Superannuation splitting is a common consequence of a relationship breakdown.
When a marriage or de facto relationship breaks down the property each party owns can be divided between the parties.
Superannuation is treated as property under the Family Law Act 1975 and forms part of the ‘pool’ to be split with your former partner/spouse.
Have you recently separated and would like information about how your superannuation is effected?
Do you need assistance to help split your superannuation with your former partner or spouse?
Read on to find out about superannuation splitting and a summary of the super splitting laws in Australia.
Superannuation Splitting Laws
Superannuation splitting laws enable superannuation held by one or both parties to be divided between the parties when a relationship breaks down.
There are three ways of splitting superannuation:
- A Financial Agreement;
- A consent order;
- An application to the court seeking an order for a superannuation split.
You should get legal advice about these options as to superannuation splitting.
What do you need to do to split your superannuation?
The process for superannuation splitting for most separated couples is as follows:
- Value the superannuation – It is very important that you obtain an accurate valuation of your or your former partner’s superannuation before it is split. If you are not the member of the superannuation fund you can obtain a valuation of your former partner’s superannuation by request to their superannuation fund using a form 6 Superannuation Information Request Form. There is usually a fee for obtaining this information;
- Negotiate an agreement – Discuss and agree with your former partner as to how your superannuation interests will be split. You should seek legal advice in respect of your individual circumstances to ensure that your agreement is just and equitable to both of you;
- Notify the superannuation fund of the agreement – the Superannuation fund who is effected by the agreement will need to be provided with a copy of the agreement with respect to the superannuation split and they will need to approve it before the agreement can be signed and formalised;
- Apply for a consent order to split the superannuation – This is done by way of an application for consent orders filed in the Family Court of Australia. Alternatively, the parties may choose to enter into a Financial Agreement instead. When a consent order is filed, an Affidavit must be done notifying the court of the current value of the superannuation interest as well as evidence that the super fund has been provided with ‘procedural fairness’ i.e. they have been notified of and agreed to the superannuation split;
- Provide the superannuation fund with the signed and finalised agreement – the superannuation fund can then attend to effecting the superannuation split agreed to by the parties.
There are three different types of superannuation:
- Accumulation account;
- Defined Benefit Account;
- Self Managed Superannuation Fund (SMSF).
Determining the value of the superannuation interest will vary depending on the type of fund.
If it is an accumulation fund, the value on the latest member statement will be accurate as to the value of the interest at at the statement date. Alternatively, you can make an application to the superannuation fund seeking information about the value of the superannuation interest.
A defined Benefit fund and an SMSF is slightly more difficult. The interest will have to be properly valued prior to any advice being given as to splitting that interest.
A valuation of a defined benefit interest is done by obtaining a valuation from an actuary.
A valuation of an SMSF is generally done by obtaining information from the accountant who manages the SMSF.
Frequently asked questions
Can a superannuation split be accessed as cash when it is transferred to me?
Generally no. Most superannuation benefits cannot be paid until the beneficiary (i.e. you) retires. This means you cannot access the funds straight away, rather the splittable amount is ‘rolled over’ to a new superannuation fund of your choice.
Can any kind of superannuation be split?
No superannuation splitting is not possible for all superannuation interests. The law says that some types of superannuation interests are unsplittable, for example, if your super fund contains less than $5,000.
Some SMSF’s are also difficult to split because doing so would have financial consequences, in particular, it may trigger the payment of tax. Even if those tax consequences are not immediate, it is still an important consideration for you in dividing an SMSF as to whether an asset is pregnant with CGT. You should obtain financial advice as to the impact and tax consequences associated with splitting an SMSF.
Do I need to have my superannuation valued before it is split?
Whilst you are not required by law to have your superannuation valued, it is advisable to obtain a valuation to make sure that it is attributed an accurate value. A failure to have your super or the other party’s super valued may result in an outcome that is not just and equitable to both of you.
The division of assets (AKA property settlement) following separation is often a very stressful and challenging process. Seeking legal advice from an experienced family lawyer is advisable so you can understand your rights and entitlements prior to entering into any agreement.
You can find more information about the process of dividing your assets following separation on our property settlement page.
If you have any questions about how your superannuation might be affected or any other matter relevant to the division of your assets following separation, get in touch with our experienced family law team.
Remember, just because you and your ex partner are amicable does not mean you should not formalise legally your property settlement agreement. Unless you formalise your property settlement agreement, you are not protected in the future from a claim by your former partner in relation to your assets.
Let us help you formalise an agreement as quickly and cost effectively as possible so you can move on with your life.