Child Support Settlement Agreement Example
Sophie Moench October 17, 2021 Agreement
Making a Child Support Settlement Agreement. One of the jobs of parents is to support their kids financially. This is something they have to do, even if they get separated or divorced, this is called child support. In many families, it means one parent pays the other parent to help cover the cost of caring for their children. Parents should think about child support as soon as they separate.
Many parents can figure out child support without going to court. They can do this on their own, or with the help of an expert. The Federal Government created some rules to help parents work out the amount of child support that should be paid. That's because kids do much better when they get the financial support they need. In this post, you will see two examples of how parents can work out the details of making their own Child Support Settlement Agreements.
After 7 year marriage, Gary and Sophie have just separated. They have two children. They know it's important to make a decision about child support right away. They want to avoid going to court, so they agreed to make their own Child Support Agreement. They have also agreed to go to a Family Justice Counselor to get help. Family Justice Counselors throughout British Columbia helped people with matters relating to separation and divorce in this scenario; Gary was the first to go for an appointment.
__Gary :I'm here because I want to Make a Child Support Agreement that my wife and I are separated.
__FJC :That's great, I can help you with that. Have you had any discussions about where the children will live?
__Gary : The children will live with both of us about the same amount of time. I am going to have them one week, and then Sophie will have them for the next week at her place. We've got room set up for them in both our homes, and we are going to share the holidays.
__FJC :That arrangement is called Shared Parenting.
__Gary :The Child Support Calculator we found on the Internet said, the parent who receives child support is the one who has the children the most amount of the time more than 60% of the time to be specific, but that's not our case.
__FJC : Well, when you share parenting, as in your case, you calculate the child support amount using the annual income of both of the parents. Did you happen to bring your income tax return for last year?, or any other financial documents?
__Gery : Here's my income tax return from last year. I made $25,000, and I think Sophie earned $20,000.
__FJC : Yeah, it says here on line one fifty that your income was 25,000 before taxes. So, Sophie will have to bring in her financial documents when she comes in.
__Gery :Couldn't Sophie and I just decide how to share the cost of raising the children?
__FJC :Absolutely, that is one way of doing it. If you can both agree. However, the Federal Government created the child support guidelines, so that parents know what they should pay according to the law. The amounts are based on what an average parent at each. Income level would usually spend on their children if the parents were still together.
__Gery : So, what's another way?
__FJC : Well, it's easier to explain using the Online Child Support Calculator. Normally, if kids live most of the time at one house. Then the other parent is the one who pays child support. But, since you are sharing the parenting almost 50/50, we can calculate the amount based on both of your incomes. So, we type in your Gross Annual Income 25,000. The number of children is two, and the province that you live in British Columbia, and then I click the look-up button. And there it is, according to the child support guidelines, you would pay Sophie $391/month, if you were the paying parent.
__FJC: Now, we're gonna do the same thing in reverse for Sophie. Although I will need to confirm her income later. We'll use the 20,000 just for numbers today. We enter her gross annual amount, the number of children and the province, $323 a month in child support. Then we split the difference. So, 391-323, there is 68 in child support. This is just a starting point, and it can be adjusted to accommodate your family circumstances.
__Gery: I can pay that.
__FJC: Well, $68 is just the basic child support amount for the regular household expenses, like food, clothing, shelter. You might also want to look at an amount for other expenses, such as the day care dentist, or any after school activities. These are called special or extraordinary expenses.
__Gery: I'd really like her son and daughter to continue with their activities, and my mom takes care of the children. So we don't have any daycare expenses.
__FJC: Do you know how much the other activities will cost?
__Gery: No, I'll have to come back with that information.
__FJC: But when you have that specific information, you answer, you could decide on how best to share the cost of those expenses.
__FJC: Another way you can use a formula based on your incomes. I'll give you an example. If I add Sophie $20,000 to your $25,000, we get a total of $45,000. Then we figure out, what proportion of that 45,000 each of you makes? So, her $20,000 of the total, gives her portion at 45%, and your portion is 56% of the total. So, that's the percentage of the cost that you should contribute to the special expenses.
__Gery: So, how would we calculate that last bit?
__FJC: Well, let's say that all the activities cost about $600 for both children. And we said that Sophie makes 45% of your combined income. So if we calculate the 45% of 600, that makes $264 that she will pay towards the cost of the activities. You make 56% of your combined income. So, 56% of 600 is 336. That's what you'll pay towards the cost of all of their extraordinary activities.
__Gery: That sounds manageable, I think Sophie and I are going to be able to work this without going to court.
__FJC: Based on the information that you gave me today, you would pay Sophie approximately $68/month in basic child support, and another $28/month towards the activities. Now you can agree to this informal arrangement if that works, or if Sophie provides her income documents to me. I can help you make a formal agreement.
With the help of a Family Justice Counselor, Gary learned how to figure out basic child support. He also learned one of the ways parents can share the cost of other expenses for the children. Gary and Sophie can keep the agreement informal, or go into the Family Justice Councilor together, to create a Formal Signed Agreement. If one of them has a change to their financial situation, they can make a new agreement based on the new situation.
