The short answer is yes! When a marriage or de facto relationship breaks down, superannuation (super) can be divided between spouse parties.
For the purposes of a family law property settlement, super is considered to be property and can be transferred between spouses as part of a property settlement. Whilst super is considered property, it has to be treated a bit differently from other assets when formalising a property settlement. This is because super is held in a trust. This means a super fund, whether the fund is managed by a third party organisation or is a self managed fund, will hold super on trust for the future benefit of a person or persons.
The nature of super being held on trust means that there are strict legal rules concerning access to super. The nature of super does not change just because it may be dealt with as part of a property settlement. This means that when the benefit of super is transferred to a former spouse or de-facto partner, they will not receive the super as a cash asset. The benefit of the transferred super will remain subject to existing super rules including that the super cannot be accessed until the conditions of release, such as retirement from paid employment, have been met.
In order for super to be divided between spouses, there a few requirements that need to be met. These steps put simply, are:
- You will need to obtain a valuation of the person’s super interest you intend to divide. The method of valuing a superannuation interest, will depend on the particular superannuation scheme being considered;
- You will need to document the proposed division. Super can be divided by way of an Order of the Family Law Courts (including Orders made by consent) or by way of a Superannuation Agreement. Whether the division is by way of an Order or Superannuation Agreement, most people will need the assistance of a legal advisor as the wording of any Order or Agreement is generally quite complex and dependent on the type of interest being considered. A Superannuation Agreement cannot be entered into without both parties having received independent legal advice;
- Once the proposed Order or Agreement has been drafted, a copy of the document will need to be sent to the relevant Superfund. The Superfund can require changes to the wording to ensure that the division is able to occur, pursuant to the particular rules governing the relevant fund; and
- Once the Order has been approved or made by the Court, or in the case of a Superannuation Agreement signed by the parties and their legal representatives, a copy of the Order or Agreement will then need to served on the fund or the fund administrator so that the administrative process of a super division can occur.
Division of super can be quite complex and is subject to a raft of legislative requirements. We recommend that you seek legal advice before making any decisions regarding division of superannuation and property settlement generally.