Top tips for child support

When parents separate one of the aspects that can be overlooked as parties focus on the division of property and children’s living arrangements is the clarification on how the costs of the children will be met until they reach adulthood, which may be many years away.  

The costs of raising a child are significant. When a household becomes two at separation with duplicate expenses and less income in each, and often with one household having substantially less income than the other, the cost of raising a child is amplified. Expectations about the particular private school that the child will attend, the extracurricular activities the child will participate in and whether the child is to be covered by private health insurance need to be realistically reassessed.

When private school fees can reach as much as $30,000 per annum, the question as to how they are paid is frequently an issue that stands in the way of parties finalising a financial arrangement between them. 

When it comes to child support our top tips are:

  1. Obtain a Child Support Assessment
    Do not delay in obtaining a child support assessment from the Commonwealth Department of Human Services. To get a sense of what you might be entitled to, the Department website contains a very useful calculator where you can plug in your details and obtain an accurate estimation. 
  2. Formalise a child support arrangement
    In many circumstances it is important not only to the parent with the lesser income (who often also has the substantial care of the children) but also the parent earning more that the costs of raising children are agreed and formalised in a binding document. The parent who earns less wants to ensure that they will be able to make ends meet and the parent who earns more wants to ensure that their financial obligations are clearly defined and that they do not have to worry about the other parent seeking more at a later time.
  3. Consider and negotiate child support at the same time as a property settlement
    Child support to be paid by one parent to another as calculated under the child support formula employed by the agency will never be sufficient to meet private school fees, private health insurance and other benefits for a child. The assessment will also vary as taxable incomes change from year to year. Often, especially in the case of a party managing their own business, taxable income is not reflective of the true income situation. Therefore it is highly desirable that the child support question is dealt with quickly and in conjunction with the property settlement.

    When it comes to private school fees, often a more creative solution is required where income alone will not be enough. It may be that a portion of sale proceeds of a home are set aside to meet this expense if both parties have their minds set on the private school for their child. 
  4. A Binding child support agreement or a limited child support agreement?
    Parties should think carefully about entering into a binding child support agreement or a limited child support agreement to formalise payment arrangements. A binding child support agreement must be signed off by lawyers acting for each party. A limited child support agreement does not need to be signed off by lawyers but must provide that the parent who is entitled to receive child support, receives more than would have been received under the child support formula.
  5. Flexible terms
    The terms of such agreements can be quite flexible to take into account changes in parties’ incomes or how financial responsibility is to be divided up. Agreements can provide for the payment of regular amounts from one party to another and or the payment of expenses directly to a school or other service provider as required.

How we can help

We would welcome a discussion with you or your clients about the risk of a prior agreement being terminated and how to ensure a future child support agreement is binding.

Please do not hesitate to contact us.