You shouldn’t overlook superannuation in the asset pool when going through your separation.
In today’s world, superannuation, aside from the family home, is one of the most valuable assets an individual can accumulate during their working years. As expert divorce lawyers in Perth, we will be discussing how superannuation is handled in family legal property settlements as well as the concept of superannuation being split following separation or divorce.
Superannuation Considered Personal Property During a Property Division.
De facto couples living in Western Australia cannot separate their superannuation. Married couples divorcing in Western Australia may apply for superannuation division during property settlement negotiations.
Superannuation, as defined by the Family Law Act 75, is classified and is subject to division in any jurisdiction except WA.
De facto marriages in Western Australia are covered by the Family Court Act 2004. To date, they are not allowed to split their superannuation rights. Each party’s superannuation balance cannot be ignored.
How Do You Divide Superannuation from A Property Settlement?
In many property settlements, one party’s superannuation rights are “split,” and a portion of the superannuation of the other party is transferred to the other party.
The interest can be held in one fund or in another. For this superannuation to take place, there are certain procedural (and sometimes technical) requirements.
The following three methods are available to split superannuation benefits:
- A Financial Agreement
- A consent orders
- A Court Order is issued allowing superannuation entitlements to be split.
What amount of my ex-partner’s superannuation am I entitled to? / What amount of superannuation may I be required to pay?
You shouldn’t assume that your superannuation will be split 50/50 between your ex and you. This is not the default situation.
As with all matters relating to separation and property pool distribution, the Court will look at many different factors when deciding whether to split one spouse’s superannuation.
Although superannuation may sometimes be treated as part of the overall pool by the Court at times, it is more often treated as an individual because of its unique status.
The Court might, for example, consider the following:
- The relative sizes of superannuation funds
- The spouses’ total contribution to the pool of assets
- What are the reasons one spouse might not have significant superannuation? Is it because they stayed at home to raise their children?
- What phase of superannuation is the fund in?
Like with all property decisions, you should consider all factors when deciding whether to divide and, if so, how to split your superannuation. That includes the fundamental principles of fairness and equity.
How does Superannuation Split Work?
Splitting superannuation entitlements involves several steps.
- Considering your superannuation investment. It is essential that you get an accurate valuation for your superannuation interest. This is often done by simply obtaining a current statement from your fund.
- Negotiate the splitable amount. You should seek legal advice to ensure that any superannuation splitting is fair and equitable and will not be rejected by the Courts.
- Notify your super funds. The superannuation fund must be informed about any proposed superannuation division. The proposed agreement must be sent to the fund along with the proposal. They must then approve it, to meet the requirements of their respective trust documents and rules.
- You can apply to the Court for Orders. This can be done together via Consent Orders. However, if one or both of the parties do not consent to this, an application must be made for an Order by a Judge or Magistrate.
- Financial Agreement – If the parties decide to enter into financial agreements, instead of Court Orders, they will need a way to make sure the agreement meets all the requirements.
- The superannuation fund will require certified copies of the Court Orders and financial agreements that have been approved by the Court to determine the superannuation division.
When can I claim superannuation if there has been a separation or divorce?
If you were part of a marriage, you can apply to the court for a superannuation order within 12 months of the date that your Divorce Order became effective. If you don’t have a Divorce Order you can make a claim with a Perth divorce lawyer for superannuation at any time.
If you were a party to a de facto relationship you must apply for superannuation order orders to the court within 2 years of your separation.
If the Court finds that the applicant is in hardship, it may allow the spouse of a de facto or marriage to request leave from the Court to file a superannuation application after the 12-month limit.
What if I have a self-managed super fund (SMSF).
If you’re in a self-managed super fund (SMSF), you can also be a trustee. It might be more difficult if your ex-spouse is also a trustee and a member.
The responsibilities for trustees remain the same as with other super funds. Trustees must act in all members’ best interests and conform to super law.
Any SMSF trustee who fails to comply with superannuation laws, including those that apply in their area of responsibility, is subject to harsh penalties
- Eliminate another trustee from the decision-making processes
- Redeem assets requests are ignored. You can roll the money to another superfund that is compliant with regulatory requirements.
- Any action not permitted by Superannuation Industry Supervision Act 1993, (SISA) or the trust feed of SMSF is prohibited.
It is a good idea for the fund to be evaluated by an accountant.
Is Splitting Superannuation a Conversion to Cash?
Splitting your superannuation will result in an amount being taken from your account and rolled over into another fund under the name of your spouse. Your spouse cannot then access the funds unless the superannuation rules apply to them. It will likely be inaccessible if both of you are working.
De Facto Couple in Western Australia
For the purposes of property division between de facto spouses following separation, in Western Australia, superannuation cannot be considered as an asset.
De facto spouses cannot split or transfer superannuation in WA. Instead, it is considered in property settlements as a financial asset.
Get Legal Advice Early
If you have just separated from your spouse and need help with property issues or the division of assets (including superannuation), we recommend that you seek out legal advice from an experienced Perth family lawyer as soon as possible.
Property settlements can be complicated and stressful. Burra-Robinson Family Lawyers has a team of highly experienced Perth family lawyers who are specialists in property settlements. This includes drafting superannuation split agreements for Court Orders, or Financial Agreements. Contact the team at Burra-Robinson Family Lawyers today to get the trusted help you deserve from Perth’s expert family lawyers.