Superannuation – an asset with a difference
When dealing with the property settlement aspect of a divorce or de-facto relationship termination, it is usual to value assets so that an appropriate apportioning can be made.
Whereas assets such as houses, cars, boats and so on may be liquidated to cash as required, retirement savings such as superannuation may not. Superannuation needs to continue as superannuation. There are some exceptions to this, which require the superannuation to have reached a condition of release. This means that the fund member has reached preservation age, or is in a transition to retirement. There are additional circumstances beyond the scope of this article, but generally speaking, superannuation can be split, with some portion transferred to the other partner.
While the immediate thought might be that both parties end up with equal amounts of super, there may be exceptions. For example, one member may be approaching retirement and would prefer to retain super, whereas the other would prefer the assets of property and so on. It is the overall division of assets that matters, not purely the superannuation, which can be decided by the parties, with assistance from lawyers and the courts if necessary.
Timeframes
For a partner in a de-facto relationship to make a claim, they must have been in that relationship for a minimum of two years. An exception is where there is a child or children from the relationship, and in this case, a claim for superannuation may be made even if the relationship ends before two years.
A party to a marriage break-up must apply to the court for superannuation orders within twelve months of the date of the Divorce Order, or if no Divorce Order, then from the date of separation. In the case of a de-facto relationship, application must be made within two years of the date of separation.
Courts have the power to grant exceptions beyond these timeframes in a case of financial hardship, although this can be expensive and time-consuming, with no guarantee of ultimate success. Being aware of, and complying with these timeframes is of paramount importance.
Lock it in
Established protocols exist for application to fund trustees to obtain account valuations, be they industry, retail, or self-managed superannuation funds, even if they are of the defined benefit type. The next step is to make a claim.
Parties can lock in an agreement on division of superannuation by applying for Consent Orders to the Family Court, and once approved, this order becomes binding upon both parties and the trustee of the fund.
Another option is to make a Financial Agreement. For this to become binding, it is a requirement that both parties obtain appropriate independent legal advice.
In a perfect world
All this presumes that both parties have fully declared all assets, including superannuation, as they are required to do. But what if one party has an old account from previous employment, and has, for whatever reason, forgotten about it?
The last couple of years have seen moves to make superannuation accounts more electronically accessible between, for example, the Family Court and the Tax Office. This would ensure that parties do not miss out on their share of an account which was, perhaps conveniently forgotten. At this time, nothing definitive has resulted, but some resolution of this issue would be appropriate so that complete fairness is achieved. We hope so.
Family Law & Superannuation – we know it. It will be easier with sound legal advice from the experts. Owen Hodge Lawyers. We are here to help.