Now, let's see how another couple work out their Child Support Settlement Agreement. Billy and Mary live in British Columbia, and have separated after 8 year common-law relationships. Their two children live mostly with Mary. Billy and Mary do not want to go to court for child support, because it would cost them extra time and money. However, they cannot agree on the amount of child support, Billy should pay Mary. They have each met with a Family Justice Counselor already. Now, they have an appointment for mediation. As a mediator, the Family Justice Councilor won't make decisions for them. But will act as a neutral person, who will help them to reach a decision they both can live with.
__FJC: Thanks for coming in. I'm going to help assist you to figure out a plan regarding your children. Bil, why don't we start with you.
__Billy: Well, I just started up a new business about two years ago, and I'm having trouble just trying to get it off the ground. I just can't have too many other expenses. I don't see why I should pay the required child support payments considering my situation.
__FJC: All parents have a legal responsibility to help pay the costs of raising their children.
__Billy: Sure, I want to help my kids. It is not like I don't love them. It's just that I don't want to pay as much as that Child Support Calculator on the Internet says. The children are living with Mary most of the time, so I know that makes me the paying parent. But, when I put into the calculator, when I earned last year. I thought, whoa, that's way too much. I just can't pay that right now.
__Mary: But, it's for the children mom. How can I support them on my own? I already got a lot of household expenses, because they live with me. While there is a daycare now that I'm back at work.
__Billy: Yeah, but now I have to rent my own place, and I can't predict how my business is going to do.
__FJC: It is often the challenge managing the finances after a separation, according to your statement of business activities last year you earned, $30,000 before taxes were taken off. So, when you look at the Government tables, for basic child support for two children. You would be paying Mary $463/ month.
__Billy: Yeah, but I still can't afford that amount. It's not like I'm raking in the money.
__Mary: Well, $463, it's not gonna even cover the daycare, or any activities are six-year-old ones to do.
__FJC: $463 is just the basic child support. Daycare expenses are what the guidelines call special, or extraordinary expenses. These expenses also include things like medical and dental bills, that are not covered by your work benefits plan. they can also include music lessons, or sports activities.
__Billy: But, I've just started a new business. When it takes off, I'll be making more, and then I can pay more.
__FJC: So, what happens in the meantime?
__Billy: What if i went to court. I could probably convince a judge that the child support guideline, amount is unreasonable in my situation.
__Mary: I don't think so. I read up on this. you'd have to prove that the child support amount would cause undue hardship, which doesn't mean it would make things difficult for you. But cause real hardship.
__FJC: In rare and specific circumstances, the child support table amounts were found to cause undue hardship. Only a judge can decide that judges expect parents to do everything they can to meet their legal responsibility towards their children.
__Mary: You made more last year than the year before, and I think you make more this year, don't you?
__Gary: I'm expecting things to go well, yes.
__Mary: Maybe you can cut some of your expenses, live more cheaply somehow, find other suppliers. It isn't like I want this money for myself. It's for Christine and Matthew.
__Billy: But, what about daycare, am i expected to pay that too?
__FJC: Typically, it is both parents who contribute to the cost of daycare. If you to decide it's also reasonable to pay for after school activities, maybe at a later date, you can write that into your agreement.
__Mary: I just thought of something, I claimed it care expenses on my income tax return. Does that have an impact?
__FJC: Yes, it does. I can estimate the amount of the tax credit, and that would lower the amount that Bil pays per month.
The Family Justice Counselor helped Billy and Mary workout basic child support. She also showed them, how parents can share the cost of other expenses for the children. She added their incomes together, then worked out the percentage that each of them earned. By putting their share into percentages, Billy and Mary found it easier to figure out, how much to contribute to the children's daycare costs.
__FJC: So, what do you think about today's discussion? You figured out that Bil would pay $463/month in basic child support, and another $400 towards the daycare expenses.
__Billy: This is going to be tough, but I will do it for the kids.
__FJC: And Mary, do you agree to pay the other $200/month for the daycare based on your income.
__FJC: So, this is your plan. If the circumstances change for either your income or your expenses, you can revisit these amounts.
__Billy: What happens if I make less one year, or Mary makes more money next year?
__FJC: Great question. If you earn less, then you can come back here to work out a new agreement, or you can figure out one on your own following the child support guidelines. You can also calculate, how much you should pay for the special expenses, by using the percentages that I showed you. Or you can do it yourself. Or later, I can help you formally change the document.
__Mary: I've heard that there is a program, they will organize the payments for us. They would move the money from Bil's account into mine every months.
__FJC: Yes, that's the Family Maintenance Enforcement Program. They make sure that payments happen, and they will keep track of what payments have been made, so that's never in question. If the payments don't happen, they do have the ability to enforce them.
__Mary: I don't think we need to do that right now.
__FJC: Okay, I will write this up as a draft, and I can mail it to you for review. When you're both ready, I can witness your signatures, and then assist you to file it at the court. If necessary, you can use a copy of that filed agreement to enroll in this program.
__Billy: Okay, I think, I have a better understanding how this works now.
__Mary: And so do I, Bil and I will talk about any financial changes in our situation at least once a year.
__FJC: That's great, and I'm really glad that you were able to work everything out today. Thank you.
Before mediation, Billy and Mary couldn't agree on how much child support BIlly should play. During mediation, Billy discovered that he could change their Child Support Agreement if his business suffered a big downturn. This made him feel more willing to pay the required amount based on his current income. He understands, the importance of maintaining the children's standard of living, as much as possible now that Billy and Mary are separated.
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