There is so much information readily available covering people’s opinions about parenting as a divorcee, but what about financials? Did you know that there is a difference between child support, child maintenance, spousal maintenance and financial settlements? We know that it needs to happen but what does it mean? Rachael Scharrer, divorce expert and founder of DivorceAnwered.com.au reviews the types of financial settlements and claims possible and available.
Four types of financials can be claimed: Child Support. This refers to a financial payment made from one parent to the other parent for the benefit of the child CONTRIBUTING TOWARDS their cost of food, shelter and other basic necessities. Often people think that child support is just for ‘mothers to buy designer handbags’. In actual fact, for many parents in receipt of child support, it hardly covers the cost of feeding the children each week. The amount payable is largely regulated by the body, Child Support Australia (CSA), and based on a formula of nights spent with each parent, each parent’s income and a self-support value. It is always possible to come to a private agreement and parents can pay above the expected minimum child support.
You can choose to receive payments directly from your child’s other parent and this is often the case for those who pay above the minimum. However, if you are in receipt of child support and the other parent doesn’t pay regularly, changes jobs regularly or there are other concerning circumstances, it is more convenient to allow CSA to collect and chase payments.
CSA will collect child support from the day that you contact them and first request their collection services. If it is the first instance that you are contacting child support, they will take on your account. However, be mindful if you continually stop and start using this service, because CSA may decline to collect on your behalf. The other great benefit of CSA is that they will adjust the child support to the taxable income (which is great if the paying parent earns more than declared), garnishee wages and apply international flight restrictions (or stop-flight order) if necessary on the parent with outstanding debt.
At times, one parent believes that there are private agencies that can collect. However, there aren’t any known agencies and it has been sprouted that private collect agencies side with the paying parent. If you use a private agency or collect privately, there isn’t any recourse by CSA to collect any outstanding monies – you will have to take it to court yourself. It is highly recommended if you are collecting privately to add the child support payment agreement to your parenting agreement or order.
Child Maintenance. Child maintenance is also referred to as a Binding Child Support Agreement (BCSA). In summary, child maintenance or BCSA is a legally binding document that covers the financial responsibilities of each parent for a child (or children) beyond what is paid in Child Support. It covers areas such as education, health, dental, mental and more. A BSCA is lodged with the Family Court and makes reference to child support and government benefits as well as the costs of raising a child beyond the minimum basic needs. [Divorce Answered features a BSCA(www.divorceanswered.com.au/binding-child-support-agreement/) which you can fill out for your circumstances and have approved by family lawyer following appropriate advice.
In addition to a BSCA, the court may order one parent to make ongoing, one-off or periodic Child Maintenance payments. If you feel that this may be relevant to your situation, please contact your family lawyer.
Spousal Maintenance. Spousal maintenance is an option for claiming through the property and financial settlements for individuals leaving a marriage or de facto relationship where they are not able to financially support themselves adequately following the relationship breakdown. The Family Law Act 1975, which much of the current family law legislation is based on, states that a person has a responsibility to financially support or assist their ex-partner if they cannot meet their own basic expenses from their own personal income and assets. How much and how long spousal maintenance is to be paid depends on each individual and situation. Judgements surrounding spousal maintenance consider the needs and ability to pay for each individual as well as the age, health, assets, income and ability to work. Claims and demands for spousal maintenance may be ongoing, periodic or a one-off payment.
Time sensitive and claims of spousal maintenance are ideally made early in the separation. If not, the court may deem each individual is able to live appropriately off their individual earnings/income. According to the Law, spousal maintenance claims need to be made within 12 months of a Divorce Order (for married individuals) or within two years of the relationship ending for de facto relationships (which is the same time restraints for financial settlements).
Depending on the nature of future relationships (particularly if you enter into a new de facto relationship or marriage), your spousal maintenance may be stopped or reduced.
Financial Settlement. Just like parenting orders, financial settlements can be costly and protracted if each individual doesn’t make a concerted attempt to work together and create a settlement by consent. To accurately make a financial settlement, full disclosure of financial records must be made. Should it be found that one party didn’t make full and frank disclosure, then there may be a case made to review the settlement and make further claims on the other party.
The financial settlement claim timeline mirrors that of spousal maintenance: made within 12 months of a Divorce Order (for married individuals) or within two years of the relationship ending for de facto relationships (which is the same time restraints for financial settlements). However, it is in the best interest of everyone to finalise the financial settlements sooner rather than later because any debt or asset accrued during the separation is often included in to the settlement. One exception may be if there is blatant and unnecessary spending and in this case, the money may be added back into the asset pool.
Each situation is different and there is not set formula to follow for the division of assets and liabilities. As such, it is strongly recommended that you get professional legal advice.
In an attempt to make a swift out of court settlement, it is strongly recommended to attend and family dispute resolution. It is a non-legally binding financial settlement mediation. If an amicable and suitable agreement is reached, it is then up to each party to present it to their lawyers and lodge it at court as an order.
In the unfortunate circumstance that you and your ex-partner haven’t been able to reach an agreement, then you may require the assistance of the court or judicial process to assist in either obtaining the financials or pushing the process towards a settlement.
Your process may involve:
When considering a financial split, your lawyer and the courts will consider: 1. Current assets and liabilities, cash and debt as well as the current value of property owned 2. What financial contributions each individual made towards the relationship 3. The periodic income or one-off gifts or inheritance 4. The non-financial contributions to the relationship such as child-raising and domestic duties 5. The future ability of each individual to self-support, ability to earn an income, support of minors in their care as well as their general wellbeing, health and age.
Seek advice from a legal professional for guidance about what is a fair and equitable split in your individual circumstances.
Finally, ensure that superannuation is included in the financial settlement. It is a viable asset and for some individuals (for instance those earning little to no superannuation during the union) it is a necessary split for the person will less superannuation upon retirement. Superannuation may be split via Consent Orders or Final Orders. However, when it is transferred the recipient or beneficiary will not be able to take the superannuation as cash, it will have to be transferred into their superfund.
NOTE: Be clear about the types of financial orders and make relevant orders for each type of financial settlement/claim. However, if you muddle the types of claims all at once, then you are further challenging a judge or ex-spouse’s legal team to make appropriate claims.