10 Jul How to deal with child support issues and other financial matters in a divorce
Pragmatic advice and guidance on Family Law matters
It is an issue that can incite the most conflict in a separation, eliciting deep emotional reactions and turbulence – the financial welfare and maintenance costs of children.
When it comes to child support, there are a few important factors to consider when separating assets, as well as a number of ways ongoing financial support for children can be dealt with. It’s important to remember that each parent has a financial responsibility to provide for the child/children until they turn 18. This is to help provide food, shelter, clothing and medical costs, along with other expenses that may come up.
There are three ways that child support can be managed and deciding which one is right for you is key.
These options include:
- An understanding between the parties of an agreed payment of certain costs and/or a weekly set amount that can be reviewed. This requires the parties to be co-operative, communicate well and trust each other to comply with their “understanding”;
- Engaging the Child Support Agency (CSA). This requires one party to register for support where an assessment will be calculated based on both parties’ income. The other party will have an obligation to pay pursuant to that assessment. It is simplistic but it can lead to significant dispute if there are discrepancies in income, and how the CSA interprets income for the purposes of the assessment. It should be noted that either party can appeal these decisions at any time which may result is a review and revision of payment sum;
- A Private Child Support Agreement can be limited or binding. This type of agreement allows the parties to negotiate and come up with their own arrangement that suits their family’s lifestyle, and adequately provides ongoing support for the children. The CSA can assist with the collection of these payments if a party falls behind.
- Or a court order under Section 124 of the Child Support Assessment Act. In this circumstance the parties have already commenced property proceedings and the parties are settling orders as to the distribution of property in lieu of past, present and or future child support.
If you have decided to try and come up with a personal arrangement based on your own family’s personalised needs, you may wish to consider engaging a mediator to assist in the process, or use the CSA Estimator to help calculate a base for discussion. These calculations do not take individual need, and are an average based on earnings. They also don’t take into account extras like large medical bills.
There are two ways to formalise your private child support arrangement. These are
1/ Limited Child Support Agreements and
2/ Binding Child Support Agreements
LIMITED V BINDING
When choosing an agreement right for your family, it’s vital to understand the short-term and long-term ramifications of your selection and approach. That includes the difference between limited and binding agreements.
A Limited Child Support Agreement is for an agreed timeframe. An administrative assessment must already be in force and cannot be less than the administrative amount. This is where the CSA calculates the payment, taking into account the parties’ income and nights with the child/children.
If there is a 15% difference in the amount paid and the assessment, then the limited agreement will be cancelled.
These agreements, however, do not provide the certainty most parents seek with continuing child support.
A Binding Child Support Agreement can make provision for a liability that is less than the administrative assessment. An administrative assessment does not have to be in force, provided there is no lump sum crediting agreement.
This type of agreement can give certainty for parents due to the fact they are difficult and costly agreements to get out of. Parties can, however, agree to terminate them, or a court can set them aside.
To set aside this type of agreement, you will require an exceptional circumstance that must have arisen after the agreement had been made. It must also be satisfied that the person applying, or the child, will suffer hardship if the agreement is not set aside.
COURT ORDERS VS CONSENT ORDERS
As described by the Family Court of Australia, Court Orders are ‘the way the decisions or judgments of judicial officers are described’.
They can include:
- an order made after a hearing by a judicial officer, or
- an order made after parties who have reached their own agreement have applied to a court for consent orders. Consent orders, if they become a formal court order, have the same status as if the order had been made after a hearing by a judicial officer.
- When an order is made, each person bound by the order must follow it.’
Consent Orders can be used for parents who agree on terms and want to make the arrangements legally binding by getting it approved by a court.
These orders can cover parenting arrangements and financial arrangements however to be accepted by the court the wording in the document must be clear and precise and Lawyers are trained to ensure these types of documents are compliant for the court to approve.
If you have an agreement the documentation to record that agreement legally can be confusing and also must be in your individual family’s best interests. If you would like a free initial consult to discuss your options or to start a mediation process, please contact Toomey Family Law to arrange.