Private Child Support Agreements: Pros & Cons of Binding Child Support Agreements

It is important to note that for this agreement to be binding, there are technical requirements that must be met, including the parties having independent legal advice.

Below, we explore the advantages and disadvantages of private child support agreements.

Before we explain the pros and cons, it is important to be aware of how child support works in Australia. If you are unsure, visit our updated child support information page first, which explains the process and takes into account recent family law changes.

When Private Child Support Agreements Are Made

Generally speaking, private child support agreements are discussed when you are working out your property settlement and parenting arrangements. 

Often when parents are reaching a deal with their property matters, they will also strike a deal about entering into a private child support agreement. This is purely because it gives everyone certainty in terms of what financial assistance is going to be in place for the children moving forward. This formal agreement also allows people to plan their financial future because they will know what is happening with any property and what is going to happen in relation to expenses relating to any children they have.

The standard child support assessment completed through Services Australia cannot enforce anyone to pay directly to a third party, which is required to pay for private school fees, sports or music lessons or other extra curricular activities. Services Australia may increase the amount of child support to be paid if they are satisfied that there is a special reason to do so, but cannot enforce payment being made to the third party. 

Another reason for a private and binding child support agreement is if one parent is concerned about the other possibly not fulfilling their verbal agreement to cover particular expenses in the future. 

Advantages of a Private Binding Child Support Agreement

Binding Child Support Agreements have many benefits for both parents. Firstly, they give security and certainty, allowing parents to make specified arrangements that suit their family circumstances at the time.

Another reason people choose private child support agreements is if they have children who they are planning on sending to private schools. This type of agreement allows for funding arrangements to be outlined.

In addition to covering who pays the school fees, the agreement can also outline things such as private health insurance, medical payments and extracurricular activities.

People may also decide on entering into a binding child support agreement if they have a child with significant medical or educational needs. Detailing the costs associated in a binding child support agreement will give them a sense of security as well as certainty, as opposed to what the standard child support assessment does. 

Once the binding child support agreement is registered with Services Australia, it can then be registered with the Family Court. Then if one person does not comply with it, you can enforce the agreement through the Family Court.

Disadvantage of a Binding Child Support Agreement

Because a Binding Child Support Agreement is in place until there is a terminating event, such as a child turning 18 or finishing secondary school, this can be a very long time for some people. It is important to be aware that there are numerous events that could happen in time that can impact a parties ability to afford their agreed child support under the terms of the agreement.

Parents can agree for their child support agreement to be terminated if one parent’s income drops below a certain level. But in order to end the agreement, you then have to enter into a termination agreement, which requires both parties to get legal advice.

There is also nothing requiring someone to enter into a termination agreement. So, if one parent refuses to enter into the termination agreement, then you have a situation whereby you have to apply to the Court to get the agreement terminated. So it is a serious commitment and should be well thought out before making any decisions.

What To Do First When Considering a Binding Child Support Agreement

If you decide to pursue a Binding Child Support Agreement, first put pen to paper and work out what your children’s expenses are. Take into consideration school fees but also include the other costs including, but not limited to:

• Uniforms
• Stationery
• Sports uniforms and equipment
• Book lists
• Tutoring
• Therapists (speech, physical etc)

Think about their medical and health expenses that you want to ensure will be accounted for. Next, think about what it is you really want this agreement to cover. 

It would also be wise to get some financial advice in terms of your budgeting and working out how much on average you spend on your children each week and how you are going to manage your funds.

Take into consideration both of your financial circumstances and work out what is going to be achievable for both of you moving forward as you run two separate households. 

This is why Binding Child Support Agreements are often discussed in the context of working out how the separating parents are going to divide the property.

So it might be that a lot of the time people will reach agreements that are conditional upon a number of elements. This means you would probably be entering into a child support agreement that will come into effect when the property settlement comes. This is what we often refer to as a package deal.

Obtaining Advice is Essential 

With Binding Child Support Agreements, it is a requirement that in order for it to be binding, you have to get independent legal advice and you must receive advice about the effect of the agreement on your rights and advantages and disadvantages of entering into the agreement at the time you are entering into it. 

However, you do not have to get legal advice with a limited child support agreement although we always recommend that you do. Some parents prefer a limited child support agreement because they like the flexibility of being able to renegotiate. But for some parents that provides too much uncertainty.

If as a parent you are worried that certain costs are not going to be met, then you need to speak to a lawyer about whether a binding child support agreement is the right option for you. You can also seek advice about trying to negotiate the agreement as part of your property settlement.