Superannuation splitting is a common consequence of a relationship breakdown.
When a marriage or de facto relationship breaks down the property each party owns can be divided between the parties.
Superannuation is treated as property under the Family Law Act 1975, but it differs from other types of property because it is not immediately accessible by the parties. Superannuation forms part of the ‘pool’ to be split with your former partner/spouse.
Barton Family Lawyers are experts in facilitating the split of superannuation following separation. We have a reputation for being the quickest and most efficient at superannuation splitting whilst maintaining a five star standard of service for each of our clients.
We highly recommend engaging one of our experienced Superannuation Lawyers Brisbane to provide you with advice about the steps required to complete a superannuation split between you and your former partner, to enable the process to be completed as quickly and cost effectively as possible.
Read on to find out about divorce and superannuation, how a superannuation split is carried out and some frequently asked questions in relation to superannuation splitting.
Frequently Asked Questions (FAQ’s)
What is a superannuation splitting order?
Superannuation splitting laws enable superannuation held by one or both parties to be divided between the parties when a relationship breaks down. This is known as superannuation splitting.
There are three ways of splitting superannuation:
- A Financial Agreement;
- A consent order;
- An application to the court seeking an order for a superannuation split.
You should get legal advice about these options from our experienced Superannuation Lawyers Brisbane as to which option is right for you.
How is superannuation split in a divorce?
There are four steps that the court looks like in working out how to split superannuation in a divorce.
Check out our Property Settlement Page for more information.
Speak to one of our experienced Superannuation Lawyers Brisbane about how your superannuation is likely to be split in the individual circumstances of your case.
Can I split superannuation with my wife / husband?
Yes. You do this through a superannuation splitting order or through a Binding Financial Agreement.
Is my ex partner entitled to my superannuation?
Possibly. It depends on the individual circumstances of your case. We recommend that you book a clean slate consultation with one of our experienced Superannuation Lawyers Brisbane to obtain advice in relation to your individual circumstances.
What do you need to do to split your superannuation?
In Australia, the process for superannuation splitting for most separated couples is as follows:
- Value the superannuation – It is very important that you obtain an accurate valuation of your or your former partner’s superannuation before it is split. If you are not the member of the superannuation fund you can obtain a valuation of your former partner’s superannuation by request to their superannuation fund using a form 6 Superannuation Information Request Form. There is usually a fee for obtaining this information;
- Negotiate an agreement – Discuss and agree with your former partner as to how your superannuation interests will be split. You should seek legal advice in relation to individual circumstances to ensure that your agreement is equitable to both of you;
- Notify the superannuation fund of your agreement – the Superannuation fund who is affected by the agreement must be provided with a copy of the superannuation splitting agreement and the superannuation fund must approve the agreement before it can be signed and legally formalised.
- Jointly apply to the Court for a consent order to split the superannuation pursuant to the agreement – This is done by way of an application for consent orders filed in the Family Court of Australia. Alternatively, the parties may choose to enter into a Financial Agreement instead. When a consent order is filed, an Affidavit must be done notifying the court of the current value of the superannuation interest as well as evidence that the super fund has been provided with ‘procedural fairness’ i.e. that the fund has been notified of and agreed to the superannuation split;
- Provide the superannuation fund with the signed and finalised agreement after it is approved by the Court. The superannuation fund can then attend to carry out the superannuation split agreed.
There are three different types of superannuation:
- Accumulation account;
- Defined Benefit Account;
- Self Managed Superannuation Fund (SMSF).
Determining the value of the superannuation interest will vary depending on the type of fund.
If it is an accumulation fund, the value on the latest member statement will be accurate as to the value of the interest at at the statement date. Alternatively, you can make an application to the superannuation fund seeking information about the value of the superannuation interest.
A defined Benefit fund and an SMSF may be slightly more difficult. A defined benefit fund should be properly valued prior to any advice being given as to splitting that interest. An SMSF may need to be valued if the fund is made up more than cash in a bank account.
A valuation of a defined benefit interest is done by obtaining a valuation from an Actuary. This is a simple, quick and low cost procedure, which is valuable in order to ensure that the value of the fund is accurate.
The first step to valuing an SMSF involves obtaining information from the accountant who manages the Fund as to the assets, liabilities and superannuation in the name of the SMSF. If there is real property owned by the SMSF, that property should be valued by a property valuer.
Can a superannuation split be accessed as cash when it is transferred to me?
Generally no. Most superannuation benefits cannot be paid until the beneficiary (i.e. you) retires. This means you cannot access the funds straight away. Rather the splittable amount is ‘rolled over’ to a new superannuation fund of your choice. There are exceptions to this. For example, if the superannuation fund of the person whose superannuation is being split is already in payment phase, it can generally be accessed as cash and transferred to you.
Can any kind of superannuation be split?
Superannuation splitting is not possible for all superannuation interests. Each fund has their own legal requirements for a superannuation split and some types of superannuation interests are unsplittable. For example, most funds will refuse to split a superannuation fund if the fund contains less than $5,000.
Some SMSF’s are also difficult to split because doing so would have financial consequences, in particular, it may trigger the payment of tax. Even if those tax consequences are not immediate, it is still an important consideration for you in dividing an SMSF as to whether an asset is pregnant with capital gains tax. You should obtain financial advice as to the impact and tax consequences associated with splitting an SMSF, prior to any agreement being reached.
