Dividing Superannuation in a Divorce or Separation

Understanding Superannuation and Divorce

When a marriage or de facto relationship ends, one of the common questions we get asked is how superannuation will be divided. In Australia, superannuation is treated as property under the Family Law Act 1975, which means it can be split between parties as part of a financial settlement.

The rules around dividing super are specific and can vary depending on the type of super fund, the value of the account, and each party’s individual circumstances. Understanding these rules is essential to achieving a fair and legally compliant outcome.

Superannuation as part of the Property Settlement

Superannuation is not automatically divided when a couple separates. It forms part of the total asset pool, which includes property, savings, investments, and liabilities. The Federal Circuit and Family Court of Australia (FCFCOA) will consider superannuation as part of the overall settlement to ensure a just and equitable outcome.

The Court looks at factors such as:

• The length of the relationship
• Each party’s contributions (financial and non-financial)
• The future needs of each party (including age, income, and care of children)

Superannuation can either be split between the parties or offset against other assets, depending on whether it is fair, just and equitable to do so in the circumstances.

How Superannuation Splitting Works

Superannuation splitting can occur through:

Mutual Agreement
This is a written agreement between both parties that specifies how super will be divided. It must comply with formal requirements, including each person receiving independent legal advice from a Solicitor before signing.

Court Order
If an agreement cannot be reached, the Court can make a superannuation splitting order as part of the property settlement.

Once a super split is approved, the super fund transfers the specified portion to the receiving party’s nominated superfund account. The funds remain preserved until retirement and cannot be accessed immediately.

Valuing Superannuation

Accurately valuing superannuation is a key step in the process. The valuation method depends on the type of fund:

• Accumulation funds are generally straightforward to value based on the account balance.
• Defined benefit funds and public sector schemes may require an actuarial valuation, as these accounts are based on formulas rather than balances.

It’s important to obtain a Form 6 Declaration and Superannuation Information Form from the super fund to ensure the valuation meets the requirements of the FCFCOA.

Tax and Timing Considerations

Superannuation is usually taxed at a concessional rate, and splitting it does not create an immediate tax liability. However, different tax components within the fund may affect each party’s future entitlements.

Timing also matters. A superannuation split must be finalised within 12 months after a divorce is finalised or if you are in a de facto relationship, within 2 years of separation.

Superannuation and De Facto Relationships

The same laws apply to de facto couples in NSW, provided the relationship meets certain criteria under the Family Law Act. This includes relationships that lasted for at least two years or where the couple has a child together.

De facto couples can also enter into Binding Financial Agreements (BFAs) before, during, or after the relationship, which can address how superannuation will be treated in the event of separation.

Seeking Legal Advice

Dividing superannuation can be complex, especially where large balances, multiple funds, or defined benefit schemes are involved. Obtaining advice from an experienced Family Law Solicitor ensures the agreement complies with legal requirements and that your future financial security is protected.

Orman Solicitors in Sydney and Wagga Wagga, can help you:

• Identify and value all superannuation interests
• Negotiate and draft superannuation agreements
• Apply for court orders where required
• Ensure compliance with super fund regulations

Superannuation is often a significant asset in a marriage or de facto relationship. Understanding how it is valued and divided under Australian Family Law helps ensure a fair settlement. Independent legal advice is essential to protect your interests and achieve a secure financial outcome following separation.

Read Next: Spousal Maintenance after Separation

Key Takeaways

• Superannuation is treated as property under Australian Family Law.
• Super can be divided by agreement or court order.
• Accurate valuation is essential to ensure a fair division.
• Timing and compliance are crucial.
• Professional legal advice protects your financial future.