How to set up a private child support agreement in 5 easy steps

When you’re considering divorcing or separating with children, one of the things you’ll be most concerned about is their wellbeing throughout the process.

You’ll want to make sure they’re able to handle the inevitable changes and upheavals that will occur. And that they’re taken care of both emotionally and financially. 

When it comes to financial care, one of the best ways forward is to set up a private child support agreement.

 

What is a private child support agreement?

Regardless of whether a couple is married, de facto, unmarried, divorced or separated, they share the financial responsibility for their children until the child is 18, or until they finish secondary school. This is generally pretty easy to manage when you’re in a relationship with the other parent. But it can become tricky when that relationship ends.

When the relationship does end, responsibility remains shared. But one parent may need to make payments to the other to ensure everything is fair and equitable and the children are financially cared for. These payments are known as ‘child support’.

A private child support agreement is a legally enforceable agreement that sets out the agreed child support payments. This will include the amounts that need to be paid, the schedule of those payments and how they should be made. It might also include the expenses that the payments should cover, like school fees for example.

 

How does a private child support agreement work?

Child support vs private agreements

As we’ve said, child support is simply the money that should be paid from one parent to another. It’s typically agreed to between the parties. But if that isn’t possible, then you can seek a child support assessment from Services Australia.

On the other hand, a private child support agreement can be created once you agree on the child support payments – what will be paid, by whom and to whom, and when. By putting it into a legal agreement you’ll be able to enforce it if your ex doesn’t meet the agreement.

Two types of private child support agreements

There are two types of private child support agreements, limited and binding.

1. Limited agreement.
   A limited child support agreement arises out of the assessment process and the child support that you agree to must be equal to or more than the assessment requires.
2. Binding agreement.
   On the other hand a binding agreement can be made between you and your ex even when you haven’t had an assessment done. It can be for any child support amount as long as you both agree. There is an additional requirement that both parties get legal advice before entering into a binding child support agreement.

 

Benefits of a private child support agreement

There are a lot of benefits to having a private child support agreement in place.

Certainty and peace of mind.

Both you and your ex will have a clear understanding of your child support responsibilities, and can feel confident that your children will be financially secure.

Beneficial terms.

You’re able to negotiate the other terms of the agreement so that you’re happy with them. This might include making payments in line with your own salary payments, or receiving payments via a method that works best for you.

No third-party assessment.

With a private child support agreement, you don’t need to rely on the assessment of a third party, like Services Australia. And that means less red tape and less hassle overall.

Legally enforceable.

A private child support agreement is legally enforceable. So you’ll have recourse if your ex doesn’t meet their requirements when it comes to child support.

Can cover additional items.

Another benefit is that your agreement can cover whatever you need it to. This might be private schooling fees, for example, or additional expenses for a child that has more medical needs.

 

Disadvantages of a binding private child support agreement

Of course there can be some disadvantages to a binding child support agreement. The most obvious is that when things change – and it’s likely that things will over the course of your children’s childhood – you will have to terminate the current binding child support agreement and replace it with a new binding child support agreement. This might be if one parent changes jobs, or gets a pay rise.

 

How to create a binding private child support agreement

If you’re ready to consider a binding private child support agreement, here are some steps to take.

 

Step 1: How much (i.e., children’s expenses)

The first step is to figure out what your children’s expenses are. You should consider things like:

• Medical, therapy or specialist care
• School fees
• Uniforms and clothing
• Stationary
• Sports fees, uniforms and equipment
• Tutoring
• Extra-curricular activities
• Health care extras, such as the dentist or optometrist

It’s always a good idea to speak to a financial and legal expert at this stage, to make sure that you’re including everything that you need to.

Step 2: How often?

The second step is to consider the schedule for child support payments. In most cases, parents agree on ‘private collection’ for payments. This means that payments go directly into a bank account. But sometimes, in some circumstances, payments will need to be made through Services Australia.

If you’ve agreed on private payments you can agree to whatever schedule suits you and your ex. Generally parents like this to line up with their own salary paydays and prefer to pay monthly, but not always. Again, it’s up to you.

Step 2: What payment method?

With a private agreement, you’re welcome to set the payment method. Most parents simply make a direct deposit into the other parent’s bank account.

However, if you’ve used Services Australia, or had any issues with receiving payments in the past, you can use Child Support Collect. This allows Services Australia to collect child support payments on your behalf. In most cases, when payments are being collected by Services Australia the paying parent will have their child support payments deducted from their pay from their employer.

Step 3: Get legal advice

Once you’ve determined the specifics of children’s expenses, and how you prefer payments to be made, you’re ready to put them into an agreement. However, under the provisions of Child Support (Assessment) Act 1989 you must get independent legal advice before doing so.

Once you’ve received legal advice your legal practitioner must complete a certificate. This will become an annexure to your binding child support agreement.

Step 4: Put it in writing and co-sign

Once you have finalised steps 1 and 2 you’ll need to put your child support payments into writing in the form of the binding child support agreement. Your lawyer can help you do this. You and your ex will both also need to sign the agreement to indicate that you agree to be bound by its contents.

Step 5: Manage payments and keep records

It’s important that if you are the parent required to make payments that you do so on time. This is your legal obligation, and if you don’t meet it you might find yourself in a situation where you’re having your obligations enforced by Services Australia. This could include having deductions made from your salary.

Again, if you’ve missed a payment, or fallen behind, or if your financial situation has changed, you will have to terminate your current agreement and replace it with a new one.

Keeping records is important for both parties, so that you can show that you’re meeting your obligations under the agreement.

 

FAQs

Does a binding child support agreement have to be registered?

No, a binding child support agreement does not have to be registered. However, registering can give you extra certainty and create a pathway for easy enforceability if your ex doesn’t meet their obligations.

Is private child support taxable?

No, you don’t pay tax on child support you receive, so you don’t have to report it in your tax return.

 

Considering a private child support agreement?

If you’re considering separating or divorcing and want to know more about a private child support agreement – or your other options – get in touch with our team. It’s a great choice for clearly setting out your obligations and your ex’s and for ensuring that your kids are financially cared for.

Seeking some more friendly supportive advice regarding children and child support agreements? Request a call back via the form below, or call us directly.