Did you know that there are key considerations to factor in when it comes to your superannuation and family law? Superannuation is often one of the most significant assets in a relationship, but many are unaware of how it is handled during a divorce or separation. Read our blog to learn more so you can be better prepared.
Superannuation is a form of retirement savings in Australia, where employers contribute to a fund on behalf of their employees. Over time, these contributions, along with personal contributions and investment earnings, accumulate to form a substantial asset. Understanding how superannuation is treated in family law is crucial for anyone going through a divorce or separation. In Australia, superannuation is treated as property, making it subject to division under family law.
In Australia, superannuation is considered property under the Family Law Act 1975. (link to this act). This means that during a divorce or separation, superannuation can be divided between parties, just like any other asset. However, superannuation is unique because it is not accessible until retirement, making its division more complex. Not to mention there are many types of superannuation like:
Valuing superannuation is one of the first steps in the division process. The value of superannuation is typically determined by the fund itself, which provides a valuation known as a “superannuation balance”. This balance includes the total contributions and earnings up to a specific date. In some cases, an expert may be required to assess the value, particularly for defined benefit schemes or SMSFs.
Superannuation can be divided in various ways, depending on the circumstances of the parties involved and their agreement. Some of these ways include:
Superannuation splitting involves transferring a portion of one party’s superannuation to the other. This split can be a percentage or a base amount, and it can be agreed upon by both parties or determined by a court order.
In some cases, the division of superannuation can be “flagged,” meaning that the superannuation cannot be accessed or paid out until a specified event occurs, such as retirement.
Offsetting involves one party retaining their superannuation while the other party receives a different asset of equivalent value. This approach is often used when one party wishes to keep their superannuation intact.
When dividing superannuation, the court considers several factors, including:
*Note: In Family Law, the parties can contact the superannuation provider by submitting Form 6 Superannuation Information Form to inquire about the superannuation balance.
Please see Family Law Property Settlement
Contact Us – If you are facing a divorce or separation and need assistance with dividing superannuation, our experienced family lawyer is here to help. Call us on 03 8589 2762 or book your free initial 20-minute consultation.