In this edition of It Depends, senior associate Hannah Flanderka looks at whether superannuation is protected in a family law property settlement.
There is no automatic rule in Australia excluding superannuation from a property settlement. It always forms part of the property pool.
Couples can agree to each keep their own superannuation, or formalise a split through a binding financial agreement or court order.
If the matter goes to court, the outcome depends on the court’s five step process, weighing contributions and future needs.
Video transcript
Hello there. My name is Hannah Flanderka and I’m an associate in the family law team at Cooper Grace Ward.
In today’s video, I wanted to look at one of the common questions that we get. And sometimes people presume the answer, but it’s not always clear. Which is, is my superannuation protected in family law?
Now, many people assume superannuation is this far away thing that we get to in retirement and you can’t touch it. Nothing’s going to happen to it. That’s the end of the story. Other people will think, well, I’ve had you know, we’ve had this long relationship, we’ve both built up super over the time. Can that be factored into our property settlement? What happens with it?
The short answer is it depends on a number of factors. So, there’s no rule in Australia against superannuation being included in your property settlement, so it’s not going to be automatically protected or dealt with in any particular way.
In some countries, there is a presumption at law that you will divide it, for example, 50/50 or in some other way with your spouse when you separate. In Australia, there is no automatic entitlement for you to keep it. There’s also no automatic entitlement for the other party to receive a portion of it.
So, what does this all mean? In summary, there are a number of potential ways that you can deal with superannuation in family law. The standard rule is that it’s going to be included in the property pool, no matter what. So, the court will take that into account as well as all your other assets.
Now, it is open to you and your spouse, of course, to agree that you will simply each keep your own superannuation and then you just divide up the other assets or do with it what you may.
There is also the opportunity to what’s called, either through a binding financial agreement or through court orders, seek a superannuation split, which is effectively that one person, whether it’s a certain percentage or a certain sum, will allocate a portion of their superannuation to be split, or really, transferred from their member balance over to their former spouse’s member balance.
Now, there are various rules required to be able to effect that process. So, I’d always recommend that you get some family law advice about what’s involved, what do I need to do? So that when you actually go to effect the split, you’ve ticked all your boxes and you don’t run into any compliance issues. But, that is an option.
Now, that’s of course, assuming that you reach an agreement by consent. So, what happens if you are in the court system and it’s a litigious matter and you want to keep your superannuation and the other person wants a portion of it, or vice versa? Well, again, it depends.
The court will always have to take into account what we call the five step process. Which is, in summary, you have to identify what’s in the property pool, what have you each contributed to the relationship, which can be financial and non financial. And also what are your future circumstances and current circumstances? And does the court need to make provision for that?
So, that’s in essence, the process the court will go through to make a decision if there’s an issue in dispute about someone’s superannuation and what’s to happen with it.
Now, the court can do a number of things. One would be to order a superannuation split from one person to the other. If they’re satisfied that it would be considered just and equitable for that to occur.
Similarly, the court may decide that having looked into all the circumstances, that it’s appropriate that you each keep your own superannuation. And perhaps there’s a different outcome. For example, someone has to pay someone cash or something else gets divided or sold, etc.
So, that’s a bit of a crash course on some things to think about with superannuation. In summary, there’s no guarantee about whether you will have it protected or not. You can have a consensual process with your partner, but if you go through the court system, there’s a lot of factors the court will take into account.
Of course, if you have any questions about superannuation or a family law inquiry in general, please do not hesitate to contact me or one of our other lawyers in our family law team at Cooper Grace Ward.
