Divorce or separation can significantly impact your financial stability and future security. A crucial aspect of this financial rearrangement is the potential division of superannuation, commonly known as “super.”
But is super split 50/50 in a divorce? The short answer is not necessarily. In Australia, there’s no automatic entitlement for super to be divided equally (50/50) between parties.
The length of the marriage, the contributions made by each party, and their future needs are just a few variables that affect the distribution of super in a divorce.
Understanding Super Split in Divorce
Superannuation is treated as property under the Family Law Act, and its division upon divorce or separation follows a specialised process.
Importantly, splitting super does not entail cashing out but dividing entitlements, which can be transferred to another super fund or retained until retirement.
Key Takeaway 🗝️
Super splitting involves dividing entitlements rather than cashing out, ensuring that both parties receive their share according to legal guidelines.
Factors Influencing Super Split
Several factors determine how super is split during a divorce. These include a spouse’s non-financial contributions, such as homemaking and parenting, each party’s financial contributions to the marriage, the parties’ age and health, and any childcare responsibilities.
Each case is assessed on its merits, aiming for a fair and equitable division rather than an automatic 50/50 split.
Key Takeaway 🗝️
Various factors influence the division of super, highlighting the importance of a tailored approach to ensure fairness and equity.
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Legal Process and Agreements
Step 1: Reach an Agreement
- Objective: Parties should first attempt to agree on how their superannuation will be divided, preferably without court intervention.
- Discussion: This step involves open and honest discussions about the division of super, considering each party’s needs and contributions.
Step 2: Formalise the Agreement
- Binding Financial Agreement: If parties reach an agreement, it can be formalised through a binding financial agreement. Both parties must receive independent legal advice for this agreement to be valid, ensuring that each individual fully understands the implications. The agreement outlines how super will be split and is submitted to the super fund trustee for approval before it can be executed.
- Consent Orders: Alternatively, the agreement can be formalised through consent orders, which are submitted to and approved by the court. While legal advice is not mandatory for filing consent orders, it is strongly recommended to ensure that all legal rights are protected and obligations clearly understood. These orders are sent to the super fund trustee to approve and implement the split.
Step 3: Court Application (if necessary)
- Application for Superannuation Splitting Order: If an agreement cannot be reached, one party can apply to the court for a superannuation splitting order. This is usually part of a broader property settlement process.
- Notify and Involve the Super Fund Trustee: The super fund trustee is notified of the application and given an opportunity to object if the proposed split does not comply with the rules governing super funds.
- Preparation and Submission: Prepare necessary documentation and evidence supporting the claim for a fair division of superannuation. This includes financial disclosures and valuation of the super interests.
Step 4: Court Decision
- Hearing and Decision: The court reviews the application, considers the evidence, and decides based on fairness and equity. If the court issues a superannuation splitting order, this order must also be approved by the super fund’s trustee before it can be implemented.
Key Takeaway 🗝️
Reaching an agreement outside of court can significantly simplify the process of super splitting. However, court intervention is available if necessary to ensure a fair distribution of superannuation assets.
Key Role of Super Fund Trustee
Throughout the process, whether it is an agreement outside of court or a court-ordered division, the terms involving superannuation require the super fund trustee’s approval.
The trustee must ensure that the agreement complies with the Superannuation Industry (Supervision) Act and is permissible under the fund’s rules.
Impact on Future Super Benefits
The method of splitting super can affect the long-term retirement benefits of both parties. When making decisions about splitting super, it’s essential to consider the future value of superannuation interests.
Consulting with legal and financial advisers can provide insights into how best to protect your retirement benefits during the division process.
Key Takeaway 🗝️
Considering the future value of super interests is crucial in safeguarding retirement benefits for both parties.
Seek Legal Advice
While the division of super in a divorce is not automatically 50/50, the law aims to ensure a fair and equitable distribution based on the unique circumstances of each case.
Seeking advice from family law experts and understanding the factors that influence super split, the legal processes involved, and the impact on future benefits can help individuals navigate this complex aspect of divorce with greater confidence and clarity.
