Child Support Agreements

For as long as child support has been assessed administratively, it has been possible for separated parents to “contract out of” the assessment process. Commonly, they will want to avoid the assessment regime in one of three sets of circumstances:

• they acknowledge that the formula amount is not sufficient to enable the children’s carer to meet the children’s costs; and/or
• one or both of the children’s parents require arrangements to be made for payment of the child’s private school fees, that are not covered by the formula; or
• one of the children’s parents wishes to have child support paid as a lump sum, for example to enable that parent to retain ownership of the family home, or because the other parent is planning to relocate overseas.

If the children’s principal care-giver does not earn a substantial income, he or she will understandably wish to enter into a formal agreement with the other parent, which provides some measure of financial security following separation.

In these circumstances, separated parents can enter into what is called a “Child Support Agreement”. As a general rule, such an Agreement, once accepted by the Child Support Registrar, will have the effect of replacing the child support formula.

A Child Support Agreement can be:

• a binding Child Support Agreement; or
• a limited Child Support Agreement.

Both types of agreement must be in writing and signed by both parties.

A limited child support agreement will not be valid unless it provides for a rate of child support that is in excess of the amount assessed under the formula. However, a limited agreement is unlikely to provide the children’s principal carer with the financial security that he or she requires, especially if the children are reasonably young. This is because either party to a limited agreement can automatically elect to terminate the agreement after 3 (three) years.

At Dimocks Family Lawyers, we would generally recommend to the parent who is the children’s principal carer that they enter into a binding Child Support Agreement. These are the most significant issues surrounding a binding Child Support Agreement:

• both parties to the Agreement will require independent legal advice, and accordingly a binding Child Support Agreement should preferably be prepared by a specialist family lawyer;
• once entered into, a binding Child Support Agreement can only be terminated by a further (binding) Child Support Agreement, or by Court Order; and
• a Court may only set aside such an Agreement, upon the application of a party, in very limited circumstances.

Our specialist family lawyers are commonly asked to draft binding Child Support Agreements. If acting for the financially stronger party, we will also:

• ensure that our client fully understands the dangers of entering into such an agreement; and
• recommend that the agreement includes default provisions, to cover situations such as the client’s loss of employment, or a significant reduction in their income, for reasons beyond their control.