Once a couple is separated, their superannuation (super) is treated as property under the Family Law Act 1975 (Cth) and the value of the couples’ super benefits will be taken into account when determining a property settlement. Laws regarding super splitting apply to both married and de facto couples.
Super is held in trust and this type of arrangement differs from other types of property – there are rules that govern when a party is able to access their super funds.
Super splitting can be a complex area of law and you should ensure you know exactly where you stand regarding super entitlements after separation or divorce.
Valuing your superannuation
The Family Law (Superannuation) Regulations 2001 provide different methods for valuing superannuation interests. The methods provided can be confusing, overwhelming or inappropriate for some super interests. We recommend you seek advice from an experienced family lawyer on the best valuation method available for your type of super fund.
If you want to obtain information about your super for valuation purposes, you will need to:
- Complete a Form 6 Declaration
- Complete a Superannuation Information Request Form
- Send both forms to the trustee of the fund
These forms can be found on the Federal Circuit and Family Court of Australia website. Your super fund may charge a fee for processing the forms. Your lawyer is also able to complete the forms on your behalf, which is recommended as family lawyers have experience in filling out Super Information Kits. This will ensure the forms are completed correctly at first instance, helping you save time and money.
What factors are considered when determining the amount of the superannuation split?
Financial contributions are not the only factor considered when assessing the value of a super split. Non-financial contributions such as the care of children of the relationship and the family home may also be considered. The Federal Circuit and Family Court of Australia may also consider the financial position of both parties after their divorce or separation when determining the value of a super split.
Splitting your superannuation
Before negotiations commence in relation to the splitting of super, you should speak to a lawyer who may help you place a “payment flag” on both parties’ super accounts. This will prevent any party from withdrawing money from the accounts before the accounts have been valued.
Splitting super does not necessarily convert the amount split into a cash asset. After the agreed amount has been transferred to a party’s super account, it must remain there until a condition of release of super is satisfied, for example, preservation age reached, retirement, severe financial hardship or terminal illness.
Methods used to split superannuation
There are a few methods by which superannuation can be split. The method applied will largely depend on whether both parties can come to an agreement on the amount of super that will be included in the property settlement.
Super may be split as part of a binding financial agreement (BFA). If your BFA did not provide for a super split, it is still possible to add a super agreement to the BFA after your relationship has ended. If there is no BFA in place and both parties have agreed to a super split, they can file an application for consent orders with the Court.
The Court will review the parties’ consent orders to ensure they are fair and reasonable. The consent orders will then be made into court orders, making them legally binding on both parties.
If parties are unable to reach a mutual agreement on splitting their super, the Court will make orders to determine the division of property including the provision for a super split by considering a range of factors.
Conclusion
Couples who are going through divorce or separation proceedings can feel stressed and overwhelmed, especially when it comes to property division. Super splitting is usually a complex area of property division, especially when parties cannot reach a mutual agreement.
There are various and complex methods of valuing and splitting super funds under the regulations. After the agreed amount has been transferred to a party’s super account, it must remain there until a condition of release of super is satisfied.
If you want to ensure you receive the correct amount of a super split, we recommend you seek legal advice from one of our experienced family lawyers.
If you or someone you know wants more information or needs help or advice, please contact us on (02) 4588 5955 or email [email protected].