What You Need to Know About Superannuation Split in Divorce Proceedings

When a couple gets divorced or separated, splitting up their property can be a complicated and emotional process. One thing that can be especially scary is dealing with superannuation, which is usually one of the biggest assets a person has. Superannuation is a crucial aspect of the property settlement process following the end of a relationship, although it may not always be apparent.

We know how hard it can be to figure out the rules for splitting superannuation at Family Lawyers Mackay. Our team, led by Ian Field, an Accredited Specialist Family Lawyer, is here to give you clear advice on how to fairly split superannuation during divorce proceedings. We are here to ensure that your legal rights are protected and that the division of superannuation is carried out correctly, whether you have a traditional super fund or a more complex self-managed superannuation fund (SMSF).

What Happens to Superannuation in a Divorce?

People often think that superannuation is always split evenly in a divorce, but this isn’t always the case. Several factors influence the division, and the Family Court does not always order a 50/50 split. Instead, they think about these things:

• How long has the relationship been going on

• Each party’s financial contributions, such as income, investments, and superannuation

• Things that aren’t money-related, like taking care of kids and doing housework

• The future needs of each party, taking into account their age, health, ability to earn money, and the care of their dependent children

The property pool includes superannuation, but the Court will decide how to divide it up based on what it thinks is “just and equitable.” Ian Field at Family Lawyers Mackay can help you through these tricky situations and make sure that your superannuation division is fair and right.

Two-Pool Method vs. Global Method

When the Court decides how to split superannuation, it usually uses one of two main methods:

Two-Pool Method (One Asset at a Time)

The two-pool method treats superannuation as its own asset and divides it up separately from other assets, like the family home. This method is often used when there is a lot of superannuation involved. The Court may also use this method if one party has a much higher super balance.

A Global Approach

The global approach looks at all of the property’s assets as a whole, including superannuation. This method applies an equal or proportional share to the whole property pool, which includes all other assets and debts.

At Family Lawyers Mackay, we look at each case on its own to figure out which approach will work best for you.

Important Things to Think About When Getting a Divorce and Superannuation

When it comes to splitting up superannuation in a divorce, there are a few important things to remember:

1. Superannuation Is an Asset for the Long Term

Superannuation is a valuable asset, but it is not a liquid asset. The value may not be useful for either party right away because it can’t be accessed until retirement. If one side needs cash to buy a new house or pay off debts, this can make negotiations harder.

2. SMSFs Make Things More Complicated

If you have a self-managed super fund (SMSF), splitting the asset is more difficult. Members of SMSFs have control over how the money is invested because they are private funds. This means that the value of assets in an SMSF can change, and you may need expert help to figure out how much the fund is worth.

3. What It Means for Taxes

There are tax consequences to think about when splitting superannuation. If you need to sell assets like real estate to make the superannuation transfer easier, you may have to pay capital gains tax (CGT). Also, moving money from one super fund to another can also make you owe taxes.

We work closely with accountants and financial advisors at Family Lawyers Mackay to make sure that any superannuation split is done in a way that saves money on taxes.

Is the Superannuation Split in Half in a Divorce?

No, superannuation is not always split 50/50. The Family Court or Federal Circuit Court will only order a split that it thinks is “fair and just.” In some cases, one person may get more of the superannuation, while the other person may get a bigger share of the other assets, like cash or the family home.

Some of the most important things that affect the decision are:

• The length of the relationship: If the marriage lasts longer, the assets, including superannuation, may be split more evenly.

• Future needs: For example, if one person is getting close to retirement and needs their superannuation for financial security, they might keep a bigger share of the super fund.

• Contributions made: Contributions from both sides, whether they are financial (like earning money) or non-financial (like taking care of the house and kids), are also taken into account.

What About SMSFs, or Self-Managed Super Funds?

When you have superannuation in a self-managed super fund (SMSF), it is harder to split up. Members of SMSFs can directly control their investments, so the process of valuing and transferring them needs to be done with care.

