With all the stress during divorce, it is difficult to keep track of all the related elements. But just like the familiar adage says, failing to plan is planning to fail. Important short- and long-term planning will reduce high levels of emotionally draining stress.
Create a new budget for yourself and separate your finances. Close off any joint accounts and list all your assets and debts. Gathering all your important financial information will be another important step. With a clear understanding of where you stand, you can begin to seek legal advice. For any budgeting assistance, ASIC (Australian Securities & Investments Commission) have a great money smart budget planner.
During a divorce, superannuation is treated like any property settlement. This is because it can be split between married or de facto couples in the same manner you would divide a property. Deciding how superannuation funds will be split depends on a variety of factors, including the superannuation scheme you belong to.
Just as the family court is not required to split property in an even 50/50 split, the division of any superannuation will depend upon negotiated agreements. And even if you have not recently contributed to your superannuation fund, your partner may still be entitled to a share.
In any instance where you are in a self-managed superannuation fund, the valuation of your superfund will be determined by either an accountant or actuarial analyst.
It is also important to note that splitting superannuation payments does not convert it into normal cash assets. In other words, even after a split from divorce, superannuation is still under normal laws and remains retained untouched until retirement age.
Whenever negotiations are made, it is always important to inform yourself with all the facts. Seeking information regarding the value of your superannuation is a great place to start. Many superannuation funds have financial advisers to guide your decision-making process.
Because superannuation cannot be accessed until retirement age, another alternative is to flag the super and wait until a future date when you are able to access those funds.
Parties who can agree on a fair distribution of superannuation, can have their arrangements formalised with a court order. For superannuation to be split and considered during a divorce separation, you will need to apply for a property and financial order.
These guidelines are based upon family court rulings. As Western Australia has its own family court, you may find yourself subject to different guidelines, as with de-facto couples.
In Australia, you can find all your super fund details, including additional superannuation accounts, using your tax file number online using a registered myGov account.
Other people prefer to avoid lengthy disputes and in turn, forgo many important financial entitlements. These shortfalls can place you in financial risk, so inform yourself with each of your decisions.
Studies indicate the increasing relative importance of superannuation as a key family asset compared to prior decades. This can be linked to federal government policies mandating superannuation membership and a push for self-supported retirement. Data also shows that in divorce cases with low assets, the value of superannuation accounts can match the value of the family home.
As a general rule of thumb, basic assets like the family home are divided in the mother’s favour while non-basic assets like superannuation or other investments, are divided in favour of the men. Other difficulties include the additional barriers mothers face in returning to the workforce upon divorce. Limited job prospect is associated with lower and irregular superannuation contributions.
Whenever concern over dividing superannuation or any other assets arise, proper precautions and risk management can always be undertaken before investing effort into any relationship. Prenuptial agreement are legally binding contracts detailing the assets each party retains should a marriage ever fail.
Divorce costs to even file an application can be costly. And whenever negotiations drag on, the cost only rises. Additionally, when it comes to splitting superannuation, many funds charge administrative fee costs depending on the actionable requests.
As with all superannuation matters, seek independent legal and financial advice. Always consult with a knowledgeable professional if superannuation is an issue for you. To assist you with the legislative framework and provide you with the best outcome, work with the professional family lawyers at O’Sullivan Legal.