Separation can be a challenging and emotional time, particularly when it comes to financial matters or parenting. One key consideration for many separating couples is how superannuation is handled in separation agreements.
Understanding your rights and obligations regarding superannuation division is crucial to ensuring a fair financial settlement, whether you live in Brisbane, more remote Queensland or elsewhere in Australia.
This article will provide an in-depth look at superannuation separation agreements, the process of splitting super in divorce, and factors affecting asset division in separation.
What is a Separation Agreement?
A separation agreement outlines how assets will be divided between separating spouses or de facto partners, including existing superannuation entitlements that each partner has.
Superannuation is considered a form of property under Australian family law and can be split as part of a property settlement.
Unlike other assets, superannuation remains in the super fund and cannot be accessed immediately unless a party has met a condition of release, such as retirement.
This means that, although a super split may occur, the funds will continue to be subject to superannuation laws and preserved until eligible for withdrawal.
How is Super Split?
Superannuation splitting involves transferring a portion of one spouse’s superannuation balance to the other spouse’s super fund. This can be done through:
A Binding Financial Agreement (BFA): A legally binding agreement made before, during, or after a relationship that determines how superannuation and other assets will be divided.
Consent Orders: A court-approved agreement between both parties regarding superannuation and other financial matters.
Court Orders: If mutual agreement cannot be reached, the court may issue an order on how assets, including superannuation, should be divided.
Superannuation splitting does not convert the superannuation into cash; rather, it moves the agreed portion into the recipient's super fund, where it remains until retirement age.
It may be the case that parties agree to retain their respective superannuation entitlements and seek to achieve a fair outcome by re-balancing with other assets in the pool.
If you and your former partner agree on how to divide superannuation, you can formalise the agreement through one of the above noted methods. Generally, the steps include:
Obtaining Superannuation Information: Request details about your former partner’s superannuation balance by completing a Superannuation Information Request Form and submitting it to the relevant fund.
Negotiation and Mediation: Engage in discussions with your former partner to reach an agreement on how assets, including superannuation, will be divided. Formal mediation can be used if direct negotiations are unsuccessful.
Drafting a BFA: Engage legal professionals to formalise the agreement in writing. The agreement should specify the exact percentage or dollar amount to be transferred and will deal with all other assets and liabilities in the scheme of things to ensure both parties obtain a fair and equitable outcome.
Applying for Court Approval: If required, submit the agreement to the court for approval. If the agreement is part of a broader property settlement, the court will consider fairness before granting approval.
Factors Affecting Superannuation Splitting
Several factors influence how superannuation and other assets are split during separation, including:
The length of the relationship;
Contributions made by each party (financial and non-financial);
The age and health of both parties;
Future financial needs, including child care responsibilities;
The overall asset pool and liabilities of the parties;
Whether a party sacrificed career progression for family responsibilities.
The court aims to ensure a fair and equitable division, taking into account the unique circumstances of the separating couple. If one party has significantly more superannuation than the other, a split may be necessary to balance financial security in retirement.
Can a BFA dealing with Superannuation be changed?
Once a superannuation split is formalised through a binding agreement or court order, it is generally final and cannot be changed.
However, in certain circumstances, such as fraud, non-disclosure of assets, or significant changes in financial circumstances, a party may apply to the court to challenge the agreement .
Common Myths About Superannuation Splitting
There are several misconceptions about superannuation and separation, including:
Myth 1: Superannuation is Automatically Split 50/50 – There is no automatic rule for dividing superannuation equally. Each case is assessed based on individual circumstances.
Myth 2: Super Splitting Means Immediate Cash Access – Superannuation remains preserved under superannuation laws and cannot be accessed until retirement age unless specific conditions are met.
Myth 3: Only Married Couples Can Split Super – De facto couples also have the right to seek superannuation splitting orders under Australian family law. You do not have to be married.
Seeking Legal Assistance
Navigating the complexities of asset division requires professional legal guidance. A family lawyer can help you understand your entitlements, negotiate agreements, and ensure compliance with legal requirements.
An experienced lawyer can also assist with drafting the necessary agreements, mediation, and court proceedings (as applicable).
Superannuation is a significant asset in many relationships, and understanding how it is handled in separation agreements is crucial.
As it is subject to many rules preventing the entitlement from being readily accessible in many circumstances, it is essential to ensure accessibility and future needs are catered for in any asset division.
By seeking legal advice and formalising an agreement, separating couples can ensure a fair division of superannuation assets. Properly navigating the superannuation splitting process can provide financial security and clarity for both parties moving forward.
Need Legal Advice? Contact Drakos & Company Solicitors Today
If you require assistance with superannuation separation agreements or any other family law matters, Drakos & Company Solicitors can provide experienced legal guidance tailored to your situation. Contact us today for a consultation to discuss your options and secure your financial future.