Things to Do When Splitting SMSFs:

• Get Current Financial Statements: You need to know the exact value of the assets in an SMSF. You can get a general idea from financial statements from the last three years, but you might need to hire a professional valuer to look at some assets.

• Reorganize the SMSF: After the divorce, the SMSF may need to be reorganized to follow superannuation laws. For instance, one person might have to step down as a trustee, or a corporate trustee might be brought in.

• Tax Implications: When assets are moved from an SMSF, there may be tax issues like capital gains tax (CGT). It’s very important to talk to professionals to make sure you pay as little tax as possible.

What Do We Do If We Can’t Agree on the Superannuation Split?

If you and your ex-partner can’t agree on how to split your superannuation, you can take the issue to court. You can get a superannuation splitting order to make sure that your superannuation is divided up fairly and according to the law.

Court orders are legally binding, but it’s always best to try to work things out through negotiation or mediation first. The Court wants the parties to settle their case outside of court because it saves time and money.

A Step-by-Step Guide to the Superannuation Splitting Process

1. Get Superannuation Valuations
   You need to ask for information about the superannuation balances of both parties. If your ex-partner has an SMSF, you will need to give them the right financial papers.

2. Mediation or Negotiation
   You and your ex-partner can try to work out a fair way to split up your superannuation, and you might want to get help from lawyers or a mediator.

3. Write the Agreement
   A Binding Financial Agreement or Consent Order must be signed after an agreement is reached. You will need to go to court for a decision if you can’t come to an agreement.

4. Put the Split into Action
   The superannuation fund trustee will carry out the split by moving the agreed-upon amount to the non-member spouse’s super fund once the agreement is signed.

Things People Get Wrong About Splitting Superannuation

• “Super is in my name, so I don’t have to share it.”
  If you got super during the relationship, even though it’s in your name, it’s still joint property under Australian family law. It has to be taken into account when you divide your property.

• “Super is always split in half.”
  As was said before, superannuation is not always split evenly. It will be up to the Court or the parties to decide what is fair based on what each person has done and what they need.

• “Not important because I can’t get to my super.”
  Superannuation isn’t available until you retire, but it’s still an important financial asset that can affect your retirement and financial security in the future.

What Family Lawyers Mackay Can Do for You

When you get divorced, dealing with superannuation can be hard, but with the right advice, you can make sure that your super is split fairly. Ian Field and the Family Lawyers Mackay team are here to help you through the process by giving you expert legal advice that is specific to your situation.

We can help you with every step of the superannuation splitting process, whether you’re dealing with a regular super fund or a more complicated SMSF. We will work with you to make sure that the division of superannuation is fair and follows Australian law. This will help keep your financial future safe.

Call Family Lawyers Mackay at (07) 4847 0198 or visit Family Lawyers Mackay to book a consultation. We can help you get the best possible result in your divorce.

Frequently Asked Questions (FAQs)

How do you split up superannuation when you get a divorce?

A court order, a consent order, or a binding financial agreement can split up superannuation, taking into account each person’s contributions and future needs.

Is the split of superannuation always 50/50?

No, the Court will decide what is fair based on a number of things, such as how long the relationship lasted, what each person contributed, and what each person needs in the future.

Can I keep my retirement savings after a divorce?

Depending on your future needs, the total property pool, and negotiations, you might be able to keep a bigger part of your super.

What if I own an SMSF?

Splitting an SMSF is more complicated because it involves valuing and restructuring it. Legal and financial advice from experts is very important.

How long does it take to divide superannuation?

Depending on whether the case is settled out of court or goes to trial, the process can take a few months.

Can you cash out your superannuation after a divorce?

You can only get to your superannuation when you meet the requirements for retirement. You can’t cash it out right after the divorce.

Do I need a lawyer to split my superannuation?

Yes, getting professional legal advice makes sure the split is fair and legally binding.

After a divorce, can I get to my super?

No, you usually can’t get to your super until you turn 65, unless certain conditions are met.