- Under the Family Law Act 1975 (Cth) superannuation is categorised as a type of property and therefore, must be considered when splitting the property pool.
- When split, superannuation will not become a cash asset but will usually be retained by the super fund until you reach the retirement age.
- A superannuation spilt can be dealt with as a part of the property settlement or as a standalone agreement.
When parties to a de-facto relationship or marriage split, the property that was acquired during the relationship must be divided between the parties. The percentage of the property pool that each party will receive is dependent on numerous factors including their financial and non-financial contributions to the relationship.
Superannuation that is accrued throughout employment will be considered property when splitting these assets between the parties. However, the Family Law Act 1975 treats superannuation as a different kind of property that is still subject to superannuation regulations and laws.
Generally, superannuation will be divided between the two parties on a percentage basis. As abovementioned, the percentage split will take into account financial and non-financial contributions. Therefore, if one party is the homemaker and is unemployed, their contribution to the maintenance of the home, parenting of the children etc. will be considered in the split.
However, in certain circumstances such as where the value of superannuation is so low that splitting it would not be cost-effective, a splitting order will not be available.
How is Superannuation Split?
The superannuation split can be made by a formal written agreement, consent, or court orders.
A formal written agreement requires both parties and their lawyer to sign a certificate stating that independent legal advice has been received. The agreement is not registered with the Court and thus, it is important that copies of the agreement are retained.
An Application for Consent Orders can be filed with the Federal Circuit and Family Court of Australia, where both parties have reached an agreement as to the percentage split. The application is to be filed with draft Consent Orders that will outline the agreement the parties have reached. Orders will then be made in chambers.
Before a superannuation can be split, a valuation must be obtained from the superannuation fund. The value of a superannuation interest can be ascertained by an eligible person making an application to the trustee. An eligible person includes:
- The superannuation fund member,
- A member’s spouse; or
- Any person who intends to enter into a superannuation agreement with the member.
The fund’s trustee must be informed of the Orders being sought. As the fund is a third party, they must be given the opportunity to object to the Orders.
Once the splitting Orders have been finalised, the trustee of the super fund should be provided with a sealed copy. Generally, the party receiving the benefit is responsible for providing the trustee with proposed and sealed Orders.
After an Order has been made, the amount split will typically be transferred into the other party’s existing superannuation fund as a lump sum or paid to a superannuation fund of their choice.
Superannuation flagging differs from superannuation splitting in that flagging restricts the trustee of the super fund from dealing with the interest until the Orders are lifted.
A flagging Order is commonly used when the value of superannuation is being assessed or is unknown. Generally, flagging Orders are sought when one party is nearing retirement age and will become eligible to access their superannuation prior to a formal agreement regarding superannuation being reached.
If the Court makes Orders, a sealed copy of these orders must be served to the trustee. Prior to the Orders being made, the trustee should be made aware of the Orders being sought.
A flagging Order requires the trustee to inform the Court when the interest becomes payable which then allows the Court to lift the flagging Order and the interest to be split in accordance with the Orders.
If the superannuation is being paid at the time of the property settlement, a party may wish to seek an injunction to suspend those payments until a settlement agreement has been reached.
The division of superannuation in a property settlement can be extremely complex regarding the options available and the percentage entitlements of each party. If you and your partner have recently split, are parties to a marriage or de-facto relationship, and wish to seek legal advice, the Coutts Family Law team is happy to assist you.
ABOUT LUISA GAETANI:
Luisa is a Partner at Coutts Lawyers & Conveyancers and head of our Family and Criminal Law divisions. Since being admitted in 2014, Luisa has practiced solely in the areas of criminal and family law. It is her sensitive yet pragmatic approach that has allowed her to develop a strong rapport and build trusting relationships with her clients. Should a client’s matter proceed to court, Luisa has the skillset and experience to assist her clients through this process and where required, will draw upon her network of barristers to further benefit her client’s outcomes.
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This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever to this blog, including all or any reliance on this blog or use or application of this blog by you.