The results for how many clients are surprised that their superannuation is to be included in their property settlement is overwhelming. When someone has worked to set themselves up to retire, this is understandable. So when relationships breakdown and clients responses to advice provided are, “how can he/she touch it if I worked for it?” and “if he/she can take half of mine can’t I take half of his/hers?” it can be difficult for them to gage the underpinning principle of a settlement being ‘just and equitable.’
Why should each parties’ superannuation even be considered at all? Legislation allows for superannuation to be treated like property. The reality is that superannuation is an asset that has been accumulated and forms part of the overall asset pool in property settlements.
The Family Law Act now allows superannuation to be valued and split between couples, regardless of whether they are married, in a same sex or de facto relationship. Prior to 2002 this was not the case. Now, the law allows super to be split as long as it is as a result of a relationship breakdown and there are formalised orders or an agreement permitting this. It is important to be aware that this does not mean that if one party becomes entitled to part or all of the other party’s superannuation entitlements that they can access it at that point in time or receive it in cash form. The funds remain inaccessible until that party receiving the benefit reaches retirement age and the funds are rolled over into that party’s superannuation account or fund.
Factors to be considered
When working out a fair property settlement, including a superannuation split, the following needs to be considered:
- What assets, inclusive of superannuation did each party have at the commencement of the relationship?
- What is the value of the assets inclusive of superannuation now?
- What direct and indirect financial contributions have been made by each party to the property assets and superannuation?
- What direct and indirect non-financial contributions have been made by each party to the property assets and superannuation?
- What contributions have been made by each party to the welfare of the family constituted by the parties, including any contribution made in the capacity of home-maker or parent.
When looking at the above factors, the importance of superannuation may vary to an older couple wishing to retire in the near future, opposed to a younger couple. The above must also be taken into account where the Federal Government’s new regime of over 65s being able to make after tax contributions to their superannuation will take effect from 1 July 2018. Whilst the regime provides restrictions on the movement and amount of such funds, this may be an attributing aspect to how the superannuation is regarded as a contribution for the purpose of family law matters.
Further, complexities arise when there is a defined benefit superfund account involved or if the parties have a self managed superannuation fund, particularly where tax implications can arise. It is important to seek family law advice in these circumstances.
Talk to our accredited specialists
If you would like to discuss how your superannuation plays a role in your family law matter, contact our Parramatta office on (02) 8833 2500 or enquire on our Live Chat to speak to a Family Law Accredited Specialist.