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, but it differs from other types of property because it is not immediately accessible by the parties. Superannuation forms part of the ‘pool’ to be split with your former partner/spouse.
We highly recommend engaging an experienced Brisbane Family & Divorce Lawyer to provide you with advice about the steps required to complete a superannuation split between you and your former partner.
Read on to find out how a superannuation split is carried out and some frequently asked questions in relation to superannuation splitting.
What is superannuation splitting?
Superannuation splitting laws enable superannuation held by one or both parties to be divided between the parties when a relationship breaks down. This is known as superannuation splitting.
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 from an experienced Brisbane Family & Divorce Lawyer as to which option is right for you.
How is superannuation split in a divorce?
There are four steps that the court looks like in working out how to split superannuation in a divorce.
Check out our Property Settlement Page for more information.
Can I split superannuation with my wife / husband?
Yes. You do this through a superannuation splitting order or through a Binding Financial Agreement.
What do you need to do to split your superannuation?
In Australia, 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 relation to individual circumstances to ensure that your agreement is equitable to both of you;
- Notify the superannuation fund of your agreement – the Superannuation fund who is affected by the agreement must be provided with a copy of the superannuation splitting agreement and the superannuation fund must approve the agreement before it can be signed and legally formalised.
- Jointly apply to the Court for a consent order to split the superannuation pursuant to the agreement – 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. that the fund has been notified of and agreed to the superannuation split;
- Provide the superannuation fund with the signed and finalised agreement after it is approved by the Court. The superannuation fund can then attend to carry out the superannuation split agreed.
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 may be slightly more difficult. A defined benefit fund should be properly valued prior to any advice being given as to splitting that interest. An SMSF may need to be valued if the fund is made up more than cash in a bank account.
A valuation of a defined benefit interest is done by obtaining a valuation from an Actuary. This is a simple, quick and low cost procedure, which is valuable in order to ensure that the value of the fund is accurate.
The first step to valuing an SMSF involves obtaining information from the accountant who manages the Fund as to the assets, liabilities and superannuation in the name of the SMSF. If there is real property owned by the SMSF, that property should be valued by a property valuer.
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. There are exceptions to this. For example, if the superannuation fund of the person whose superannuation is being split is already in payment phase, it can generally be accessed as cash and transferred to you.
Can any kind of superannuation be split?
Superannuation splitting is not possible for all superannuation interests. Each fund has their own legal requirements for a superannuation split and some types of superannuation interests are unsplittable. For example, most funds will refuse to split a superannuation fund if the 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 capital gains tax. You should obtain financial advice as to the impact and tax consequences associated with splitting an SMSF, prior to any agreement being reached.
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.
Can a de facto separation result in a superannuation split?
Yes. There are four steps that the court looks like in working out how much superannuation you might have to give to your former de facto partner.
Check out our Property Settlement Page for more information.
The division of assets (property settlement) following separation is often a very stressful and challenging process. Seeking legal advice from an experienced Brisbane Family & Divorce Lawyer is highly recommended 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.
You may also like to check out our useful Free Family Law Information Videos on various family law issues relevant to you, such as how a court determines your property settlement entitlements and how to formalise a property settlement agreement.
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 one of our experienced Brisbane Family & Divorce Lawyers
Remember, just because you and your ex partner are amicable does not mean it is unnecessary to legally formalise 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 (including those acquired by you after separation).
Let our experienced Brisbane Family & Divorce Lawyers help you to formalise an agreement in relation to division of your assets as quickly and cost effectively as possible so you can move on with your life.