How superannuation is divided in a divorce is probably one of the most common question we get asked as family lawyers in Perth.
Let’s take a closer look at how superannuation is divided in a divorce in Western Australia and how this affects your separation and divorce process.
How Is Superannuation Divided In Divorce Or Separation?
Australian Family Law considers superannuation as an asset and in many cases, it forms a significant part of the asset pool that is divided between a divorcing or separating couple.
Where it differs from other assets, is that it’s held in trust and has to comply with the fund’s strict terms and conditions. This mostly means that no funds are released until they become due, usually at retirement age.
Until recently, separating de facto couples living in WA were not permitted to split their superannuation funds, but they were taken into account within the overall settlement.
Since 28 August 2022 separating de facto couples in WA are treated in the same manner as married couples across the whole of Australia. Read more about this law change here.
Is My Ex Automatically Entitled To Some Of My Superannuation When We Divorce?
The quick answer is often yes. However, superannuation splitting laws are extremely complex and numerous factors have also to be taken into account.
These may include the length of the relationship, the financial and non-financial contributions of each person, the age, health, financial position and earning capacity of each person as well as their individual and their children’s needs.
Accessing your ex’s superannuation and calcualting its value is a most complex procedure all on it’s own. Considering that superannuation is often a most highly valuable family asset, it makes perfect sense to obtain professional legal and financial advice when trying to split your superannuation fund with your ex.
How Can Superannuation Be Split?
There are several ways to split superannuation funds in the event of a separation or divorce.
Both parties can reach agreement, tailor-made to suit their own circumstances, with the assistance of their legal representitives. This can include a Binding Financial Agreement drawn up before, during or after the relationship has ended.
Both parties may agree to calculate the values of their superannuations and leave them untouched, but use them to offset or trade for any other asset of similar value.
If the parties cannot reach agreement on how their superannuations may be split, the final order will be handed down by the Court.
If both parties reach an amicable agreement, they can apply to the Court for a consent order, without needing to appear in Court. The Court will need to be satisfied that the agreement reached is just and equitable, and may reject it if it does not meet that criteria.
What Happens To My Superannuation Benefits On Separation Or Divorce?
So what exactly happens to your superannuation benefits on separation or divorce? Well that depends on whether you can access your funds yet, or not.
If you can’t access your super yet
If you’re at an age where you may not acces your super yet, you have the choice of:
- Flagging the policy, leaving your benefits untouched until you reach retirement. This usually only occurs when a superannuation fund member is close to retirement age.
- Processing the split now and transferring the agreed sum to your ex-spouse’s super account.
If you can access your super
If you’re in “preservation age” (55-60 years), you may access your superannuation. That means that your or your ex-spouse’s superannuation can be valued and split immediately, as per an agreement or court order.
What Are The Key Steps To Take When Dividing Superannuation In Divorce?
When dividing your superannuation following your divorce, your first step would be to notify the fund’s trustees that you intend to divide the funds and obtain an accurate vaulation. There may be a charge for this information.
If there is an agreement about how to split superannuation, you can file consent orders with the Court. Once the Court receives your consent orders, it will decide whether to grant them. Once the consent order is issued, you must provide a copy to the fund’s trustees to affect payment arrangements.
If there is no agreement, you would need to file an application to the Family Court along with the financial statement and affidavit setting out what you are seeking from the other party.
If you have reached a mutual agreement and want to do a Binding Financial Agreement, it must be drawn up by a family lawyer, stating exactly how the super funds will be split and also certify that you have both received legal advice.
How Long After A Separation Or Divorce Can I Make A Claim For Superannuation?
You can apply as soon as you have separated. Married couples have 12 months from the date of their divorce order to apply, while de facto couples must do so within 24 months from the date of separation.
Outside of these deadlines, the Court may in rare cases, allow late applications for superannuation, where one party can establish financial hardship. But even then, this process is extremely complicated and costly with no guarantee of success.
What Happens If One Of Us Has A Self-Managed Super Fund (SMSF)?
Self-managed super funds are managed by the members themselves and are even more complicated to value and process, without the assistance of a family lawyer and forensic accountant.
If you or your ex-spouse is a trustee of the fund, you need to act in the best interests of both parties and must include them in the decision-making process.
Changing Your Beneficiary Nomination
Changing all beneficiaries is a must-do whenever your marital status changes not only for superannuations but for wills and all other policies. Ensure that you notify the trustee of the fund of your beneficiary change.
Please note that this information is general in nature. As all families have unique circumstances, it is necessary to seek professional legal and financial advice to suit your specific needs.