Superannuation in Property Settlement
Super is treated as property in Australian family law. It can be:
Split between partiesTaken into account when dividing other assetsLeft as is (each keeps their own)The Two-Step Process
Step 1: Flagging Order (Optional)
A flagging order "freezes" the super while you negotiate. The fund cannot pay out the super until the flag is lifted.
Use this if:
Negotiations may take timeSpouse might access their super (e.g., turning 65)You want to protect the super poolStep 2: Splitting Order
The actual split. This can be:
A percentage of the superA specific dollar amountBased on the interest at a particular dateRequired Information
Before splitting, you need:
Fund name and contact detailsMember numberType of fund (defined benefit or defined contribution)Current balance or family law valueProcedural Fairness Letter
Send a letter to the fund asking for:
Current balance/valueInformation about feesPayment split optionsThe fund must respond within certain timeframes.
Implementation
Once you have orders:
1. Send orders to the fund
2. Fund calculates amounts
3. Non-member spouse nominates receiving fund
4. Transfer occurs
Timeframes
- Accumulation funds: Usually 4-6 weeks
Defined benefit: Can be longerSelf-Managed Super Funds (SMSFs)
SMSFs are more complex:
May need to sell assets to fund the splitAuditor issues may ariseConsider rolling member out before splitGet specialist advice for SMSFs.
Tax Implications
- Super splits are generally tax-free
No tax on the transferTax applies when super is eventually withdrawn (same as normal)Costs
- Fund administration fee: $0-$200
Consent order application: $185Legal costs if using solicitor: $1,500-$3,000
