The end of a relationship may be something you never imagined would happen. And while separating from a partner can be emotionally overwhelming, it’s important at a time like this to keep your financial wits about you.
A divorce can have a lasting impact on your financial position. For example, there’s a tendency for people who are divorced or separated to have lower rates of home and asset ownership, and lower levels of super1.
It’s a startling fact, but according to the Australian Bureau of Statistics, the average duration of marriage in 2013 was 12 years, and nearly half of all divorces involved children2.
If you separate or divorce it’s possible you will get some of your ex-partner’s super or they’ll be entitled to some of yours.
Superannuation splitting laws in the Family Law Act of 1975 specify how super is treated in divorce and separation. Essentially, it’s considered as property, so like any asset it can be divided between partners by agreement or court order. It does however differ from other types of property, because it is held in a trust, which means there are rules around when these assets can be accessed.
Couples who have separated are able to make an agreement (known as a superannuation agreement) about how super either party will receive is to be split. If the agreement meets legal requirements (is legally binding) the super fund trustee carries out the agreement and a court doesn’t need to be involved. If couples are unable to agree then a court order is made to determine how the super is to split3.
It’s a good idea to seek legal advice so any super splitting agreement will be legally binding.
Related Article: What happens to my finances if I split up with my de facto?
Breaking up involves a lot of adjustment and there are things you can do to stay on track. A thorough financial stocktake will help you move forward with more confidence. Below is a quick checklist:
A financial adviser can show you the long-term outcomes of different settlement options, so you can understand the impacts of any decisions you make today.
For more information on how you can separate and divorce with or without court please contact our office – 03 9620 0088 or email [email protected]
1 Divorce and personal wellbeing of older Australians, Australian Institute of Family Studies: http://melbourneinstitute.com/downloads/hilda/Bibliography/Conference_Papers/de_vaus_Gray_Qu_Stanton_ASPC2007.pdf.2 Australian Bureau of Statistics website: abs.gov.au/ausstats/[email protected]/mf/3310.0.
3 Superannuation Splitting Laws, Frequently Asked Questions: https://www.ag.gov.au/FamiliesAndMarriage/Families/SuperSplitting/Documents/Superannuation%20splitting%20frequently