What is a Superannuation (Super) Split?
The Family Law Act was amended in December 2002 to include super as property of the marriage (or now de facto relationship) and to provide for the making of orders or agreements dividing or splitting super interests and for a mechanism for their valuation.
How is the Super split?
Because super has so many different manifestations it is impossible to formulate an overall approach to be taken in determining the role either party’s entitlements are to play in the division of the assets. An experienced family law solicitor will be able to advise you of whether you can make a claim to your ex partner’s superannuation and if so the approximate amount you should be entitled to.
In many instances no splitting order or agreement will be requested, but a party’s entitlement will be adjusted by adjustment of other property. For example the family home might be transferred to the wife in which to raise the children whilst the husband retains his super and other assets if he prefers not to sell the home to get his cash share and prefers to keep his super intact.
What are the types of Super?
An accumulation fund -where the final benefit depends on contributions and earnings are straightforward and require no valuation -is readily the subject of splitting orders. You may have a defined benefit fund or an accumulation fund or a hybrid of both. Most people have accumulation funds.
However if the super is in the form of a pension that cannot be converted to cash at any time, then it can only sensibly be considered as a future needs or spousal maintenance factor in making an order in relation to other property, rather than part of the asset pie to divide up. There are instances however where agreements or orders have been made so that the fortnightly super payments have been divided between separated parties so that each get half of the fortnightly payments that were otherwise only payable to one of them.
When can you cash out your Super?
Super divided between separated parties is “rolled over” or split so that a credit is put into one party’s super fund from the other party’s super fund. Just because you are separated it does not mean you can actually get the cash out of your super fund to be able to spend it. In normal circumstances you would only be able to redeem or cash out your super if you had retired, were moving overseas permanently or had a disability to prevent you from working as certified by a number of medical practitioners. There are some exceptions eg: financial hardship provided you satisfy the super fund criteria. The criteria most funds have is more than just being unable to pay some bills: each fund is different however. If you are successful in a financial hardship application, many super funds will allow a withdrawal of up to $10,000 once a year to assist with the financial hardship. To find out if you are eligible you would need to contact your super fund and ask for forms/criteria for withdrawal of super based on financial hardship.
Superannuation and Property Settlements: always get legal advice!
Over the years, superannuation has become an area of real significance in property settlement matters and close attention needs to be given to its true nature and value and each spouses’ contribution both direct and indirect to its acquisition and the weight that might be given to it when the court is making an order for the division of property. People will often overlook the fact that a super split made in their favor can not only benefit them in their retirement, but may be needed earlier if they can cash it out under financial hardship. Whenever looking at your family law entitlement as a whole, superannuation should not be ignored, even if you agree that your ex-partner and you are to keep your respective superannuation funds; there may still be justification for a greater share of the rest of the property if each of you are keeping your own funds. If not sure, always get legal advice.