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Superannuation and Family Law. Important 2022 Update

Superannuation and Family Law

In the past, obtaining information about a former spouse or partner’s superannuation assets in family court procedures required directly contacting the relevant super fund. This procedure also relied greatly on the former spouse or partner being honest and forthcoming about where their retirement funds were held. All of that is poised to change on April 1, 2022, when new laws go into effect allowing the ATO and the Federal Circuit and Family Court of Australia to share more information about an individual’s superannuation assets (FCFCOA).

Superannuation & Family Law

When a marriage or de facto partnership ends, Property can be divided between the parties, with superannuation splitting being especially crucial because superannuation is often a large asset for one or both parties. The process of splitting property, including super, is a property settlement.

When a relationship ends, superannuation is considered as property under the Family Law Act and can be amended, transferred, or divided between the parties.

Although it should be noted that de facto couples in Western Australia are not subject to the Family Law Act’s superannuation splitting regulations.

Superannuation is factored into the overall property settlement, and while it is unique, it is governed by the same principles that apply to all property settlements:

  • All superannuation is considered, regardless of when it was earned (before, during the relationship or after separation).
  • It is not subject to a 50/50 split by default. If the court rules that 60 percent of the assets should go to one party and 40 percent to the other, this can also happen with their superannuation.
  • The court will make its decision on the basis of what is “fair and equitable.”

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What makes Superannuation and Family Law Unique?

Because it is a trust-held asset, superannuation is distinct from other types of property.

Because a superannuation trustee is in charge of the fund’s assets, the method for transferring, dividing, or adjusting superannuation differs differently from the process for transferring, dividing, or adjusting bank accounts, cars, or real estate.

Superannuation Splitting Options

Couples who are divorcing have the option of:

  • Enter into a formal written agreement to split superannuation;
  • or obtain consent orders to split superannuation;
  • or, if you are unable to achieve an agreement, obtain a court order to split superannuation.

A formal written agreement requires both parties to hire a lawyer separately, who must sign a certificate declaring that they received independent legal advice on the arrangement. This document is sometimes called a Binding Financial Agreement.

You won’t have to go to court over the superannuation interest once this agreement is signed. Because the agreement is not filed with the court, you should make sure that each of you keeps a copy.

Even if a court application is filed, an agreement can be reached at any point without the requirement for a court hearing.

The Impact of Superannuation Splitting

Splitting superannuation does not turn it into a cash asset right away; it is still subject to superannuation restrictions and is typically only accessible after retirement.

A splitting agreement or order may allow for the creation of a new interest for the non-member spouse, as well as the transfer or roll-out of benefits to another fund for the non-member spouse.

This means that when a payment from a superannuation interest becomes payable to the member spouse (typically because a condition of release, such as retirement from the workforce, has been completed), a portion of the payment will go to the non-member spouse, and the balance to the member spouse.

The member’s superannuation fund’s Trustee is effectively directed to divide and transfer a portion of the member’s entitlement to their spouse’s super fund, who is then free to deal with their remaining superannuation entitlements according to their own fund’s obligations.

Need some information that relates to superannuation?

Why not book a free appointment now with a family law expert.

What you must do in order to divide your Superannuation

Although the superannuation splitting laws do not require you to value the superannuation interest before entering into a payment splitting agreement, it is a prudent practice.

The court will require evidence of the value of the superannuation interest if you are seeking a payment splitting order.

If you are obtaining information regarding a superannuation interest to assist you in the negotiation of a superannuation agreement or orders under the Family Law Act in connection to superannuation interests, you can apply to the trustee of a superannuation fund under the superannuation splitting provisions.

You can obtain information regarding the value of the superannuation interest, as well as information that will help you to determine its worth, as well as other data that may be useful when deciding what to do with the superannuation interest.

Documents to assist you in obtaining this information can be found in a Superannuation Information Kit at your local family law registry or on the Family Court of Australia’s website. Some superannuation funds require you to fill out their own form.

A fee may be charged by the superannuation fund for delivering the information, which is paid when the forms are sent.

Putting a value on the Superannuation Fund

The trustee’s information may be sufficient to determine the value of the superannuation interest. However, some superannuation interests, such as defined benefit interests, might be difficult to value, and an expert may be required.

What more should you know?

The majority of superannuation holdings can be divided. However, any interest with a withdrawal benefit of less than $5,000 is normally not splittable because it would be inefficient.

Making a decision regarding how to split a superannuation interest can be deferred or postponed. You can make a flagging agreement or request a flagging order in this circumstance, which prevents the superannuation trustee from releasing or dealing with the superannuation entitlements until a decision is made and the flag is withdrawn.

If you are seeking court orders concerning superannuation, you must inform the trustee of the superannuation fund. The trustee must be given notice of the court hearing so that he or she can oppose to the orders you are seeking. Even before filing consent orders with the court, the trustee must be provided a copy of the draught orders requested at least 28 days before the consent orders are filed, giving the trustee time to evaluate them and, if necessary, object to the orders sought. A trustee may respond with a request for a modification in wording but otherwise agree to the order being made.

It is critical to provide a sealed copy of the superannuation order to the trustee when it is made, whether by consent or after a hearing, so that they can effect the super split.

Book a Free Consultation with a Family Law Expert.

Considering a property settlement? Find out where you stand sooner rather than later.

What are the new Super Laws that have been made?

The new ‘Visibility of Superannuation Law,’ which took effect on April 1, 2022, will make it easier for persons involved in family law processes to have access to their former spouse or partner’s superannuation assets.

Parties can now request information on their former spouse’s superannuation directly from the FCFCOA. Within 7 days of receiving the request, the FCFCOA will receive this information from the ATO and distribute it to all parties involved, including their family lawyers.

Because of the nature of these kinds of inquiries, the more information you have about your former spouse or partner, the more likely the information returned by the ATO will be accurate and up-to-date.

If a super fund is discovered, the ATO’s response will contain the following:

  • The superfund’s name and the identity of the fund’s owner.
  • The ABN and USI (Unique Superannuation Identifier) of the Super Fund.
  • The most recent balance recorded, as well as the date it was reported.

In the event that the ATO does not have superannuation information for a certain person, a response stating that this is the situation will be supplied.

It is also recommended that you complete the Superannuation Information Request Form, or the Form 6 declaration, and submit it to the superfund once you have received the relevant information from the ATO about the superannuation funds held by your former partner or spouse so that you can be sure that you have a current and up-to-date valuation for all of the superannuation assets in question.

The information provided by the ATO, as with most information gathered for the purpose of family law cases before the FCFCOA, cannot be disseminated to third parties and should only be used for the purposes of the family law proceedings.

What does this signify for those involved in Family Law Matters?

The new measures are expected to increase transparency in family law procedures and result in more equitable and just results before the Court. It could also save parties time and money that would otherwise be spent chasing assets.

How We Can Help

At Mediations Australia, we’re early resolution focused. we have a team of family lawyers and mediators who can assist you in Canberra, Perth, Adelaide, Melbourne, Sydney, and all other locations in Australia, talk to one of our family lawyers today about super splitting and property settlements.

Book a Free Consultation with a Family Law Expert.

Considering a property settlement? Find out where you stand sooner rather than later.

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