Splitter Super After Separation
When a relationship breaks down one spouse need not lose the prospect of sharing in the benefits of their spouse's superannuation entitlements. Since 2001, the Family Law Act has treated superannuation as property and allows it to be divided between separating spouses once a relationship breaks down.
Where superannuation is built up over the course of a relationship, the Act recognises that both parties make contributions whether direct (through wages from employment) or indirect (through homemaker and parenting roles) so the benefits of the entitlement and the financial security for the future should be shared.
However, while the Act allows separating spouses and the Court the discretion to split superannuation entitlements, it is not mandatory when dividing assets. In fact the legislation requires a range of considerations to be taken into account by a Court or by separating spouses before superannuation entitlements are split.
These considerations include the value of the contributions made by the member spouse at the commencement of cohabitation, during the relationship and if applicable following separation, which when assessed will determine whether and how superannuation should be split.
Accordingly the size, if any, of a superannuation split will be determined on a case by case basis and there is no requirement for an equal split or any split at all, unless in the circumstances it is fair and equitable to do so.
Whilst the legislation allows separating couples the ability to value their superannuation interests and split them, it does not convert the superannuation entitlements into cash. Generally the superannuation will only be able to be accessed upon retirement age or otherwise in accordance with the terms of release of the fund, for example if a person is terminally ill, suffering financial hardship or permanently incapacitated etc.
To split superannuation entitlements you will need a Financial Agreement, Consent Order or Order of the Court. It is important that before a superannuation split is negotiated, the member spouse's interest is properly valued. A valuation can be obtained by either party submitting a request to the trustee of the superannuation fund.
The value of a member spouse's entitlement cannot always be accurately determined by referring to their last annual statement. In some cases a superannuation interest may need to be valued by an expert, so people should obtain legal advice upon separation to ensure that they receive an accurate valuation.
Once the Agreement or Order is made, then it will need to be served on the trustee of the superannuation fund to allow them to comply with the splitting order.
Spouses should be aware that the splitting order does not necessarily create a new superannuation interest for the non-member spouse. However some funds may allow this to occur or they may permit the transfer or roll over of the superannuation benefits for the non-member spouse to another fund. This information can be easily obtained by contacting the trustee of the member spouse's fund.
Finally because the value of superannuation interests can be significant, it is important that separating spouses obtain legal and sometimes financial advice in relation to their entitlements and any potential superannuation splits.