Understanding the Three Types of Child Support Agreements

child custodyOne of the most stressful parts of a divorce process is dealing with child support. It’s important for anyone who finds themselves in that situation, to understand the different types of agreements you can enter into with your partner.

So, what is a child support agreement?

A child support agreement is a written agreement between parents or carers of children which describes the payments to be made to support their children. The actual child support payments can be made in all sorts of ways, for example:

  • direct payment of a set amount to one of the parents/carers into their nominated bank account each week;
  • payment to a school for their fees;
  • payment to medical funds for health insurance; or
  • payment to providers of extra-curricular activities.

All of these payments made on behalf of the children can be used to partially or completely offset the child support you might be liable to pay.

There are three general types of Child Support Agreements:

  1. Binding;
  2. Limited; and
  3. Lump Sum.

“Binding” Child Support Agreements

To be legally binding you both must have received independent legal advice about the advantages and disadvantages of entering into the agreement. This needs to be done before the agreement is entered into.

For these agreements, it is not necessary to ask the Child Support Agency to prepare an assessment of the payer. In fact, you can enter into an agreement for less than the amount assessed by the Child Support Agency, although we do recommend that you access the Human Services website to give you some guidance about the child support payable if you were assessed by the Child Support Agency.

Unless the agreement gets set aside, it will remain in place until the youngest child reaches the age of 18, or the child enters into a de facto relationship.

You should also each receive a copy of the agreement once it has been signed.

It is difficult to set aside a binding child support agreement – agreements can only be set aside if obtained by fraud, or if exceptional circumstances have arisen since entering into the agreement, such that a parent/carer will suffer hardship if the agreement is not set aside. Exceptional circumstances are generally only met where something has happened which is unexpected, such as one of the parties has substantially increased their care of the children.

“Limited” Child Support Agreements

Limited child support agreements are also written agreements, but are more flexible than binding child support agreements. They generally involve “non-periodic” or irregular payments made directly to a parent/carer, or on behalf of children to third-party providers, such as schools and medical funds. There must be a child support assessment already in place and the annual amount payable must be equal to or more than the amount assessed. You are not required to get legal advice before entering into a limited child support agreement.

Limited child support agreements are easier to set aside and can be done at the election of one of the parties after the expiration of three (3) years. These agreements can also be set aside when one of the parties’ income has decreased by more than 15%.

“Lump Sum” Child Support Agreements

It is possible to have child support paid in a lump sum, where the payer has repeatedly failed to make periodic payments. Although, the courts are reluctant to exercise that power for fear that the money might be spent immediately and not be properly allocated for the long-term benefit of the children.

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