When you separate, one of the things you need to do is divide the property which is owned by you and your spouse/de facto partner. Your superannuation is an item of property which can be split between you and your spouse/de facto partner.
In family law, your solicitor will create two ‘pools’ of property – one pool will contain the superannuation and the second pool contains all of the other assets. The reason why we separate the superannuation and the non-superannuation property is that superannuation is preserved until retirement (in most cases), whereas the non-superannuation property can be converted to cash to be used now.
There are 3 types of superannuation:
- Accumulation – this is the most common ie, industry and retail funds.
- Defined Benefit – these have a pension entitlement attached to them.
- Self-Managed Super Funds (SMSFs).
As with all property in family law matters, there are four steps which need to be taken to reach a settlement regarding superannuation:
- Compile an agreed list of the assets, debts and their values.
When it comes to superannuation, we need an up to date value of your entitlements. For an accumulation fund, this can easily be obtained from a recent statement or online via your member access. Defined benefit interests and SMSFs can be a little more complicated. SMSFs may require the input of your accountant. A defined benefit interest will need to be valued, after first obtaining information from the fund. There are costs associated with this and we can assist you to obtain a valuation. It is important to note that the assets, debts and super are valued as at the date you do your property settlement, not the date that you actually separated.
- Consider the contributions made by both parties.
Here we look at what each party brought into the relationship, what has happened during the relationship (and if there have been any lump sums received eg, inheritance and compensation claims) and post-separation.
- Look at the future needs of both parties.
Here we look at whether or not any adjustment needs to be made for the parties going forward. This could include adjustments for income disparity between the parties, or for the care of the children.
- Ensure that the agreement reached is just and equitable.
Once we have worked our way through the first three steps, we can determine your entitlements, usually expressed as a percentage. The percentage you are entitled to of the non-superannuation property is often different to the percentage of super you are entitled to.
Reaching an agreement as to the split of superannuation, and property generally, can be achieved in 3 ways:
- Negotiating with your spouse/de facto partner or their solicitor;
- Attend mediation with your solicitor present; and/or
- Commence court proceedings.
Any agreement reached can be drawn up as Consent Orders filed with the Court, or by executing a Financial Agreement. We can discuss with you which option best suits your requirements.
Notice must also be provided to the superannuation fund’s trustee prior to you signing any agreement to split super.
There are rules regarding superannuation splits and property settlements, so it is important to seek advice before entering into any property settlement agreement.