Superannuation Splitting: What Evidence of Value is Required?
The laws around superannuation splitting are often not clear for clients who are undertaking a Family Law property settlement.
Firstly, it is important for parties to understand that the Family Law Act treats superannuation as property, which then can be divided or "split" upon the breakdown of a marriage or de facto relationship, either by agreement or a "splitting order".
The law allows separating couples to value their superannuation and split superannuation payments, although this is not mandatory. Most importantly, splitting superannuation does not convert it into a cash asset – it is still subject to superannuation laws, for instance, it is usually retained until retirement ages are reached.
Options for splitting superannuation
The options available for couples seeking to split their superannuation include:
- Creating a formal written agreement which requires both parties to instruct a lawyer, who must sign a certificate stating that independent legal advice about the agreement was given.
- The parties can seek Consent Orders to split superannuation.
- If parties cannot reach an agreement, they can seek a Court Order to split superannuation.
Obtaining valuation information
Determining the value of superannuation entitlements can require expert evidence.
It is dangerous to assume that the value of superannuation is the total stated on your member benefit statement, particularly with respect to defined benefits.
Details about the value of the superannuation needs to be obtained from the Trustee of the Fund. This information can be obtained by providing the following forms to the Trustee:
- Form 6 Declaration;
- Superannuation Information Request Form; and
- The Superannuation Information Form.
The superannuation fund may charge a fee for providing the information, which is paid to them when you send the forms. Parties can access information about their former partner’s (and their own) superannuation in this way and can ask for a figure for the entitlements on specific dates, such as the date of commencement of cohabitation and separation.
The Form 6 completed by the Trustee is needed by the expert to prepare a valuation report. Once the value of superannuation entitlements is known, the parties should be able to determine whether they need to ask the court to make a Superannuation Splitting Order.
The Family Law Rules ("FLR") provide that the Form 6 needs to be exchanged before the first court date in a property case and clients may be directed to file the document.
Under the Federal Circuit Court Rules ("FCCR") a party is required to file a Form 6 if they have to file a financial statement, which would be at the commence or proceedings.
Under the FCC, Rules parties need to serve the order sought on the Trustee immediately after filing the application seeking relief.
Framework of the Legislation
- The Family Law Act requires a court to value the interest in respect of which superannuation benefits are payable before it orders that they be split in property settlement proceedings.
- The court is required to value the interest in accordance with any method set out in the Family Law (Superannuation) Regulations.
- The Regulations provide methods for determining the value of defined benefit superannuation interests in the growth phase.
- They also provide for the Attorney General to approve in writing methods or factors for determining the gross value of a defined benefit superannuation interest that is in the growth phase. Applications may be made to the Attorney-General by funds for this purpose.
If you are negotiating a property settlement with your former partner, and you are unsure about how this might impact on superannuation entitlements please contact our experienced Family law team at Colin Daley Quinn. Generally speaking, it is always in your best interests to speak to an expert and understand your rights and obligations from the beginning and avoid the potential for future conflict at a later date.Back