When a couple is going through a divorce, one of the things they have to deal with is property settlement. They have to disclose all the properties that should be split. However, there’s one thing often initially overlooked: splitting superannuation assets.
In the past, one party could hide their superannuation assets from the other during property settlements. But today, these could no longer be a secret. The amendments to the Family Law Act 1975 and the Income Tax Assessment Act 1997 make it harder to hide or under-disclose such assets during property settlements.
Full transparency of superannuation assets is now possible.
Starting April 2022, anyone going through a divorce can apply to the Family Court to obtain information from the Australian Tax Office (ATO) about their ex-partner’s superannuation assets. It will now be tough for anyone to hide the total amount of their super, which can be higher than they initially disclosed to their partner after growing it through SMSF loans & other investment strategies over the years.
This full transparency on super assets will largely benefit women. Historically, they have often faced extensive delays and costly legal fees trying to determine the full extent of their former husband’s assets. Now, they can end the property settlements faster and more effectively, getting their fair share of properties after the divorce.
How can divorcing couples divide superannuation assets?
Divorcing couples can have multiple options when splitting their superannuation assets. For one, they can divide their combined super through mutual consent or court order. It won’t quickly convert into cash since it is subject to superannuation preservation laws. The split funds may have to stay in the combined super until the parties meet the release condition.
Another option is to defer a settlement or division with a “flagging agreement.” It entails that the super fund won’t pay out to any party until the flag is lifted or the super holder retires.
Divorcing couples also have the option not to touch the super accounts. Still, they can take into account the total amount of the super when dividing their other properties. Keeping the super intact can be a good decision if the party holder is close to retirement age. It will generate a good income stream for them after retiring. The other party can agree and negotiate to receive comparatively more in the form of non-superannuation assets, like the family home, a beach house, or a car.
What if they can’t agree on the division of the super assets?
The Family Court can divide the super holdings once a family law solicitor has submitted superannuation agreements. These documents certify that both parties received independent legal advice regarding the division of the super assets.
If the couple can’t agree on the settlement, the court will decide how to divide the superannuation assets. The court will decide on what’s “fair and equitable” for both parties. The court may consider what each party contributed to the relationship and their financial needs after separation, especially if they have dependents. Keep in mind that the law recognises stay-at-home mums or dads as a party that contributes equally to the couple’s assets.
Get in touch with our experienced divorce lawyers today.
If you are planning to file a divorce, consult with one of our divorce lawyers. They will help you navigate through the complex process of property settlements, including superannuation agreements. Fill out a form today to request an appointment.