I recently penned an article about a Full Court decision which provided an example of the interaction between Child Support (in that case private school fees) and its impact on a property settlement adjustment Order.
Besides the obvious reasons as to why a parent should pay Child Support and come to an amicable and sensible arrangement for their children, there are also tactical reasons to be sensible and proactive about Child Support obligations.
If you are a separating parent earning a higher income then the act of separation should not suddenly mean that you do not bear the greater responsibility for the costs of children immediately after separation. Hopefully, you can resolve your matter after separation without going to Court but remember that if you do end up in Court then it is relevant for the Judge to consider what financial arrangements have been in place for the parties and also for the children. If a party who has had capacity to pay substantial Child Support has simply failed to do so (instead spending the money on themselves having a good time) then the Judge could draw adverse inferences against that party with respect to their future intentions with respect to paying proper and adequate support.
It is much more sensible and safer to put in place an immediate arrangement to pay proper expenses for the household and the children immediately after separation. This not only makes the act of separation easier on your children financially but also creates a more cooperative environment for hopefully settling matters after separation if your spouse is in a good financial position.
On some occasions, clients says to me “but I do not have to pay Child Support until I get an assessment”. Whilst that can be said to be technically correct, it is not the type of answer that a Judge will view favourably if you ever say it in the witness box. Being proactive and making sure that there is enough money available for the household and particularly the children (if you are the high income earner) is a sensible and wise strategy.
If you are the high income earning spouse, then typically the law says that there may be an adjustment against you and in favour of the other spouse (who earns less money) on the basis that party may have had their income earning capacity affected by the length of the marriage or just purely because of a large disparity in income. Whilst, there are no guarantees, a sensible strategy of paying Child Support regularly and committing to a long term Child Support payment (for example through a Child Support Agreement) sends a clear message to the Judge hearing your matter that the children will be properly and financially looked after from your higher income. Whilst this does not guarantee a lesser adjustment being made against you it is a factor that may assist in the assessment of what is a just and equitable property settlement Order.
Also, do not forget that in mediations (where most matrimonial matters settle) one can often negotiate an overall property settlement that is a bit more favourable to the high income earner if they are offering a generous private Child Support Agreement. In other words, being generous in a private Child Support Agreement which provides certainty to the low income earner and also locks in a set amount for the high income earner to pay, is often of significant advantage to the low income earner. The low income earner, who may also be the primary carer for the children, gains certainty and security in knowing that there is now a private arrangement in place that pays a premium on Child Support and for instance pays for other things such as private health insurance and perhaps private school fees. There is a greater chance that negotiating a more favourable property settlement deal in situations where such a private Child Support Agreement is offered.
The lesson here is to be smart when it comes to Child Support and property settlement. Legally, the two are mutually exclusive but often overlap because in property settlement the nature, amount and consistency of payment of Child Support can be a relevant factor when it comes to making a just and equitable property Order.
Written by: Brett Hartley