When a marriage or de facto relationship breaks down, it can be a stressful time and the task of separating finances can often add to the pressure.
Getting the right advice can help you make the tough financial decisions about your assets and superannuation.
Whenever there is a change to your financial situation, a review of your financial plan is necessary – even more so when a complicated matter like splitting superannuation is involved.
What is the first step?
Get expert advice
When a marriage or de facto relationship breaks down, many couples choose to separate their finances by going through a property settlement. In this process, getting financial and legal advice is essential.
Your property and possessions
A property settlement is the legal process of dividing a couple’s assets when they become separated or divorced. Assets may include the family home, investment properties, ownership in a business, valuables, investments and savings. A property settlement can be reached by mutual agreement, or where an agreement can’t be made, the court can determine the settlement.
Superannuation is also included as an asset that can be divided as part of a property settlement. All or part of a superannuation benefit can be transferred from one spouse to the other. This also applies to de facto couples (including same sex relationships) living together on a genuine domestic basis and relationships registered under particular State or Territory Laws. Couples have the option of drawing up a financial agreement on how superannuation is to be divided. This can be made at any time during the relationship.
What parts of super can be split?
Superannuation benefits (both accumulation and defined benefits), allocated pensions, complying pensions and annuities can all be split in a divorce or de facto relationship breakdown. Accounts with a balance of less than $5,000 cannot be split under Family Law.
The process of splitting superannuation can be broken down into six key steps:
- Request for information – A request for information is made by either spouse, regarding the details of a super benefit.
- Response to request – A response is made with the details of the super benefit.
- Put account on hold – A hold on some types of withdrawals can be placed on the account by agreement of the two parties or by order of the court. This is not essential but may be used as a precaution for settlements that can’t be reached immediately.
- Settlement – The couple, or the court, decide the settlement terms and the proportions of the benefit each spouse will receive.
- Splitting instructions – Instructions are sent to the trustee of the super fund, indicating the method and proportion of the split.
- Splitting the benefit – Part or all of the member’s superannuation is transferred to the non-member spouse.