When married couples separate, the Family Law Act 1975 sets out their rights and obligations as to financial matters. The legislation tells us the steps involved in dividing property between the separated married couple.
The first step in any property settlement is determining the asset pool, so that the assets, liabilities and financial resources of the parties are all taken into account and can be given a value.
Superannuation is property if you are married
Superannuation is treated as property under the Family Law Act 1975. This means that just like the matrimonial home which may be owned by the wife but may ultimately, as part of the division of property be transferred into the husband’s sole name, so too, superannuation can be dealt with in this way. It can be transferred or divided between the separated couple.
While superannuation is property, it differs from other property, such as a car or house, because it is an asset that is held in “trust” and cannot be accessed immediately. It is also an asset that is held by the “trustee” of the trust and any proposed changes to the superannuation, must be approved by the trustee of the superannuation fund. The trustee generally approves an application to split superannuation between the couple.
Superannuation is not property in de facto relationships
In Western Australia only, superannuation is not treated as property for family law purposes in de facto relationships. Instead, superannuation is treated as a financial resource that is taken into account when considering the overall property split between the assets of the de facto couple. Therefore, superannuation cannot be split between de facto parties upon separation.
Splitting superannuation
Since superannuation is property it can be split between separated (once married) couples just like any other asset.
This can be done by either:
An order of the Family Court:
- which can be made by consent;
- or by commencing proceedings in the Family Court and the Court ultimately deciding how the superannuation interest is to be treated.
A superannuation agreement (which is a financial agreements that deals with a superannuation interest):
- which requires both parties to obtain independent legal advice; and
- for the solicitor to provide a certificate stating that legal advice has been provided.
Splitting superannuation interests
A superannuation split can occur in a number of ways:
- interest split – the superannuation benefit is divided by specifying an amount that is to be paid to the non – member spouse.
- payment split – where an income stream payment is split between the couple.
If you go to Court
The Court will deal with the superannuation interest by making one of the following orders:
- a splitting order – where the Court specifies the manner in which the superannuation benefit is to be divided;
- a flagging order – this prevents the trustee of the superannuation fund from paying out that part of a member spouse’s splittable benefit until either the parties enter into a written agreement or the Family Court makes an order for the trustees to pay out the benefit. This type of order is usually made when the member spouse is close to meeting a condition of release or it is difficult to determine the value of the superannuation benefit.
Once the superannuation split has been agreed
The non-member spouse who is to receive a part of the superannuation benefit, can receive the superannuation payment in a number of ways:
- by having created a new superannuation account in their name only in the existing superannuation fund;
- by rolling over the superannuation benefit to a fund of their own choice;
- payment of a lump sum (if the non-member spouse has satisfied a condition of release or the member spouse’s benefit consist wholly of unrestricted non preserved benefits.
Further Information
If you require advice on superannuation splitting or any other aspect relating to the division of assets upon the breakdown of your relationship, please contact us to arrange an appointment with one of our experienced lawyers.
About the authors:
This article has been co-authored by Samantha Gomez, associate, and Steven Brown who is a director at Lynn & Brown Lawyers. Samantha is an experienced lawyer in family law, commercial litigation and Wills. Steven is a Director and has over 18 years’ experience in legal practice and practices in commercial law, business law and estate planning.
