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Superannuation and Your Property Settlement

Superannuation Property Settlements Rockhampton

Separation or divorce is an unfortunate but common reality for many people. While we commonly assist people with queries about parenting arrangements (formerly known as “child custody” and “visitation”), spousal maintenance and child support, some of the more complex questions from our clients are about property settlement. In this context, one of the most frequently asked questions is, “what will happen to my/our superannuation?” The answer depends on your specific circumstances, but in this blog we outline generally how it can be dealt with in a property settlement.

Superannuation is regarded as property under the Family Law Act, which means:

  • All superannuation is included in the overall “property pool” available for division between parties (except those in de facto relationships in Western Australia). This is the case regardless of whether you or your former spouse obtained it before you met, during your relationship or after you separated;
  • Whether it is to be “split”, and how much is “split” to the other party, is determined on a case by case basis having regard to the relevant factors to be considered in each case (which includes an assessment of each parties’ financial and non-financial contributions and future needs).
  • It is not automatically divided equally. Nor is it necessarily divided in the precise percentage split as the rest of the asset pool, eg. If the Court decides one party should get 70% of the property pool and the other should get 30%, it does not automatically mean the superannuation is also split 70/30. The party keeping 70% may retain their own superannuation and other assets and may only require a small superannuation split from the other party to make up the difference.
  • Superannuation can be split either using a “base amount”, being a fixed sum, or a certain percentage of the superannuation interest with that fund.
  • The court’s determination as to whether superannuation ought to be split is based on what it considers to be “just and equitable” when regard is had to all the circumstances of the individual case.

Superannuation split from one party to another is not received as cash by the recipient. The recipient can either elect to have their benefit split into a “new interest” within the same fund or to “roll out” their benefit to a different superannuation fund of their choosing. Either way, the usual superannuation laws then still apply to that benefit such that (generally) it can only be accessed when the recipient reaches retirement age.

The other factor which distinguishes dealing with Superannuation from other types of assets is that, because it is held on Trust and controlled by the Trustee of the fund, you must afford the Trustee “procedural fairness” in relation to any proposed superannuation split. This requires parties’ to give the Trustee at least 28 days’ notice of the proposed split, during which time the Trustee can object to the proposed split.

The process for splitting cannot begin until you get the information needed to value the superannuation benefit. The value of your benefit is not always simply the balance on your Member Statement. Our Rockhampton family lawyers can help you obtain the necessary information from the Trustee to value the superannuation benefit (which includes a Form 6 Declaration and Superannuation Information Request Form).

There are different types of superannuation, and the rules for how to value each fund vary accordingly. Although the information the Trustee supplies may be enough to value some benefits, there are times when the process is more complicated and an expert valuation is required from someone such as an Actuary. Funds which use different valuing methods, for example, include self-managed superannuation funds and defined benefit funds.

In the event you and your former spouse/partner come to a property settlement agreement that involves a superannuation split, this will need to be legally documented to effect the split; either by way of a consent order or a financial agreement.

If you are unable to reach an agreement, you can make an Application to the Court seeking property settlement Orders which include a split of superannuation. Keep in mind that you can still try to come to an agreement after making a court Application and, if you reach one, an Order can be made by consent formalising your agreement without needing to proceed to a final hearing.

Superannuation can be a complex area of family law, so it is important to seek legal advice early if you are considering separating so we can answer your questions and assist you to formulate a plan.

It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.