Many of our clients ask us what happens to their superannuation when they separate from their partner and divide their assets.
Superannuation has long been treated as 'property' within a family law property settlement.
However, it must be considered in a different way to other assets because it has limits to access. In superannuation language, it is ‘preserved’.
In our experience, there are usually two main outcomes for superannuation:
- Superannuation can be left alone (meaning that each party retains the super they already have); or
- Superannual is ‘split’.
Splitting superannuation usually involves moving from one spouse’s superannuation account to the super account of their former partner. For a split to occur, the trustee of the super fund where the money is coming from will need to receive formal documentation.
The formal documentation must be in the form of either ‘consent orders’ or a Financial Agreement under the Family Law Act. And in order to prepare these formal documents, the super fund trustee must be consulted regarding the wording used in the documents to describe the super split arrangements.
So, to move super money as part of a family law property settlement, formal documentation must be prepared which satisfies the trustee of the super fund that is to make the payment.
The usual form of a superannuation split (if it occurs) is for the respective balances of the parties to be ‘equalised’.
For example, if the husband has a balance of $100,000 and the wife a balance of $200,000 (a total of $300,000), this might be effected by the wife’s super fund transferring $50,000 to the husband’s super fund. This would result in each party having a balance of $150,000 after the split.
Importantly, money would not normally leave the superannuation system as part of this process: it would simply move from fund to fund.
Remember, everyone's situation is different. For advice that takes your unique circumstances into account, please get in touch with our experienced family law team, who are here to protect your best interests when negotiating separation.