their interests. This applies whether the arrangement is a private child support agreement or another type of written agreement made by both parents. Additionally, the lawyer will provide a certificate confirming that the legal advice was given, which is required to formalise the agreement through the Family Court if needed.
Learn More: What is Child Support in Australia?
Determining the percentage of care
Services Australia sorts the percentage of care into five levels.
Below regular care
0% to 14% of care. This works out to:
0 – 51 nights per year.
0 – 2 nights per fortnight.
At this level, the paying parent isn’t eligible for tax benefits like the Family Tax Benefit (FTB).
Regular care
14% – 35% of care. This means either:
52 – 127 nights per year.
2 – 4 nights per fortnight.
A paying parent won’t get FTB but may be able to receive other concessions.
Shared care
35% – 65% of care. This amounts to:
128 – 237 nights per year.
5 – 9 nights per fortnight.
The parties may be able to share FTB.
Primary care
35% – 86% of care. This means:
238 – 313 nights per year.
10 – 12 nights per fortnight.
Above primary care
Any care percentage above 86%. At this level, the party can receive 100% of any FTB.
Proof of care
If one or both parents cannot agree on the percentage of care each provides, Services Australia can assist in resolving the dispute. They may require a written agreement signed or other documentation as evidence to determine your care percentage. This evidence is essential for establishing support arrangements, whether through a private child support agreement or another type of child support agreement. Services Australia uses this information to ensure fair child support assessments and accurate child support payments. Evidence may include:
A calendar or diary that sets out what days you are caring for the child.
A court order or a parenting plan that shows what percentage of care you have. You’ll need to provide evidence that you are meeting your obligations.
Documentation that shows when the children are in daycare or other regular activities.
Records that show when children have attended health care or other services.
Records showing when children have travelled. This may include airline bookings or passports that contain travel dates.
Statements from people familiar with your situation who can attest to your percentage of care.
If you need help with the Binding Child Support Agreement, Andrews Family Lawyers can help.
Before entering a binding child support agreement
Private child support agreements shouldn’t be entered into lightly. There’s a lot to consider beforehand. Here are some factors that can guide your agreement: one or both parents must carefully assess their financial obligations and the amount of payable. The agreement should meet the criteria for a binding agreement, and if it differs from an assessment, approval from the Family Court may be required. Both the parent and the receiving parent should fully understand their responsibilities under the private child support agreement.
What will the private child support agreement cover?
Think about what you need the private child support agreement to cover. Write these down so both parents can review the list and suggest amendments. A private child support agreement should clearly outline obligations and the allocation of expenses. Here’s an incomplete list of expenses relating to children:
School expenses
School fees are one of the most significant factors. If you’re planning on sending your child to a private school, covering the fees will be critical to each parent. However, this isn’t the only cost. Other expenses can include:
School uniforms
Stationery
Sports uniforms and equipment
Tutoring
Medical needs
All children should have their reasonable medical needs covered by a private child support agreement. Some children may have specific healthcare needs that result in additional costs for parents. In such cases, an agreement can play a crucial role in ensuring the child receives adequate care. Medical costs covered by private child support agreements may include:
Vaccinations
Routine check-ups
Medication
Medical consultations
Health insurance
Medical equipment
Therapy
Daily expenses
Caring for a child incurs daily expenses that encompass many necessities. These costs are often covered under a binding agreement or a limited agreement, ensuring clarity on child support payable. Before finalising any arrangement, it’s essential to obtain legal advice to ensure the agreement meets the criteria for a legally enforceable agreement. While this can be a long list, here are some common considerations often addressed in an administrative assessment or private agreement:
Childcare and babysitting
Recreation (toys, games, etc.)
Travel costs
Household supplies
Clothing
Seeking legal advice
A binding child support agreement requires both parties to access independent legal advice and have an agreement signed to formalise the arrangement. Which lawyer should you choose? The quality of your legal representation can make the difference between a successful and an inadequate agreement. This is especially important when dealing with the complexities of a binding agreement or a limited agreement. Additionally, understanding how the agreement aligns with an administrative assessment and considering the position of the other parent are crucial factors. What should you consider when approaching a law firm?
Reputability
You want to ensure that the lawyer you work with adheres to the highest standards of family law practice. Membership with organisations such as a law society demonstrates their commitment to these standards. Additionally, a lawyer experienced in family law can help draft an agreement signed by both parties, ensuring the support amount reflects the financial responsibility of each parent. The agreement must be legally enforceable, and both parents should have received legal advice to confirm their understanding of the terms. This process helps ensure that the arrangement is financially secure and that both parents agree on their obligations.
