By Daniel Ulaszyn
We’re fierce advocates of striving to obtain a property settlement by consent and without going to Court. We feel the best way to make the property settlement legally binding is through a Consent Order – it’s an Order of the Court, but no-one goes to Court.
With the substance and clauses of the Consent Order, the old adage ‘the Devil’s in the detail’, is more than apt.
But what does this mean? What are the details you should be considering, looking out for, and making sure are being covered in the Consent Orders?
We intend to look into this with you, over a multi-part series of discussions. Today, let’s consider some of the important ones when it comes to superannuation splitting —
Super split?
- When going through a Family Law property settlement, each party’s superannuation is essentially an asset that is available for division between the parties.
- It’s not just about selling or transferring the house, or dividing up the joint bank accounts.
- Superannuation splitting can be a useful tool in dividing up the property pool (we’ll talk about the property pool in a future discussion), especially where one party has a lot more superannuation than the other, or where superannuation forms the largest asset in the property pool in terms of value.
- Sometimes too it is ‘just and equitable’ (a Family Law term) to consider splitting superannuation, especially when one party has a substantially greater amount than the other party.
- Splitting superannuation does not mean ‘giving half your super’ to the other party. It could be about equalising superannuation outcomes, or using superannuation splitting as a tool to give the other party an amount of consideration required to effect their overall outcome where there is no other resource or asset available to do that.
What’s involved?
- As with nearly everything in Family Law, there’s a process. The below sets it out in general terms.
- Generally, once an agreement is reached as to the amount of superannuation to be split, a superannuation information form (“SIF”) is sought from and then completed by the splitting party’s superannuation trustee (“trustee”). The SIF gives the details needed for Family Law (sometimes a super split may be precluded), and provides a current value of the superannuation amount. Oftentimes, it is prudent to obtain a SIF early, and before reaching an agreed superannuation split amount.
- The consent orders will need to be prepared, containing the clauses detailing the superannuation split – the clauses are technical and precise.
- A process called ‘procedural fairness’ will then need to be undertaken, whereby a draft copy of the consent orders with the superannuation splitting clauses needs to be given to the trustee for approval – the trustee has 28 days to reply – something to bear in mind if time is critical.
- Once approval of the trustee has been obtained, the draft consent orders can be finalised for signing and lodgement with the Court, along with other required documentation.
Some things to consider
- Cash or super? Sometimes, the two greatest assets are a large amount of cash (from, for example, a house sale) and one party’s superannuation. Thought should be given as to how best to optimally divide these two assets in a manner that is ‘just and equitable’ to both parties.
- Advice from a financial planning expert should be obtained to assist with decisions regarding the personal financial advantages or disadvantages (current and future) of splitting superannuation. We can assist with acquiring these expert advices.
The above discussion covers only some of the requirements and things you need to consider and implement. There are some differences in the process when it comes to Self Managed Super Funds.
Please carefully note – this is general information only and not intended nor to be construed as legal advice – if you need help with making sure your Orders are done right, or wish to talk about superannuation splitting, get in touch with our Family Law team.
Next time, join us for a discussion on what is the ‘property pool’, how we ascertain and value it, and why it’s important to your consent orders.
