Once a couple is separated, their superannuation (Super) is treated as property under the Family Law Act 1975 (Cth) (FLA) and the value of the couples’ Super benefits will be taken into account when determining a property settlement.
Super is held in trust and differs from other types of property, there are rules that govern when a party is able to access their Super funds. Laws regarding Super splitting apply to both married and de facto couples equally, except in Western Australia (WA).
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 (Regulations) provides different methods for valuing Super interests. The methods provided in the Regulations can be confusing, overwhelming or inappropriate for some Super interests.
This is why we strongly recommend you seek advice from an experienced family lawyer on the best valuation method available for your type of Super fund.
What factors are considered when determining the value 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 care of children of the relationship and the family home may also be considered. The Family Court 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
Splitting super does not necessarily convert the amount split into a cash asset. After the agreed amount has been transferred to a parties’ super account, it must remain there until a condition of release of Super is satisfied, for example preservation age reached, severe financial hardship or terminal illness.
In WA, further legislation to give effect to a scheme for superannuation splitting for parties in a de facto relationship is yet to be passed. Once this occurs, parties who have been in a de facto relationship will be eligible to seek Super splitting only if:
- they are separated;
- have not made a BFA; and
- there are no final Family Court Orders existing between them.
Married couples in WA are able to obtain super splitting orders which are subject to Commonwealth laws when determining a Super split.
Methods used to split superannuation
There are a few methods in which Super 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.
If there is an agreement between the parties, we recommend the parties’ file an Application for Consent Orders with the Federal Circuit and Family Court of Australia.
The Family Court will review the parties’ Consent Orders to ensure they are fair and reasonable. The Consent Orders will then be made into a Court Order, which means the orders are then legally binding on both parties.
If parties are unable to reach a mutual agreement on splitting their Super, the Family Court will determine the division of the Super split by considering a range of factors. This type of Court Order is known as a Financial Order.
As is clear from the above discussion, splitting Super can become a complex task. This is why we recommend seeking further advice and guidance from an experienced family lawyer.
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, some people may also discover that none of the valuation methods are suitable for their Super account. 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 strongly recommend you seek legal advice from one of our experienced family lawyers.
If you know someone who could benefit from this advice please suggest they contact us on 02 4322 0251 or email [email protected].