Hannah Clarke's killer rejected a "very good" offer of shared custody of their children before he took their lives in a car fire, a source close to the case has told the ABC.

Key points: A source told the ABC that Rowan Baxter rejected his lawyer's advice to accept 165 days of custody offered by Hannah Clarke

A source told the ABC that Rowan Baxter rejected his lawyer's advice to accept 165 days of custody offered by Hannah Clarke The source said Baxter wanted 50-50 custody and considered an expensive Family Court bid

The source said Baxter wanted 50-50 custody and considered an expensive Family Court bid When he died, Baxter was due to face court on charges of breaching a DVO

Rowan Baxter had earlier regained the right to contact his children under an amended domestic violence order (DVO) — but lost it just a week later over an alleged assault of his estranged wife.

A source close to Baxter in recent months said he had been in counselling for several weeks before he doused petrol over Ms Clarke and their children Aaliyah, 6, Laianah, 4, and Trey, 3, and set them alight.

Ms Clarke obtained the DVO against Baxter after he allegedly kidnapped their eldest daughter on Boxing Day.

The source told the ABC the 42-year-old had rejected his lawyer's advice in mediation and refused to sign a consent order offered by Hannah allowing him 165 days of custody a year.

"He had three days one week and four the next," the source said.

"He got the children back but... he wanted 50-50, that was it. It was his way or nothing."

"In my view, it wasn't about the children at all, he just couldn't move past the relationship with Hannah."

Baxter lost access to his children in early February when police charged him with breaching a DVO. ( Facebook )

Baxter considered expensive Family Court battle for custody

The source, who spoke on condition of anonymity, said Baxter's crime was "unforgivable" and those who had persuaded him to go to counselling were dismayed.

"I tried to help him as much as I could. But there's only so much you can do and I never could have imagined that he'd do what he's done," he said.

"I think any reasonable person would have done something about it, report it to the appropriate authorities, but there was nothing in my view that could have imagined him doing that."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 58 seconds 58 s Baxter plays a wrestling game with his three children.

A source familiar with Baxter's situation said he was contemplating taking his wife to the Family Court in an expensive bid for a more favourable custody arrangement he was "unlikely" to get.

The ABC has confirmed Baxter sought the advice of a specialist family lawyer but did not proceed to the Family Court.

Baxter regained access to the children late last month when the DVO was varied in the Holland Park Magistrates Court.

The couple then went to mediation, with Baxter refusing to sign the consent order which would lock in custody of the children.

Instead, he did sign a parenting agreement that gave him the same level of access but was not legally-binding, the source said.

But he lost access in early February when police charged him with breaching the DVO.

Hannah Clarke died in hospital hours after the attack that killed her three children. ( Facebook )

He allegedly assaulted Ms Clarke during an argument over photos of herself she saw in his car.

One of her friends has told the ABC that Baxter "tried to break" Ms Clarke's wrist, after she challenged him over the photos in front of the children.

In the meantime, he was allowed to speak to his children twice a week via Facetime video chat, the source told the ABC.

He said Baxter's lawyer had advised him to seek another mediation session and sign the consent order for shared custody.

When he died, Baxter was due to face the Holland Park Magistrates on charges of breaching the DVO.

He was found at the murder scene with burns and self-inflicted knife wounds.

The children died in the back seat of the car.

Ms Clarke died in hospital hours later.