Death and child provision. Do you understand what happens?

The effect of death on ‘Child Support Agreements’ and ‘Binding Financial Agreements’ can be a little complicated – but more importantly, can have unintended consequences for your Estate Planning.

Child Support Agreements

The Child Support Assessment Act is clear that death of a paying parent, or of a child, is a terminating event for a ‘Child Support Assessment’. However, the Act is silent on the effect of death on Limited and Binding ‘Child Support Agreements’.  The general consensus appears to be that the death of a paying parent also terminates a Child Support Agreement.

Binding Financial Agreements

On the other hand, a ‘Binding Financial Agreement’ is binding on the Estate of the parties to the Agreement, and therefore any lump sum or periodic payments due to be made under a Binding Financial Agreement will continue to be enforceable against your Estate after your death.  For this reason you should carefully consider how the Binding Financial Agreement is drafted, to ensure that you are consciously making the decision whether or not to continue your support after you have died – or whether you will continue support in some other way, e.g. through your Will.

Adequate provision

There is a misconception that a Child Support Agreement parallels a Binding Financial Agreement in relation to the death of a party. In our view, this is not the case. It is important that both payers and payees are aware that the death of a payer will terminate a Limited or Binding Child Support Agreement, and that the children and the surviving parent will be required to rely upon the Estate of the payer.  If the child or parent has not been provided for in the payer’s Will, then they may need to consider an application under the Inheritance (Family Provisions) Act 1972 to get a larger share of the payer’s Estate.

At the same time, if you are a payer under a Child Support Agreement, you may need to consider whether you have made adequate provision in your Will for your children, and potentially their other parent.

Family Court Orders

The Family Court can make a ‘child maintenance order’.

A child maintenance order may contain a provision that says it will end at a specified time, or when a particular event occurs. If so, the order ends at the specified time, or when the event occurs.

Ordinarily, under the Family Law Act, a child maintenance order will end.

  • If the child dies (section 66U);
  • If the payer dies, unless the order expressly provides for it to continue after the death of the payer (section 66U);
  • If the payee dies, unless the order expressly provides for it to continue after the death of the payee and nominates a person to whom those payments are to be made (section 66U);
  • If the child is adopted, marries or starts a defacto relationship (section 66V);
  • Where the child maintenance order for a child under 18, when the child turns 18 unless the order says that it will continue after that (sections 66L and 66T);
  • Where the child maintenance order for a child aged over 18, which was made to enable the child to complete his or her education, when the child ceases education (section 66VA); and
  • Where the child maintenance order for a child aged over 18, which was made because the child has a physical or mental disability, if the child ceases to have the disability (section 66VA).

If you need some help understanding how your child support obligations fit in with your Estate Plan or if you’d like to understand your rights to child support, call us now on 1300 654 590.

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