Is your Superannuation yours?
An often overlooked aspect in Family Law Property Matters is the Court’s treatment of superannuation.
Prior to 2002 superannuation wasn’t treated as Property in Family Law proceedings unless it was a self-managed super fund, the superannuation was vested, or it could be treated as a financial resource.
This often meant that for parties to Family Law proceedings to receive a just and equitable outcome one party may have ended up with superannuation but no realisable assets and/or vice-a-versa.
Recognising the deficiency in the existing treatment of superannuation, the Government passed legislation in 2001 which changed the characterisation of superannuation under the Family Law Act.
Superannuation is now defined as “property” within section 4(1) of the Family Law Act. This means that superannuation will form part of the matrimonial asset pool and the court is able to make adjustments to the superannuation interests of the parties.
This includes the power to prevent one party from transferring their superannuation elsewhere without a court order.
The court also has the power to make superannuation splitting orders. A superannuation splitting order generally allows the court to take the superannuation interests of one party and add it to the superannuation fund of the other party. This can include superannuation earned before, during or after the relationship.
It is important to note that access to superannuation of the other party is limited until the conditions of retirement in relation to the superannuation fund have been met.
Accordingly, despite the powers of the Court to make superannuation splitting orders, the Court is not compelled to exercise this power and will not do so, unless appropriate. However, superannuation splitting orders can often be valuable in circumstances where one person has worked more than the other during the relationship (and has therefore accumulated superannuation and the other hasn’t). Having regard to the future needs of the parties, a superannuation splitting order may be appropriate to accommodate for the non-working party to be cared for in their retirement.
Superannuation splits can be effected by way of consent order, financial agreement or by court order in contested proceedings.
However, there are very specific processes which must be followed in order to give effect to a superannuation split. Accordingly, it is always recommended that you get legal advice to help you understand your rights and responsibilities and how the law applies in your case.
So, if you are contemplating separation and the division of your assets, keep in mind that your superannuation may not ultimately be yours.