Is my Spouse entitled to a share of my Superannuation if I separate?

20 January 2015

In a Family Law Property Settlement, Superannuation is always taken into account when considering a division of property between spouses (including de facto or same-sex partners).  These days, most people have Superannuation entitlements.  Whilst those Superannuation entitlements may not be readily accessible now if you are below retirement age, they will make a difference to your financial situation when you do retire.  In previous years, the law did not allow a person’s Superannuation to be split with his/her spouse.  At the end of 2002, the law was changed to allow a transfer of Superannuation entitlements between spouses as long as it is as a result of a relationship breakdown and formalised by way of a Court Order or a Financial Agreement pursuant to the Family Law Act.

When working out a fair property settlement (including Superannuation Split), it is essential to consider the following:

  1. How much Property and Superannuation did each party have at the commencement of the relationship?
  2. How much Property and Superannuation is there now?
  3. What direct and indirect financial contributions have been made by each party to the property assets and Superannuation?
  4. What direct and indirect non-financial contributions have been made by each party to the property assets and Superannuation?
  5. What contributions have been made by each party to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home-maker or parent?

It is often the case that with older couples, the Superannuation component represents a substantial part of the assets.  It could also be the most attractive component to keep if the other assets are investment assets which will be subject to Capital Gains Tax if sold.  It is important to get advice on how to structure any settlement in order to maximise any tax benefits available.  For example, if the person earning a low income retains an investment property and later sells it, the capital gains tax payable would most likely be less than that payable by the high-earning spouse.  Also, it is important to take into account the respective ages of the parties.  For example, if one spouse is already retired and over 60 years of age, he/she could withdraw superannuation (free of tax) and use it to buy a home.  If the other spouse was below retirement age, then he/she would not be able to have access to lump sum superannuation at this stage as it would have to remain in the Superannuation Fund until retirement.

Everyone’s Family Law property settlement is different, and it essential to get the best expert Family Law advice to tailor the best solution for your circumstances.

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