Child Support Agreements - Limited v Binding
The Child Support legislation provides for two types of Agreements for parties to enter into voluntarily and opt out of an Assessment from the Child Support Agency (“CSA”); Limited Child Support Agreement and a Binding Child Support Agreement.
A limited Child Support Agreement is an agreement that can be in place with respect to child support payments for a period of up to three years. The Agreement can be extended by agreement between the parties and can be terminated if there is an unexpected change in circumstances. The Agreement provides certainty for the paying parent and also certainty for the parent receiving funds, and also certainty that the agreement will be terminated if there is an unexpected change of circumstances. Such circumstances include, the paying parent being unemployed unexpectedly or becoming bankrupt. Once an agreement is terminated, the parties can enter into a further agreement or will use a Child Support Assessment as conducted by the Agency.
A limited Agreement requires parties to have a Child Support Assessment in place, and the agreement must provide for equal or greater than the annual rate of child support to be paid by the paying parent than what has been assessed. The Agreement does not require independent legal advice to be provided to each party prior to entering into the Agreement.
The alternate Agreement is a Binding Child Support Agreement. This type of agreement is much harder to terminate and it is intended to provide certainty and finality on the issue of Child Support. This Agreement will continue to be binding despite a change in income, loss of employment, bankruptcy, or change in income earning capacity. Given the serious binding nature of the agreements each party is required to seek independent legal advice and should carefully consider whether it is appropriate to enter into such an Agreement as the Agreement will continue to be in place and binding until a Terminating Event occurs under the Agreement, such as a child turning 18 or completing High School.
These types of agreements are difficult to change in the absence of an agreement with the other party and by entering into a further Binding Child Support Agreement to either terminate the previous Agreement or vary it. Given the more serious nature of the Agreement and increased difficulty to change in the future, each party is required to obtain their own independent legal advice prior to entering into the Agreement. The legal advice is to also go to the advantages and disadvantages of that party entering into the agreement. Each party’s lawyer is then required to execute a certificate to this effect which is to be attached to the Agreement and provided to the client prior to their signing of the Agreement.
A Binding Child Support Agreement may deal with issues such as ongoing periodic payments and also non-periodic payments such as payment of health insurance and school fees.
In the absence of a formalised agreement or private agreement for child support, either party may seek an Assessment through the CSA. An assessment will consider each parties income, level of care of the children, the children’s ages, and each parties cost percentage for each child. A Child Support Assessment may be varied, by way of a Change of Assessment Application, for a number of prescribed reasons as set out by the legislation and these changes to assessment can be managed and applied via the CSA.
A Child Support Agreement may be one of many agreements reached between parties when resolving parenting and property matters following the breakdown of a relationship. A child Support agreement should be carefully considered prior to entering into such an Agreement noting that each case will have its own advantages and disadvantages for entering into such an Agreement.
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