Going through a separation can be a difficult time in life and dealing with money often makes it even trickier. But it’s important to know what to expect when it comes to your personal finances so you can be prepared for your next chapter.
If you’re separating from your spouse or de facto partner, one thing you’ll need to consider is how you plan to split your assets (also referred to as property).
There are a few ways you can go about this, and the right choice for you may ultimately depend on the state of your relationship. According to The Attorney-General's Department, you and your former partner can choose to:
- reach a decision on how your property should be divided without court involvement;
- reach a decision and formalise it by applying for consent orders in the Family Court, or;
- apply to a court for financial orders if you cannot reach an agreement together.
The court will decide how to divide assets (and debts) on a case-by-case basis.
Superannuation is included in this division, as it is considered a type of property. However, splitting super does not convert it into a cash asset, as it will still be subject to super laws.
You and your former partner will have three main options to choose from when deciding what happens to your super:
- Split your super – This option can come about from a mutual agreement or court order and involves the division of super benefits in the same way as other assets are divided.
- Factor in super – You may decide to factor in your super balances in your overall division of funds but divide other assets to avoid touching your super.
- Postpone your decision – You and your former partner can decide to defer the process of dealing with your super until a later stage, such as retirement. According to Industry Super Australia, this approach isn’t often used, but may be appropriate if either of you are in a defined benefit account, where it is more difficult to determine the value of the super. You can request for a flag to be placed on the accounts to prevent withdrawals being made before matters are settled.
Regardless of which option you take, you’ll need to know the total value of yours and your former partner’s superannuation. If your former partner declines to share this information, you are entitled to request it from their fund by submitting a form via the Family Court of Australia.
It may be worth consulting a family lawyer regardless of the state of your relationship with your former partner to ensure you are dotting the i’s and crossing the t’s.
Will I be charged any fees for splitting or flagging funds?
It’s important to note that you may be charged a number of fees to cover administrative costs for splitting or flagging your super funds. One reason that some fund members might decide to take the option of factoring in super balances but dividing other assets may be to avoid these fees and charges.
You may be charged a fee for:
- Applying for information including your former partner’s super balance
- Processing a payment split
- Placement of a payment flag
- Removal of a payment flag
If you need assistance with separating other aspects of your finances, consider checking out MoneySmart’s divorce and separation financial checklist.