One of the most common myths is the belief that superannuation is not included in the division of property for Family Law purposes.
In property settlements under the Family Law Act, superannuation is defined as “property” and therefore falls within the assets that will be considered by the Court when dividing property after the breakdown in a marriage or relationship. Because most people have superannuation this has a significant impact on most people’s property settlement.
The superannuation splitting law treats it as a different category of property and lets separating couples value their superannuation and split superannuation payments, although it is not compulsory.
There are a number of options available for separating couples, including:
- entering into a formal written agreement to split superannuation;
- entering consent orders to split superannuation;
- where an agreement can not be reached, asking the Court to split superannuation.
The Court can make orders “splitting” or “flagging” superannuation interests. A splitting order splits the superannuation interest so that some of it is given to the other partner. A flagging order prevents the superannuation fund paying out any money when the member retires until the Court has decided how the money should be paid. These orders must be adhered to by the superannuation funds.
If you are considering splitting superannuation, you need to get information to value the superannuation. A member of a superannuation fund or the partner of a member can apply to a superannuation fund for information about the member’s interest in the fund. The fund is then required to give this information provided the request complies with the legal requirements. This information enables the member’s interest in the fund to be valued and assists the parties and the Court to decide how the superannuation should be addressed in the property settlement.
It is important to understand that there are different types of superannuation and the law provides specific formulas for the valuation of each type of interest. For self-managed superannuation funds, for which there is no formula, a formal valuation by an expert may be required.
It is vital that you are aware that orders relating to superannuation interests can have significant consequences and it is essential that you understand the potential tax and financial planning implications. The law relating to superannuation in property settlement is complex and it is essential that you obtain advice from lawyers practising extensively in Family Law.
Call us on 8523 8400 or email us at email@example.com for a free first interview without obligation to discuss your property settlement.