In 2002 the Family Law Act 1975 (Cth) was amended so that superannuation entitlements would be treated as marital property. Like other marital property, the Family Court can alter superannuation entitlements following the breakdown of a marriage or de facto relationship.
It is common to refer to the alteration of superannuation entitlements as a ‘super split’. When a super split occurs a portion of a spouse’s superannuation fund is transferred to a fund in the other spouse’s name. It does not convert the portion of superannuation transferred into cash but rather it continues to be subject to the restrictions of superannuation funds and cannot be accessed until retirement age is reached.
Before a split can occur, the superannuation entitlements need to be valued which can be as simple as obtaining a superannuation statement. However, for superannuation accounts such as defined benefit accounts, you will need to seek the assistance of the trustee or an accountant to value the entitlements.
There are two methods for splitting superannuation:
- An order of the Court (which may be by consent or as the result of a court hearing);
- A formal written agreement.
If superannuation is to be split via an order of the Court, it is a requirement that the trustee of the superfund be given notice of the proposed order prior to the order being made by the Court. This is called providing the trustee with ‘procedural fairness’. Once orders are made by the Court, the trustee will also require a copy of those Orders with the Court’s seal before they affect the split.
It is important to note that there are some circumstances when a super fund cannot be split, and those include:
- When the super fund holds less than $5,000.
- Certain pension accounts.
Please note the answers provided are for your general information only and we ask you to call our office on 02 6331 2911 to obtain detailed legal advice for your individual situation.
Lauren Ryan | Family Law Solicitor