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Superannuation

Author: Anne-Marie Murphy

Publish Date: Thursday, July 26, 2007

Superannuation and your rights under family law

Since major changes to the family law provisions in December 2002, superannuation has become a significant asset of the parties to a marriage. Due to the inherent complexity of this area of law, parties are often confused as to their rights and entitlements to superannuation when a marriage ends in separation or divorce.

This article unravels some of the most pressing issues surrounding superannuation and family law.

What is superannuation splitting?

Following the amendments introduced by the Family Law Amendment (Superannuation) Act 2001, superannuation is now regarded as property and is treated like any other “property” in the divorce settlement. This means that just as property is divided between the parties upon divorce or separation, the superannuation of one party is now “split” between each party.

Are all forms of super split?

Most forms of super can be split in the event of a marriage breakdown. This includes all superannuation acquired at any time, not just the superannuation accrued during the marriage.

However there are some exceptions to the rule. Non-splittable super may include:

  • Payments made from a super fund on compassionate grounds;
  • Payments made from a super fund due to severe financial circumstances or ill health; and
  • Superannuation interests under $5,000.

The split does not just occur automatically and evenly between the parties. A super split only occurs once a formal, court approved agreement has been reached between the parties.

How do I reach an agreement on the super split?

Superannuation splitting occurs by an agreement between parties to a divorce settlement, which is then filed in court. It is important to note that you can enter into a superannuation agreement before, during or after a marriage.

It is also important that a family law expert drafts the agreement, in order to:

  • Protect the interests of all parties involved;
  • Secure the best outcome for you in the negotiation process;
  • Help calculate moneys specified in the agreement;
  • Enforce the agreement with respect to the rights and obligations of the trustee of a superannuation fund;
  • Ensure the agreement meets all legal requirements; and
  • Ensure the agreement is enforceable in court.

If an agreement cannot be reached, the Family Court has the power to order a super split.

What are the steps of super splitting?

The Family Court will evaluate the superannuation entitlements and allocate an amount from one party (member spouse) to the other (non-member spouse).

The Family Court has the power to decide the exact split of superannuation entitlements, as long as it is fair, just, reasonable and equitable under Family Law.

Factors considered include:

  • Responsibilities for children under 18; and
  • Preservation of economic units such as farms or estates.

Once the Court allocates the amount to the non-member spouse, the trustee of the superannuation fund is notified and makes the necessary amendments. Once these steps are completed, the relevant payments are made and finalised.

What if I want to split the super later?

Parties who wish to split the superannuation interests later, can direct the trustee of the superannuation fund not to distribute the super payments until a designated time or until certain events take place. This postponement of payment, or “flagging”, also delays the time for valuation and splitting of the superannuation interest.

Once you decide to “flag”, instead of making a “splitting order” the Family Court will make a “flagging order”. This then formally directs the trustee to “flag” the date when a payment to a member spouse is due to be made. The parties will then return to Court to decide who is entitled to what proportion of the available funds.

A flagging order can be made when the payment of the superannuation is close to the time when the other property is being divided between the parties. However t o find out if “flagging” would be appropriate to you, seek the expert advice of a family lawyer.

I am a non-member spouse, what are my rights?

If you are a non-member spouse, you are the party who will receive a super payment from the member spouse.

It is your right to find out all the relevant information about your spouse’s superannuation in order to protect your best interests. However, this can be a difficult process and legal advice is paramount.

A specialised family lawyer can help you understand your rights and obligations, including:

  • Which specific documents and information are relevant to your assessment;
  • How to make a declaration explaining why you need to access certain information;
  • The dangers of providing false or misleading information in regards to a division of assets; or
  • Any fees to the fund you may incur.

If you are a non-member spouse, speaking to a solicitor will help clarify the application process to best protect your interests and assets.

The changing face of super and you

Superannuation is a complex and ever-changing area of law. Coupled with family law, it needs the expert hands of a legal specialist to help clarify how recent changes may affect your circumstances. At Bells Lawyers, we provide professional, specialist advice to help protect your interests in a marital relationship. Speak to us today to help you negotiate and achieve a super agreement that best protects your future.

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