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Superannuation like any other property in which a spouse has an interest is available for distribution between them.
When we talk about a spouse, this means the other party to a marriage or a de facto relationship whether heterosexual or same sex.
Because people cannot access their superannuation until they meet certain conditions such as age and retirement, the way superannuation is divided between spouses is by a “Splitting Order” which takes superannuation from one spouse’s fund and adds it to the other spouse’s fund or creates a new fund for that spouse.
A Splitting Order is the most common approach to dealing with superannuation. This occurs when:
- The total value of the superannuation is valued usually by one party sending a form (called a Form 6 Superannuation Information Request) to the superannuation fund which then values the superannuation in accordance with the law.
- The spouse parties then agree upon a division of superannuation or if they cannot agree, the court will decide.
- Once an Order is made either by a court or with the agreement of the parties (called a Consent Order), the Order is forwarded to the superannuation fund which then makes the split from one party’s fund to the other.
- It is important to understand that your superannuation fund must be given notice of the proposed split before any Order can be made.
- It is important to be aware that superannuation is valued when you divide your property not as at the date you separated.
- A division of property does not always have to include a Splitting Order. Sometimes one spouse might prefer to retain their superannuation intact and agree to the other spouse having more of the non-superannuation property. As an example, it may be preferable for one to retain a home where that spouse and the children may reside for example, whilst the other prefers to retain their superannuation, particularly if it is a valuable defined benefit.
Self-Managed Superannuation Funds
Splitting Orders can also be made in relation to self-managed superannuation funds.
In addition, decisions need to be made about whether the fund is to be wound up or whether one spouse will retain the fund. The party who is leaving the fund usually will have their interest in the fund rolled over (that is transferred to another complying fund of their choice). The outgoing spouse should also resign as a Trustee or as a director of a Corporate Trustee.
Until such time as the outgoing spouse resigns, it is important to understand that they have obligations to ensure compliance by the self-managed superannuation fund.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.