SUPERANNUATION - THE IMPORTANT FACTS
- In your property settlement matter it is important to realise that Superannuation is now regarded as an item of property by the Family Court.
- The purpose of this document is to inform you of the various processes, options and costs that are involved in dealing with Superannuation in a property settlement matter.
- It is important to realise that the treatment of Superannuation and the splitting of Superannuation (in appropriate cases) can be a complex matter and is one which you should receive specific legal advice on and be guided not only by legal advice but also financial advice. It is extremely important that you work with your Financial Advisor (or have us recommend one to you) who can assist you with making decisions that are in your best long-term financial interests.
The Valuation of Superannuation Interests
- If you and your spouse agree to a property settlement Order and there is no Super splitting involved then you may simply come to an agreement as to the value of each of your respective Superannuation entitlements. If you come to this amicable agreement then there is no necessity under the Family Law Regulations to formally value the Superannuation according to the Regulations.Please be aware however, that this can only occur when there is no Super splitting and you simply agree to retain your own Superannuation interests.
- Even in this situation we would still recommend that you value your Superannuation interests and also your spouse's Superannuation interests according to the Regulations so that you know accurately what your Superannuation is worth and what your spouse's Superannuation interests are worth.
We will ask you to provide specific instructions on whether you wish to perform this valuation or not (if there is to be no Super splitting).- If however, it is intended to split a Superannuation interest of yourself or your spouse pursuant to a Court Order then please remember in most cases the Superannuation interests must be valued according to the Regulations.
- If you wish however to enter into a Superannuation Agreement than please be aware that no formal valuation pursuant to the Regulations will be required even if you do split the Super. However, a Superannuation Agreement will only be used in rare circumstances when we recommend one to you.
What is Involved in Valuing Super?
- Initially, to value a Superannuation interest you must complete a Declaration (which we will provide to you) and forward this together with a request for information from the Trustee of the Super Fund.
- Once the Trustee returns this information and documents to us we will then be able to prepare a valuation of the Superannuation interests for you.
- If Superannuation is split pursuant to a Court Order then we must, pursuant to the Family Law Act, prepare an Affidavit setting out the valuation calculations and file this with your Consent Orders for approval in the Family Court.
What Happens After a Super Splitting Order is Made?
- After your property settlement is approved by the Court (whether by consent or by an Order by a Judge) and if it contains a Super Splitting Order then, we as your solicitors, have certain other duties to perform and there are other matters that must be attended to in order to ensure that your Superannuation is split properly. This is particularly so where you are receiving Superannuation from your spouse.
- We must ensure that the Trustee of the Superannuation Fund is accorded procedural fairness and served originally with the Application and then later with the actual Orders. We must put proof of that service in an Affidavit before the Court.
- Further, once the Order is served the Trustee of the Super Fund must provide certain information to us which gives you a number of options as to what to do with your Superannuation interest. We will explain these options to you but essentially you should seek advice from a Financial Planner as to which option is best for your financial interests.
- We will then communicate your preferred option to the Trustee and ensure that the Trustee effectively follows your instructions in making the interest split or payment split.
How Long Does the Above Take?
- If you come to an amicable arrangement and Superannuation does not have to split then there is no extra time (other than the time required to value the Superannuation interest) than would normally be encountered when preparing and approving a Consent Order.
- If we do have to value your Superannuation (even if it is not being split) then you can expect about a twenty-eight (28) day delay from when we send the request for information to a Trustee to when that information is returned to us.
- If Super splitting is to occur in your matter then once again you can expect a further delay of about twenty-eight (28) days to obtain the information and then before the Order is actually approved in Court, we must accord procedural fairness to the Trustee. This usually means allowing them about twenty-eight (28) days to receive the proposed Orders and raising any objections. Therefore, you can see that if Super splitting does occur it cannot usually take place quickly and we'd estimate that usually you could expect the process to take about two (2) to three (3) months.
Are There Extra Costs Involved?
- Unfortunately, the answer is yes. If Super is not being split then the only extra costs is the costs involved in obtaining information from the Trustee and us preparing any necessary valuation (which is not mandatory but still recommended).
- We will be able to provide you with a specific estimate of those costs if that is all to occur in your matter and our estimate will depend upon what type of Superannuation interest is being valued. Some interests are very easy to value (for example, accumulation funds) but other interests are more complex to value (for example, defined benefit funds).
- Please be aware that Trustees of Funds can charge fees to provide information. They will let us know what their fees are when they send back the answers to the request for information. At this stage we anticipate most fees being somewhere in the range of $100.00 to $200.00.
- If you are actually splitting Superannuation then besides the above costs you will also incur the further costs of our services in ensuring that your Superannuation is actually split, that your options and preferences are clearly communicated to the Trustee and ensuring that the Trustee follows through with your instructions. This can be in some respects a difficult process and one which is governed by strict Rules and Regulations.
- We will be able to provide you with an individual estimate of the extra costs for splitting your Superannuation but in our opinion you could expect that these costs would be a further $500.00 up to a further $2,500.00 depending on the number of Superannuation interests being split and the complexity of such Orders. Please be aware that this cost is an additional cost to the normal costs of a Consent Order for property settlement.
Financial Advice
- In our opinion, the new Superannuation Splitting Laws make it imperative that you receive financial advice from your Financial Planner in relation to what options are best for you in relation to retaining or receiving Superannuation. If you have a Financial Planner then we will probably need to contact that Financial Planner to look at the best options for you.
- As lawyers we are unable to provide you with specific financial planning advice. If you do not have a Financial Planner than we work closely with a number of specialist Financial Planners who would be able to assist you in this area.
If you have any questions relating to the above please do not hesitate to contact us directly.
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