Suncorp recently released a report titled “Untying the Knot”1 which provides an insight into the “average” Australian divorce. Their research found that:
When it comes to divorce or settlement, the legal process of dividing assets is referred to as a Property Settlement. Typically a couple’s assets may include the family home, investment properties, investments, savings and sometimes business ownership.
Legally, superannuation is an asset that can be included in property settlement with all or part of a superannuation benefit able to be transferred from one spouse to the other in the event of a relationship breakdown. This also applies to de-facto couples, including same sex relationships, living together on a genuine domestic basis and relationships registered under a particular State or Territory Law.
A superannuation interest that is transferred as part of a property settlement must be made proportionally from tax components and will keep the same preservation status when transferred to an ex-partner. For example, if the superannuation account is 100% preserved, then it will remain 100% preserved when transferred.
There are two ways that a superannuation interest can be legally split being via a superannuation agreements or court order. A superannuation agreement is part of a binding financial agreement which provide couples with the option to split property without going to court. A binding financial agreement can be made at any time before, during or after a relationship has ended.
Binding financial agreements cannot, except in rare circumstances, be overturned by a court, however for an agreement to be binding, both members of the couple must receive independent legal advice prior to signing the agreement and must retain a copy of the agreement for their own records.
If a couple cannot reach agreement then they will generally need to seek a court order from the Family Court in order to split their assets. If the couple are in agreement but do not have a binding financial agreement, they can apply to the court to issue a consent order. If they cannot come to an agreement then the court will issue a financial order which will outline how assets are to be divided.
In all situations and even if the couple doesn’t go to court it is important to seek legal advice as certain parts of the asset and superannuation splitting process require both members of a couple to declare that they have received independent legal advice before settlement can take place.
The split of assets is not the only important decision that will need to be made in the event of a relationship breakdown. Other financial matters that may require attention may include the need to set a new budget, restructuring savings and investments, setting new goals and retirement plans, reviewing superannuation fund beneficiary nominations and revisiting Wills and other estate planning arrangements.
As always, it pays to seek professional help. Counselling, legal advice, financial planning advice and advice from Centrelink’s Financial Information Service (FIS) can all be beneficial and will help to explain your options and assist with the administration and paperwork involved. You can also read more in our Life Event: Divorce.
1 Suncorp “Untying the Knot” Report released July 2013