A breakdown of a marriage or de facto relationship often results in the parties dividing the assets and liabilities of the relationship between them.
Prior to seeking legal advice, parties sometimes forget to consider that often, superannuation is a large asset of the relationship.
Under the Family Law Act, Superannuation is treated as property, therefore it can be transferred or divided between the parties after their separation.
As superannuation is an asset of the relationship, both parties superannuation is included within the overall property settlement.
Superannuation considerations in family law
Below are some relevant considerations about Superannuation in the context of Family Law:
- Both parties entire superannuation balances are considered, regardless of whether the balance was acquired prior to the relationship or after the parties separated.
- Each party will not automatically keep their own superannuation as it is more likely than not that there would be a discrepancy in their values.
- It is not always split 50/50. The Court may decide that the assets of the relationship, including superannuation, should be apportioned to favour one party over the other.
- The Court makes these decisions based on what is “just and equitable”.
Is Superannuation the same as any other asset?
Superannuation is different to other property, such as a bank account, because it is held on trust. Therefore, the process to transfer or divide superannuation is slightly more complex.
How much superannuation will I need to pay my ex-partner or how much of my ex-partner’s superannuation can I receive?
In a long-term relationship, where neither party entered the relationship with large superannuation balances, the parties will likely retain their own superannuation, or calculate a split so that they both end up with an equal balance.
To equalise both parties superannuation, parties would add the values of their respective superannuation, divide that amount by two, and split one parties’ superannuation interest to pay the difference into the other parties interest. The effect is that both parties would receive an equal amount of superannuation.
However, sometimes parties or their lawyers can negotiate a settlement depending on that couples’ particular circumstances. Seeking legal advice when contemplating a property settlement is always beneficial so that you are left satisfied with your property settlement.
How should me and my ex-partner split our superannuation?
No two cases are the exactly the same when it comes to superannuation, so a superannuation split often depends on the circumstances of the relationship and the intentions of the parties.
However, for general guidance, the below steps would be considered if the superannuation split was before the Court:
- The superannuation would be valued. Your legal representative would contact your superannuation company so that they can provide an accurate reflection of the balance you hold in superannuation. This information would be shared with the legal representative for your ex-partner.
- The parties contributions to their superannuation will be assessed
- Multiple factors attributed of the parties would be considered, including; the age of the parties, their ability to earn income in future, whether the parties have young children and who holds the caretaking responsibilities of their children.
- The Court must make an assessment to consider that the superannuation split be “just and equitable”. In other words, the split must be fair and reasonable in the circumstances.
The above steps are what a court would consider if you and your former partner cannot come to an agreement amongst yourselves. Some parties agree to exclude superannuation from the asset pool, keep their own superannuation and focus on the other assets of the relationship.
If you and your former partner have agreed on a superannuation split:
If you and your ex-partner do manage to agree on a split of your superannuation, and you want the split reflected in an order from the Court, you must inform the superannuation fund trustee prior to filing the orders. The superannuation trustee must consent to the order being made.
Once you have filed the order, you must provide the superannuation trustee with a sealed copy, so that they can effect the superannuation split.
The process of superannuation splitting can be complicated. We highly recommend contacting a family lawyer to receive specialised legal advice tailored to your needs.
Email us at info@icaalaw.com or call us today to book your appointment on (03) 9842 4474.
Important Disclaimer: The content of this posted article is general in nature and for reference only. The content does not constitute legal advice. Legal advice about your specific circumstances should always be obtained before taking any action in your particular circumstances.
