In a property settlement arising from divorce or separation, superannuation is usually included in the pool of assets to be divided between the parties.
In most cases, superannuation can be ‘split’ from one party’s fund to the other party’s fund as part of a property settlement. The ‘splitting payment’ is made either as a fixed amount or a percentage interest of the fund.
Whether or not your former spouse will be entitled to some of your superannuation depends on a range of factors and the circumstances of each relationship. Contrary to popular belief, your spouse is not automatically entitled to half of your super.
To understand whether it is appropriate or possible for there to be a superannuation splitting payment or ‘super split’ it is necessary to:
Once these issues are understood, if appropriate, each party’s superannuation interests will be included in the pool of assets to be divided between spouses in accordance with the usual ‘four-step process’ which would be applied by the court.
Just how much superannuation should split from one spouse to another will depend upon the circumstances of the relationship in question, including the length of the relationship and the financial and non-financial contributions made by each party.
Separated parties are required by law to provide each other with financial disclosure so each party has a full understanding of the other party’s superannuation interests. If a party ignores their disclosure obligations or refuses to provide their superannuation details, there are options for obtaining this information.
Since April 2022, parties to family law Court proceedings may be able to seek an Order from the Court that the Australian Taxation Office release details of all superannuation interests held by their former spouse.
If separated parties have interests in the same self-managed superannuation fund, it is essential that each party seeks independent tax and financial advice, as well as family law advice.
Parties will need to be satisfied about what assets are in the fund and what those assets are worth, as well as understanding the tax and other consequences of any proposed super split.
Where both parties are members of the same self-managed superannuation fund, it is necessary for parties to separate their superannuation interests as part of their property settlement. This is because the Family Law Act 1975 requires parties to end their financial relationships and have a ‘clean break’ from one another.
If you need advice in relation to your superannuation in a family law matter, please contact us.