What is the firm’s standing in its community? Community awards reflect the respect they’ve earned, while active community participation demonstrates their dedication. Do they sponsor local groups or have a history of volunteerism? Some lawyers go further by providing free legal education through seminars and other initiatives. This not only showcases their expertise but also highlights their long-term commitment to the local area. A firm that values its community often mirrors the same dedication when addressing clients’ financial responsibility, ensuring parents agree on essential matters like children’s expenses, parenting arrangements, and the payment method for support. They may even consider future scenarios, such as a pay rise, to create agreements that remain fair and adaptable over time.
Communication
You’re relying on the advice of your legal practitioner to make the private child support agreements legally enforceable. If they’re not good communicators, their advice may be less informative or unclear. This is particularly important when dealing with non-parent carer, limited agreements, or navigating the complexities of property settlements alongside the support. You can assess their communication abilities through online reviews and an in-person consultation.
Check how well they’re able to break down complex legal jargon and whether they take the time to address your concerns. Are they dismissive, or do they provide clear guidance, even in exceptional circumstances that may require involvement with the court system? Their ability to communicate effectively says a lot about their commitment to collaboration and ensuring the best outcomes for their clients.
Fee transparency
Low fees aren’t the best way to determine the right lawyer. Excellent legal advice is worth paying for. However, it’s important that the firm is open about its fee structure. This allows clients to avoid hidden fees and budget effectively. Experienced lawyers can minimise delays and streamline negotiations. This can save clients money in the long term.
Track record
One of the most important factors is to choose a lawyer who has a proven record of success in support negotiations. Lawyers with extensive experience handling effective support arrangements can develop tailored solutions. This helps create agreements that are sustainable.
Co-parenting relationship
Your relationship with the other parent determines a binding child support agreement’s chances for success. Both parents need to be willing to work together to avoid involving the Court. If you’re struggling to find agreement on the terms of a support agreement, mediation can help.
Mediation is an important tool for avoiding conflict. In order to get the most out of mediation sessions, there are a few things to remember.
Compromise
Both parties must be prepared to compromise. Mediation isn’t about getting everything your own way. Find areas where you can find common ground.
Listen
You have to actively listen to each other. Don’t twist each other’s words to suit a narrative. Be charitable and approach the sessions in good faith.
Advantages
There are various reasons why a binding child support agreement might suit your circumstances over a limited child support agreement.
Flexibility
Unless you’re organising a lump sum payment, you don’t need to get a child support assessment from Services Australia. This gives you some flexibility about how you work out what should be paid. You can use a formula of your choosing and make whatever considerations you deem appropriate.
You can also decide that the parent will cover certain expenses. For example, they may pay for private school fees or holidays. This can be important if a child has extensive medical needs. We all know how expensive healthcare can be. A binding agreement can ensure the parent covers those costs.
Secure
It’s not easy to put a binding child support agreement aside. They can’t be cancelled on the whim of either parent. Once you formalise the agreement, you can ensure the financial support will remain in place.
There may be legitimate reasons to want to terminate the agreement. However, both parents must agree to the termination.
Legal advice
Both parties must receive independent legal advice. This ensures that you enter the agreement with full knowledge about how it will affect you. A good child support lawyer will protect your interests and work to ensure that the agreement properly reflects your child’s needs.
Disadvantages
Binding child support agreements are right for everyone. While there are reasons you may want to create one, there are also reasons it might not work for you.
Potentially costly
Since both parties must agree to the termination of the agreement, costly disputes can arise. The parent may not be able to meet their obligations anymore and seek to end the agreement. However, if the receiving parent doesn’t agree, the matter may end up going to Family Court to settle the issue.
If the parents do agree to end the agreement, they must enter a termination agreement. The parties will need to seek legal advice from a family lawyer again. This incurs additional costs.
Significant commitment
A binding child support agreement ends when a child turns 18. This could mean a parent is locked into providing financial support for a long time if the agreement began when the child was very young. A lot can happen in that time that affects a parent’s ability to continue making payments.
If you’re not absolutely confident of your capacity to meet your obligations for the entirety of the agreement, a binding agreement may not be the best option.
Poorly drafted
It’s possible that a binding agreement won’t be drafted in a way that accurately captures your circumstances. You may not make adequate provisions for potentially significant events. For example, the parent could suffer an injury that leads to a disability or lose their job.
This will affect their financial stability and, unless the agreement covers such events, will make the agreement difficult to continue.
Conclusion
Binding child support agreements are one-way parents can organise support for their children after a divorce. Binding arrangements are flexible and stable. With good legal advice, you can be confident that the agreement will adequately reflect what’s best for your family.
However, they can be expensive. Disputes or unforeseen circumstances sometimes crop up. These situations can make binding agreements more complicated. They’re also a big commitment that can last for many years.
You may not be sure if a binding child support agreement is right for you. That’s natural as it’s a big decision.
If you want expert advice, contact our office today. Our team will discuss with you the best option for you and your children.
