When going through a separation and negotiating child support, deciphering the division of school fees and school related expenses can be difficult to navigate. This task becomes even more complex when one party holds greater financial means and may exploit this advantage as leverage during negotiations. In this article, Partner Reece Ramsden highlights the importance of seeking legal advice as soon as possible. He explains the difference between a binding child support agreement and a limited child support agreement, how to set a lump sum of child support, and also clarifies what a departure order is.
School fees and school related costs and expenses are part of child support. As family law lawyers we regularly advise on straightforward and complex child support arrangements including which parent should pay all or more of the private school fees and other education costs. For some families, private school fees may be genuinely unaffordable post separation with the division of assets and the family unit moving across two separate households. For other families one parent can afford to pay private school fees but may threaten to cease paying in an attempt to gain a perceived leverage in negotiations in the parenting and/or property settlement negotiations or because they choose to no longer pay. When school fees fall into default then legal action is taken to pay the fees in arrears and the child’s enrolment is withdrawn. Legal advice should be sought prior to this occurring. It is stressful for the family and the child. Separation is a significant stressor for children of all ages and ideally the children can retain the benefit of stable schooling and maintain their connections with their peer group.
Some legal options to consider where there is uncertainty or threats to cease paying school fees include:
Whether both parties agree to put in place a private written child support agreement. These agreements are in writing and there are two types – binding and limited. Each has its own benefits and drawbacks, but a binding child support agreement is difficult to opt out of and if the agreement includes the payment of school fees then the Federal Circuit and Family Court of Australia can, on an application to do so, enforce the payment of school fees if the paying parent defaults on the payments.
a) Binding Child Support Agreement
A binding child support agreement is a legally enforceable contract between parents that outlines the financial support arrangements for their children. It is a voluntary agreement where both parents negotiate and agree upon the amount and terms of child support payments, which can differ from the standard guidelines set by the Child Support Human Services. The agreement must be in writing, signed by both parties, and usually requires each parent to seek independent legal advice before signing. Once established, the agreement is registered with the Child Support Human Services , ensuring its enforceability under Australian law. Modifications to the agreement can occur if both parents consent and are documented in writing. Failure to comply with the terms of the agreement can result in legal action to enforce payment
b) Limited Child Support Agreement
A limited child support agreement is a legally binding arrangement between parents that specifies the financial support for their children, offering a degree of flexibility while maintaining enforceability. Unlike a binding child support agreement, which can deviate from standard guidelines, a limited agreement still involves some adherence to these guidelines, typically based on the paying parent’s income. However, it allows parents to agree on a specific level of child support payments, typically a fixed amount, for a set period, or until certain conditions are met. Both parties must sign the agreement, and it usually needs to be registered with the Child Support Human Services to ensure enforceability. Limited child support agreements can be modified or terminated under certain circumstances such as after 3 years, but they provide a structured framework for financial support while allowing some customisation to suit the parents’ circumstances.
To learn more visit: Guides to Social Policy Law – Child Support Guide Version 4.79 – Released 5 February 2024
A lump sum of child support might be an option for some families
This is where it is agreed to as part of the property settlement in which case a set sum of money is allocated as lump sum child support and used by the recipient parent to pay the school fees. These require careful drafting to ensure the documents reflect the intention of lump sum child support. This is useful if incomes are less certain but there is sufficient equity in assets to use for the payment of school fees.
A Departure Order
This is another option but it will not direct payment to the school for the tuition fees. Instead, it requires that a child support assessment be issued by the Child Support Human Services. Child support as assessed will not be sufficient to cover private school fees and education related costs.
In order for a parent to receive more child support to be used towards the child’s education they need to apply for the child support assessment to be ‘departed’ from and with consideration of specific grounds including:
- That the parents intended the child to attend the school;
- The enrolment form signed by each parent;
- The history of payments by the parent/s to date;
- Income details and details of their earning capacity;
- Financial resources that may be available to a parent including tax minimisation structures to reduce their taxable income.
A departure application in effect enables the Registrar of Child Support Human Services to look behind the taxable income to determine if a parent has the ability to pay more child support on account of the child’s education. If successful more money is payable to the parent receiving child support in departing from the standard modest child support assessment.
Ramsden Family Law – How We Can Assist with the Division of Child Support and School Related Expenses
When separating from a partner it can be difficult to navigate child support in terms of how expenses such as school fees and additional school related expenses are paid for. It can become more complicated when one party has substantially more money and leverages it as a bargaining chip in negotiations. This is when it is immensely important to seek professional legal advice. When one party does not agree or threatens to stop making child support payments it is essential to look at your legal options. Some of your legal options are a Binding Child Support Agreement or a Limited Child Support Agreement. Both have their advantages and disadvantages, but the bottom line comes down to your specific situation and personal needs. Furthermore, another option to overcome any uncertainty could be to utilise a lump sum of child support after a property settlement to pay school expenses. Another option is a departure order. Essentially, protecting your interests and securing a stable future for your children during their schooling years is paramount. At Ramsden Family Law our team of family lawyers are well experienced in negotiating child support, especially when it comes to discussing school expenses. If you are uncertain about what is the best option for you, our team of family lawyers is here to guide you. Please contact us today for an obligation-free initial consultation in regard to your best options moving forward.
Posted in: Child Support, Parenting
February 16 2024
