In Australia, superannuation is treated as property under the Family Law Act 1975. This means it can be divided between parties in a property settlement following the breakdown of a marriage or de facto relationship. Here’s a brief overview of how it works:
Treatment of Superannuation
Superannuation is considered a different type of property because it is held in a trust. It can be split either by agreement or by a court order. The split does not convert it into a cash asset; it remains subject to superannuation laws and is usually retained until retirement ages are reached.
Splitting Superannuation
There are a few ways to split superannuation:
- Formal Written Agreement (Binding Financial Agreement) : Both parties must instruct a lawyer who will sign a certificate stating that independent legal advice has been given. This agreement does not need to be registered in court. However, the cases show that these can be set aside if they are not properly prepared and executed.
- Consent Orders: Both parties agree to the terms, and the court makes an order to split the superannuation. This is, in our view, preferable, as they are less likely to be set aside. The costs are generally not too much different to a Binding Financial Agreement and a Registrar / Judge will consider whether the orders are just and equitable. It is also not necessary for both parties to be legally represented where there are consent orders as is required with a Binding Financial Agreement (although its recommended).
- Court Order: If the parties cannot reach an agreement, one can apply to the court for an order to split the superannuation and this will be subject to the normal processes, laws and rules of the Court.
Requirements for Transferring Superannuation
To transfer superannuation, the following steps are generally required:
- Valuation: Obtain information to value the superannuation. This involves providing specific forms to the trustee of the superannuation fund3.
- Superannuation Information Kit (a resource to assist you gain an understanding of what is required): Use the kit available on the court’s website to get the necessary forms.
- Legal Advice: Both parties should get independent legal advice about the agreement or court order from a lawyer with experience in Fam
- Court Application: If necessary, apply to the court to request superannuation information held by the Commissioner of Taxation.
- Procedural Fairness: needs to be provided to the Superannuation Trustee, to enable them to consider certain matters including the appropriate wording to be used in any orders. The Court will want to be satisfied that you have provided procedural fairness to the Trustee.
Call us on 1300557819 and we are happy to provide a no cost conference to discuss your needs and options.