Do I need to have my superannuation valued before it is split?
If the superannuation fund is an accumulation account there is no need to value it and a paper statement will suffice to evidence the value of your super.
If you have a defined benefit fund, it is advisable that you have the fund valued by an Actuary to ensure that the value attributed to the interest is accurate. This is a quick and straight forward process and it only costs about $400 to do.
If you have an SMSF it may need to be valued, depending what it is made up of. For example, if it is made up of assets like real property, a painting etc it will need to be valued. It may not need to be valued if the SMSF is simply made up of shares or money in a bank account.
Can a de facto separation result in a superannuation split?
Yes. There are four steps that the court looks like in working out how much superannuation you might have to give to your former de facto partner.
Check out our Property Settlement Page for more information.
Requirements for Superannuation Splitting in Financial Agreements
Besides meeting the requirements for a Financial Agreement to be binding under the Family Law Act, under section 90XI of the Family Law Act, a superannuation agreement must meet two additional requirements that do not apply to consent orders, as follows:
- The operative time for a superannuation split to become binding on the trustee of the superannuation fund is four (4) business days after the Agreement is served on the Trustee: s90XI Family Law Act;
- The Superannuation Fund cannot act on a superannuation agreement unless it is satisfied that the parties are either separated or divorced. This is satisfied either by the parties serving the superannuation fund with either:
- a copy of the Divorce order;
- A separation declaration signed by one of the parties stating that they were married/in a de facto relationship, they have separated and, in the event that the Financial Agreement is a pre-nuptial agreement, it must state that there is no likelihood of cohabitation being resumed: s90XI and s90DA.
- If the member’s interest exceeds the low rate cap, being the eligible termination payment tax-free threshold ($215,000 in 2020/2021 and $210,000 in 2019/2020), s90XQ of the Family Law Act applies and a separation declaration must under s90XP also state that the parties have lived separately and apart for a continuous period of at least 12 months immediately before the time the declaration was made.
If the above requirements are not satisfied, the superannuation fund cannot agree to affect the proposed superannuation split and any provisions in the financial agreement which provide for the superannuation split are void.
Superannuation Splitting in Financial Agreements where separated less than 12 months
The effect of the above is that if you are entering into a Binding Financial Agreement which involves a superannuation split in excess of the low rate cap (in 2021-2022 the low rate cap amount is $225,000) it is void unless the parties have been separated and have been living separately and apart for 12 months before signing the separation declaration: s90XP and s90XQ.
The ‘low rate cap amount’ is an amount set by the Australian Taxation Office each year which sets a limit on taxable components for lump sum superannuation payments that receive a low rate of tax. The low rate cap amount is applicable to people who have reached the preservation age but are under 60 years of age.
The purpose of low rate cap amounts and the additional requirement under s90XP and s90XQ of the Family Law Act, is to reduce the potential for tax avoidance by preventing persons who have not retired from withdrawing their superannuation savings early due to the tax benefits of withdrawing superannuation below the low rate cap amount.
Service of Financial Agreement on Trustee of Super Fund
Before a superannuation splitting order is made, there must have been procedural fairness on the Trustee of the superannuation Fund, in a similar manner to consent order agreements: s90XZD.
This means that the Superannuation Fund must have received prior notice of the specific order sought and the opportunity to object to the order being made. This occurs by the superannuation fund being served with a copy of the draft order proposed to be made. The superannuation fund may require service of an amended order, if they are not agreeable to the terms of the original order served on them.
This is just a formality in most cases as superannuation funds have specific wording that they prefer before binding themselves to the terms of a superannuation splitting agreement.
The superannuation fund should be provided with at least 28 days to review and comment on the proposed superannuation agreement, prior to the superannuation splitting agreement being signed.
Importantly, the separation declaration which is attached to the Binding Financial Agreement must also be served on the Trustee. The separation declaration must be signed within the last 28 days, otherwise it will not be accepted by the Trustee of the superannuation Fund: s90XI.
Superannuation Lawyers Brisbane
The division of assets (property settlement) following separation is often a very stressful and challenging process. Seeking legal advice from an experienced Brisbane Family & Divorce Lawyer is highly recommended so you can understand your rights and entitlements prior to entering into any agreement.
You can find more information about the process of dividing your assets following separation on the following pages:
You may also like to check out our useful Free Family Law Information Videos on various family law issues relevant to you, such as how a court determines your property settlement entitlements and how to formalise a property settlement agreement.
If you have any questions about how your superannuation might be affected or any other matter relevant to the division of your assets following separation, get in touch with one of our experienced Superannuation Lawyers Brisbane. More information about our unique fixed fee approach can be found on our Fixed Fees Page.
Remember, just because you and your ex partner are amicable does not mean it is unnecessary to legally formalise your property settlement agreement. Unless you formalise your property settlement agreement, you are not protected in the future from a claim by your former partner in relation to your assets (including those acquired by you after separation).
Let our experienced Superannuation Lawyers Brisbane help you to formalise an agreement in relation to division of your assets as quickly and cost effectively as possible so you can move on with your life.