What you need to know about superannuation splitting in family law
The two biggest assets people have in a relationship or marriage are usually the family home and their superannuation. Superannuation is treated as property under the Family Law Act and can be divided when people separate or divorce. The division of superannuation is commonly called a superannuation split, or super split.
Do we have to split superannuation when we separate?
It is not compulsory to split your superannuation. Consent Orders for property settlement or a Binding Financial Agreement can divide a specific asset, such as the proceeds of sale of the family home, and can stipulate that each party will keep their own superannuation.
However, you have an obligation to declare all of your assets including superannuation in any family law property settlement process:
- In Consent Orders, the Application for Consent Orders form specifically asks for your superannuation information. It also asks for the proposed overall % division of assets including each person’s superannuation.
- In Binding Financial Agreements, non-disclosure of superannuation would be a red flag to any advising lawyer. Not disclosing a significant superannuation interest may be considered fraud and would open the door for any Binding Financial Agreement to be challenged down the track.
- Under the superannuation splitting laws, ‘an eligible person’ can apply at any time to the trustee of a superannuation fund for information about the superannuation interest of a member including it’s current value. An ‘eligible person’ includes the spouse and ex-spouse of the member.
- In contested court proceedings, either party can apply directly to the court to request the other party’s superannuation information held by the Australian Taxation Office.
Is superannuation treated as a cash asset?
You cannot receive superannuation as cash unless you are eligible for retirement. Once the superannuation split has been completed by the super fund, you will have your own superannuation account with that fund with the amount that has been split to you. You can choose to keep this new superannuation account or roll it into an account you already have with a different super fund. You will be able to access the superannuation that has been split to you when you retire.
How can superannuation be split?
Superannuation can be split either by:
• an Order of the Federal Circuit and Family Court of Australia or Family Court of Western Australia, or
• a Superannuation Agreement (a financial agreement that deals with a superannuation interest).
What sort of superannuation accounts can be split?
The most common superannuation accounts split in family law property settlements are:
- Accumulation account: Most superannuation interests are accumulation accounts and are relatively easy to value.
- Defined benefit interest: Defined benefit interests are more common to see for older public service employees and older Defence Force members. A defined benefit interest is more difficult to value than an accumulation account because the value is impacted by length of service and final average salary.
- Self managed superannuation fund: Self managed superannuation fund interests can be split under family law and are relatively easy to value.
What sort of superannuation can’t be split?
Most superannuation can be split. However, there are some superannuation interests that cannot be split. These are known as unsplittable interests. For example, superannuation accounts valued less than $5,000 cannot be split.
Valuing superannuation that is going to be split
The Family Law (Superannuation) Regulations provide the methods to value superannuation interests. The valuation method required will depend on the type of superannuation account (e.g. accumulation account, defined benefit account, self-managed super fund) and the phase the superannuation account is in (e.g. growth phase or payment phase).
How we can help
We provide cheap and easy Consent Orders and Binding Financial Agreements Australia-wide. You can add in a superannuation split to your Consent Orders or BFA and we will do all the work to get the super split completed.
