Super splitting in a property settlement
“Superannuation splitting” provides separating couples with the option to divide their superannuation.
It’s important to note that splitting superannuation does not transform it into a cash payment – it remains governed by superannuation laws. In other words, the ‘split’ sees a transfer from one super account to another (where it can only be accessed after retirement).
Following separation, the superannuation of each member of the couple takes on particular significance as it often holds substantial value for one or both of the parties.
Superannuation is regarded as property, making it eligible for adjustment, transfer, or division when a relationship dissolves. While it follows the same principles as other assets, such as homes or vehicles, superannuation doesn’t automatically undergo a 50/50 split. The way that it is distributed (if at all) will vary based on the unique circumstances of each case.
Legal Framework for Superannuation Splitting
Superannuation can be split through either a court order from the Federal Circuit and Family Court of Australia, or through a superannuation agreement – a binding financial agreement specifically addressing superannuation interests.
Executing Superannuation Splitting Agreements or Orders
Superannuation splitting agreements or court orders operate as agreements or orders for payment splitting.
This entails that when a superannuation interest payment becomes due to the member spouse, a portion is allocated to the non-member spouse, without creating a new superannuation interest.
Interest splitting options may also be available, allowing the non-member spouse to independently access entitlements.
For Commonwealth regulated funds, specific regulations detail the circumstances and procedures for interest splitting.
Eligibility for Superannuation Split
Under the Family Law Act, individuals separated after a marriage or de facto relationship may be entitled to a superannuation split. The 2-year rule for de facto relationships may be waived if there are children involved or if substantial contributions were made.
Information on Superannuation Value
Eligible individuals, such as the member, spouse, legal representative, or someone intending to enter a superannuation agreement, can apply to the trustee for information about the superannuation interest. Declarations of genuine need and specific purposes must accompany such requests.
Unique Characteristics of Superannuation
Superannuation differs from other property types as it is held on trust, managed by a trustee. Options for splitting superannuation include formal agreements, consent orders, or court orders, each of which has distinct processes and requirements.
Valuing Superannuation for Splitting
Though not mandatory under superannuation splitting laws, valuing the superannuation interest before reaching an agreement or court order is advisable.
Courts require evidence of value when processing payment splitting orders.
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