Superannuation in Family Law
When one thinks of property decisions made pursuant to the Family Law Act 1975, a vivid and clear image is summoned: orders for the division of property that will finally determine the financial relationship between parties. We’ve heard it a million times before – the wife gets the boat and the luxury car collection, the husband gets the house, the Swiss bank accounts are divvied up, and poor old Fido, the faithful family dog, gets split 50/50 (although if your lawyers are any good, we hope not!).
However, there is an aspect of property settlements that are often overlooked in the public sphere, and which can be very valuable indeed. Superannuation.
Superannuation splitting law treats superannuation as a type of property, with its own ascertainable value, and which can either be split between the parties, or be used to offset the division of other property of the relationship.
Since 28 December 2002, parties whose marriage has broken down have been able to split their superannuation interests in the same way as they could divide the property of the relationship, and since 1 March 2009, the same has been true for defacto partners (whether same or opposite sex).
Options for splitting super
Superannuation splitting can occur in a number of ways:
- An Order of the Family Court or Federal Circuit Court, imposed either by:
- Litigation, or
- A superannuation agreement, which is a financial agreement that specifically deals with a superannuation interest. Similarly to a Binding Financial Agreement, both parties to a superannuation agreement require separate independent legal advice, and their lawyers must each sign a certificate stating that they have provided independent legal advice. Once this agreement is made, the parties do not need to attend Court.
It is important to note that superannuation splitting law does not convert the property into a cash asset, and it is still subject to normal superannuation laws, such as the usual requirement for retainment until retirement age is reached.
Payment splitting does not usually create a new superannuation interest for the non-member spouse, however, splitting laws may permit the creation of a new interest for the non-member spouse. They may also permit a transfer or roll-out of benefits for the non-member spouse to another fund.