Splitting superannuation under the Family Law Act

When a marriage or de facto relationship breaks down property can be divided between
the parties.
Superannuation is treated as property under the Family Law Act and as such can be
adjusted, transferred or divided between parties when a relationship breaks down.
Although it should be noted that de facto couples in Western Australia are not subject to
the superannuation splitting laws which is covered by the Family Court Act.
Superannuation is taken into account in the overall property settlement, and although it
is different it is subject to the same principles that apply generally:
 All superannuation is taken into account, irrespective of when it was acquired
(before or during marriage or after separation).
 It is not automatically subject to a 50/50 split. If the Court decides the assets
should be apportioned 60% to one party, and 40% to the other party that, can
also occur with their superannuation
 The court will decide based on what is “just and equitable”.
How is superannuation different?
Superannuation is different from other types of property because it is an asset that is
held on trust.
A superannuation trustee controls the assets of the superannuation fund and therefore
the process to transfer, divide or adjust superannuation is slightly different to the process
adopted for assets such as bank accounts, cars or real estate.
Options for splitting superannuation
Separating couples may either:
 enter into a formal written agreement to split superannuation; or
 seek consent orders to split superannuation; or
 if you cannot reach an agreement, seek a court order to split superannuation.
A formal written agreement requires that both parties separately instruct a lawyer who
must sign a certificate stating that independent legal advice about the agreement has
been given.
Once this agreement is made you do not need to go to court. The agreement is not
registered in court so you should be careful that each of you retains a copy.
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Even when an application is made to a court, it is possible to reach an agreement at any
stage, without the need for a court hearing.
The effect of splitting superannuation
Splitting does not immediately convert superannuation into a cash asset – it is still
subject to superannuation laws and is usually only accessible after retirement age.
A splitting agreement or order may permit the creation of a new interest for the nonmember spouse or a transfer or roll-out of benefits for the non-member spouse to
another fund.
New Interest
This means that when a payment from a superannuation interest becomes payable to
the member spouse (usually because a condition of release has been met, such as
retirement from the workforce) a certain amount will be paid to the non-member spouse
and the remainder will be paid to the member spouse.
Roll out
The Trustee of the member’s superannuation fund is effectively directed to divide and
transfer a portion of the member’s entitlement to the superfund of their spouse, who is
then free to deal with their remaining superannuation entitlements in accordance with
their own fund requirements.
What you need to do to split superannuation
Although the superannuation splitting laws do not require you to value the
superannuation interest before making a payment splitting agreement this would still be
a sensible thing to do.
If you are seeking a payment splitting order then the court is required to value the
superannuation interest.
Under the superannuation splitting laws you can apply to the trustee of a superannuation
fund for information about a superannuation interest, provided you have a genuine
reason for needing the information.
You can get information about the value of the superannuation interest, or information
that will enable you or the court to calculate its value. Along with other information that
might be of assistance when you are considering what might be done with the
superannuation interest.
Documents which will help you obtain this information are available in a Superannuation
Information Kit at your nearest family law registry, or from the Family Court of Australia
The superannuation fund may charge a fee for providing the information, and this is paid
when you send the forms.
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Valuing the superannuation fund
The information from the trustee may be enough to establish the value of the
superannuation interest. However, the valuation of some superannuation interests can
be complex and an expert may need to provide a further valuation.
Other things you should know
Most superannuation interests can be split. However, generally any interest that has a
withdrawal benefit of less than $5,000 is not split as it would not be cost effective.
It is possible to defer or postpone making a decision about how to split a superannuation
interest. In this case you can make a flagging agreement which prevents the
superannuation trustee from releasing or dealing with the superannuation entitlements
until a decision is made and the flag is lifted.
If you are seeking court orders about superannuation, you must tell the superannuation
fund trustee about the orders you are seeking. The trustee must have an opportunity to
attend the court hearing and object to the orders that you are seeking.
Once the superannuation order is made, whether by consent or after a hearing, it is
important to provide a sealed copy of the order to the trustee.
Dealing with superannuation in a property settlement when a marriage or de facto
relationship breaks down can be a complicated process, apart from the legal
considerations there may be tax consequences that flow from splitting superannuation
and the process can be difficult, confusing and time-consuming.
An experienced family lawyer can help make the application as efficient and accurate as
possible and will help you to understand the process and any information you receive.
If you know someone who may need assistance get them to call us on 02 9191 9293 or
email mail@rnlegal.org