Superannuation and divorce are two words you hopefully never need to hear in the same sentence. However, in the event of a separation, superannuation must be accounted for and split, along with all other assets.
Superannuation and Divorce
In this article we will discuss:
- What happens to your super during separation and divorce.
- How to process the splitting of super.
- What having an SMSF means for superannuation and divorce.
- Preparing for your financial future post-divorce through divorce financial planning.
What Happens to Super During Separation And Divorce?
Superannuation in divorce settlements is counted as mutual property and will be split along with all other assets during the divorce proceedings. These rules apply to marriage or de facto relationships, both heterosexual and same-sex across Australia, with one exception; they do not apply to de facto couples in Western Australia.
There are three possible ways to manage what happens with super during divorcee.
- You split the super via mutual agreement or court order. Splitting super does not convert it to cash. It must be deposited back into a superannuation account and cannot be accessed until you reach the age of preservation.
- Review super along with other assets but choose to leave each other’s accounts alone. Instead, the fair value from other assets may be exchanged.
- Defer the decision until retirement age. This is very uncommon but sometimes considered for those who have a defined benefit account. Your financial advisor can help you decide if this option is right for you.
The Process for Splitting Superannuation for A Divorce Settlement
The first step is to obtain a record of your ex-partner’s super account showing the current balance. You are legally entitled to contact their fund and request this information, though it must be done via this form from The Family Court Of Australia.
Seek legal representation or mediation to determine the percentages of the split; it is not guaranteed to be 50/50. Many factors will be taken into account such as who has primary care of any children and what the financial position of both parties will be post-divorce.
Notify the super funds via a copy of the agreement. This is to ensure you meet the legal conditions set out for super and to make sure you are adequately compensated.
What If I Have A Self-Managed Super Fund?
If you are the trustee of a self-managed super fund (SMSF) the division of superannuation and associated assets during divorce is more complex. This is particularly true if there are multiple trustees or beneficiaries linked to the SMSF.
While seeking qualified financial and legal advice, you must:
- Continue to comply with the Superannuation Industry (Supervision) Act 1993 (SISA) or the SMSF’s trust feed.
- Act in the best interests of all trustees and beneficiaries.
- Not exclude other trustees in the decision-making process.
- Not attempt to roll money to another regulated super account.
Make Time to Plan For The Future
The proper and fair division of superannuation in a divorce is hugely important to your financial future. Divorce is likely to be the single biggest financial event you face in your lifetime. It is vital that you seek sound financial planning advice around divorce and superannuation throughout the process. This can help you to ensure that your superannuation after separation and retirement is not negatively impacted.
At Collins Mann, we can help guide you through the complex process surrounding superannuation and divorce. We specialise in divorce financial planning and can work alongside your legal counsel to ensure your financial interests are properly represented. This can also help to expedite your divorce.
Following your divorce, we can strategise with you as to the best way to secure your financial future.
Why Choose Us For Your Superannuation and Divorce?
Collins Mann has over 40 years of experience in guiding clients through divorce and protecting their financial interests. We understand that divorce is an emotionally charged and difficult time and aim to make navigating superannuation and divorce easier. We provide perspective on your current and future financial situation helping to ensure that you have choice without compromise.
Contact the experts at Collins Mann today to discuss your options on 07 3251 3201
No matter how amicable your divorce is, it is important to seek financial and legal advice relating to the division of superannuation.