When a marriage or de facto relationship breaks down, it can be a stressful time and the task of separating finances can often add to the pressure. Getting the right advice can help you make the tough financial decisions about your assets and superannuation.
Whenever there is a change to your financial situation, a review of your financial plan is necessary – even more so when a complicated matter like splitting superannuation is involved.
What is the first step?
Get expert advice
When a marriage or de facto relationship breaks down, many couples choose to separate their finances by going through a property settlement. In this process, getting financial and legal advice is essential.
Your property and possessions
A property settlement is the legal process of dividing a couple’s assets when they become separated or divorced. Assets may include the family home, investment properties, ownership in a business, valuables, investments and savings. A property settlement can be reached by mutual agreement, or where an agreement can’t be made, the court can determine the settlement.
Superannuation is also included as an asset that can be divided as part of a property settlement. All or part of a superannuation benefit can be transferred from one spouse to the other. This also applies to de facto couples (including same sex relationships) living together on a genuine domestic basis and relationships registered under particular State or Territory Laws. Couples have the option of drawing up a financial agreement on how superannuation is to be divided. This can be made at any time during the relationship.
What parts of super can be split?
Superannuation benefits (both accumulation and defined benefits), allocated pensions, complying pensions and annuities can all be split in a divorce or de facto relationship breakdown. Accounts with a balance of less than $5,000 cannot be split under Family Law.
The process of splitting superannuation can be broken down into six key steps:
|1||Request for information||A request for information is made by either spouse, regarding the details of a super benefit.|
|2||Response to request||A response is made with the details of the super benefit.|
|3||Put account on hold||A hold on some types of withdrawals can be placed on the account by agreement of the two parties or by order of the court. This is not essential but may be used as a precaution for settlements that can’t be reached immediately.|
|4||Settlement||The couple, or the court, decide the settlement terms and the proportions of the benefit each spouse will receive.|
|5||Splitting instructions||Instructions are sent to the trustee of the super fund, indicating the method and proportion of the split.|
|6||Splitting the benefit||Part or all of the member’s superannuation is transferred to the non-member spouse.|
The importance of legal advice
Both spouses will also need to appoint a legal adviser to split a superannuation benefit of one of the parties. Even if you don’t go to court, certain parts of the superannuation splitting process require you to declare that you have received independent legal advice, and your legal adviser to certify that they have provided advice.
A legal adviser will also have experience in relationship breakdown procedures and can assist you through the property settlement by:
- advising you on the relevant laws and how they apply to your situation
- providing you with guidance on the division of assets and your entitlements
- assisting with any documentation that you may need during the process
- representing you in court if necessary.
The role of your financial adviser
For most people, a relationship breakdown is an extremely stressful and emotional time. The thought of making important life-changing decisions can be overwhelming. A financial adviser can provide you with the knowledge and guidance to help you feel more confident about the decisions you make about your financial future.
A financial adviser in conjunction with your legal adviser can guide you through the process by:
- determining whether your superannuation can be split
- helping you complete the request for information documents
- interpreting the valuation information
- identifying exempt withdrawals
- interpreting splitting instructions issued by the court
- letting you know of any obligations you may have towards the super fund.
A financial adviser can also assess the impact on your overall financial situation and provide a recommendation about appropriate investments for your portion of the settlement. They can also provide ongoing advice regarding your super benefits and general financial position.
The process of splitting super after a relationship breakdown is complicated but can be made easier with the right advice. Contact us and we can work together with you and your legal adviser.
Crosby Dalwood ABN 30 132 876 is an Authorised Representative of Count Financial Limited ABN 19 001 974 625, AFSL 227232. This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. ‘Count’ and Count Wealth Accountants® are trading names of Count. Count advisers are authorised representatives of Count. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Information in this document is based on current regulatory requirements and laws, as at 1 July 2015, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Should you wish to opt out of receiving direct marketing material from your adviser, please notify your adviser by email, phone or by writing to us.