Superannuation can be a valuable asset in the property pool. Depending on the type of superannuation, separating couples can reach an agreement to transfer some superannuation from one person to their former spouse or partner. To achieve a fair outcome, it may be necessary to have one person’s superannuation shared between the separating couple.
We look at some of the basic around how superannuation splitting can be achieved as part of a property division (or “property settlement”) between parties.
Types of "splittable" superannuation accounts
We can assist you to find out if the superannuation account is ‘splittable’.
These days many people have an account with a commercial fund called an “accumulation” superannuation account. If you check your super balance and there is a lump sum balance, a number which is growing with your super contributions and income ideally, there is a high chance you have an accumulation account. These are likely to be capable of being divided and we can easily transfer some super to a former spouse or partner.
If your superannuation interest is expressed as being indexed to a final rate of pay or regular pension payment amount, you may have a defined benefit interest. These can be more complicated to deal with as some are not splittable.
Self-Managed Superannuation Funds can also be split, but we will need to look at the assets and debts owned by the fund to be able to consider if the split can be easily achieved or whether there may be better options.
There are ways of finding out from your fund whether the super is splittable or not. We can help you with this potentially tricky issue.
Option #1 - Orders for super splitting
If you reach an agreement about property settlement, the agreement can be formalised as a “Consent Order”. This is a quicker and easy way to obtain an Order which reflects your agreement for property settlement between partners or spouses. The Court has the power to include Orders within your property settlement for a Trustee of a superannuation fund to transfer either a dollar amount, or a percentage, of a superannuation interest of one party to the other party.
However, you must first have provided the superannuation fund with ‘procedural fairness’. This is essentially up to 28 days notice of the proposed Order against the superannuation fund.
Option #2 - Superannuation Agreements
Parties can enter into a “Superannuation Agreement”. This can provide for the transfer of superannuation from one partner or spouse to the other in much the same way as an Order. While you don’t need to provide the superannuation fund with procedural fairness for an agreement as you would with an Order, it is sensible to do this to avoid any problems after the Agreement is signed.
We usually embed a Superannuation Agreement within a Financial Agreement.
A Superannuation Agreement alone will not deal with the other parties assets and liabilities, so we normally ensure our clients have a final and legally binding property settlement, which includes the superannuation split, by including a Superannuation Agreement within a Financial Agreement.
What happens after the Order or Agreement?
The Trustee of the superannuation fund must be provided with a certified copy of the Order or Agreement.
The Trustee will then take the necessary steps to effect the transfer of superannuation to the superannuation account nominated by the recipient party. The time this takes depends on the individual fund.
More questions or need help with super splits?
Call or contact us to discuss superannuation splitting by telephone or to book an Initial Consultation.
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