Is superannuation included in the calculation of who gets what in a relationship breakdown?
When partners separate there are many assets of the relationship that may create the relationship asset pool. This might include the family home, investments such as property and shares, savings and the like. It usually includes the superannuation entitlements of the partners.
On many occasions one partner will have a significant amount of superannuation that has been accrued due to his/her employment. Many times, there is a mistaken belief that the person is solely entitled to his/her superannuation to the exclusion of the partner. The Family Court considers superannuation a joint asset that the parties are equally entitled to if it has been accrued during the period of the relationship.
There are two types of superannuation entitlement:
- Accumulation Benefit
- Defined Benefit Scheme
Most superannuation entitlements are from accumulation schemes where the superannuation member statement for the end of the financial year is the value of the superannuation entitlement. The other type of superannuation benefit known as a defined benefit scheme is less common and the member statement may not reflect its actual value because the way in which the entitlement is calculated upon retirement or death.
If upon receiving financial disclosure from your partner you become aware that his or her superannuation scheme is a defined benefit scheme you should ask your lawyer to contact the trustee of the superannuation fund for an evaluation of the superannuation plan. There has been an agreement reached between the Family Court and the trustees of the major funds as to the appropriate mechanism to value a defined benefit scheme for the purposes of family law proceedings.
A note on self-managed superannuation funds
Many families now manage their own superannuation by way of a self-managed superannuation fund. The fund holds the family’s superannuation entitlements by way of property, cash, shares or other assets. Generally, the partners are both members of the self-managed superannuation fund and they may hold equal shares or shares in different portions depending on the terms of the fund.
All self-managed superannuation funds must be certified by an accountant at the end of each tax year. Certain documents are required for the fund and should be readily available from the fund’s accountant. If after separation you’re uncertain as to the value of the assets held by the superannuation fund you should ask your lawyer and accountant to review the fund’s financial documents to determine its value or the need to revalue the fund assets.
Superannuation splitting
Many people are unaware that superannuation can be split up and given to the other party by way of property settlement in lieu (instead) of other assets. For example, many individuals who have large superannuation funds will seek to either divide their superannuation with their partner, either equally or as a portion so they can take more of the cash from the sale of the matrimonial home or other assets. Transferring superannuation may also help a partner retain the matrimonial home. Another example is where partners who have insufficient superannuation for their retirement seek a property division that includes a superannuation splitting order that transfers some of their partner’s superannuation to their own superannuation account. These are just a few examples of how superannuation might be harnessed during a property matter.
There are many ways superannuation can be used whether it is a self-managed superannuation fund or a traditional superannuation fund that will allow for the wife’s superannuation to be transferred to the husband that may allow her to retain the former matrimonial home will give her more cash to buy a property.
Don’t trust the advice of friends, family and forums on the internet. Every situation needs a trained eye. Seeking comprehensive advice from an experienced family lawyer is valuable as it will be based on a genuine understanding of your legal entitlements in your unique situation. Good advice should take into account your goals and situation to give you options on how you may wish to divide your property, including superannuation, to give you the best financial platform from which to build your life.
Brendan Manning has a Master of Commercial Law and decades of experience assessing and advising people about their relationship breakdown. Brendan has a well-developed understanding of commercial issues, including complex business structures such as companies, trusts and family businesses. This helps him to effectively gauge the assets of a relationship, perform investigative procedures where necessary, and negotiate settlements in very difficult situations. When a dispute must go to Court, Brendan is more than able to take the pressure off and represent you professionally and expertly.
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