Divorce and Superannuation… what can you do?

As family lawyers, we are often asked the question ‘is my ex entitled to my superannuation’ or ‘do I have to split my superannuation with my ex?’

In this article, we will discuss the ins and outs of super splits.

Divorce and superannuation: What can you do?

In any property settlement following the breakdown of a marriage or de facto relationship, both parties are required to disclose the value of their superannuation entitlements. Such evidence typically includes:

• Most recent member statement for each fund you hold an account with
• Printout or screenshot from online member portal showing the current balance
• For an SMSF:
  • Recent financial statements
  • Details of the assets held
  • Trust deed, including any amendments
  • Bank statements
• For a defined benefit fund (eg. PSS, CSS, Military Super) additional information and a valuation may be needed

This evidence must be disclosed to the other party and, where proceedings are on foot or where Consent Orders containing a super split are sought.

Accessing your ex-partner’s superannuation information

Under superannuation splitting laws, you are entitled to request information from your ex-partner’s superannuation fund, including a valuation of their super interest, if the information is needed:

1. To properly negotiate a superannuation agreement, or
2. In connection with family law proceedings where superannuation is likely to be considered.

This is particularly useful if your ex-partner refuses to provide evidence of their superannuation entitlements.

To access this information, you must send a Superannuation Information Request (Form 6) along with a declaration and any required fee to the trustee of the relevant superannuation fund.

If Court proceedings are on foot, you or your lawyer can request superannuation information from the ATO by completing and submitting a form through the Commonwealth Courts online portal.

Is your ex entitled to your superannuation?

Superannuation is treated as property under the Family Law Act 1975 (Cth) and can be split between parties as part of the overall property settlement. It is considered a different species of property as it is held on trust for the member by the trustee of the super fund and is subject to preservation rules. Whether superannuation will be split, and in what proportions, depends on the circumstances of your case.

Superannuation is not automatically split 50/50. The Court must consider what, if any, split is just and equitable based on a range of factors, including:

• Whether there are children of the relationship;
• The length of the relationship and the period of fund membership;
• The value of super entitlements at the commencement of cohabitation;
• The value of preserved and non-preserved entitlements at separation and at the time of the hearing;
• Unique characteristics of the fund or the member spouse’s current or future entitlements.

Ways to divide your superannuation post separation

Superannuation can be split following the breakdown of a marriage or de facto relationship under the Family Law Act 1975 in one of the following ways:

1. By agreement pursuant to a Binding Financial Agreement
2. By Consent Orders filed with the Federal Circuit and Family Court. No Court appearance is necessary.
3. By Court Order, as determined by a Judge if you cannot reach an agreement.

It is recommended that you obtain legal advice when drafting Consent Orders that include a superannuation split. Obtaining legal advice is a requirement if you elect a Binding Financial Agreement.

Your lawyer will send the proposed orders to the trustee of the superannuation fund whose member’s interest is to be split, to allow the trustee to raise any objections or procedural issues. This is known as providing procedural fairness.

How does superannuation get split in a divorce?

Once a Court Order is made, or a Superannuation Agreement is executed, a certified copy must be served on the trustee of the super fund.

The trustee will divide the superannuation interest by transferring the allocated portion to an account in the non-member spouse’s name, either within the same fund or to a different fund nominated by that person. The member spouse retains the remainder of their entitlement.

If I split my superannuation with my ex, will they get the cash immediately?

Not necessarily. They can only access the benefit of the superannuation split once they meet a condition of release. This usually means reaching preservation age and retiring or meeting an approved financial hardship criterion. Until then, the split portion remains preserved in their superannuation fund.

What happens if you have a Self Managed Super Fund (SMSF)?

If you and/or your ex-partner are members or trustees of a Self-Managed Super Fund (SMSF), the same rules regarding superannuation splitting largely apply. However, the process can be more complex due to the structure and assets held by the fund.

Options for implementing a split in an SMSF may include:

• Rolling out member entitlements to separate funds;
• Dividing fund assets and allocating them between member accounts;
• Selling assets and splitting the proceeds (noting possible capital gains tax (CGT) implications).

You must continue to comply with your duties as a trustee, even during a relationship breakdown. Given the complexity involved, it is important to seek both legal and financial advice tailored to your circumstances. Contact our Family Law Team today for expert advice