Super split down the middle
Divorcing couples will soon be able to divvy up their superannuation in the same way they divide other marital assets, following the Family Law Legislation Amendment (Superannuation) Bill 2000.
Divorcing couples will soon be able to divvy up their superannuation in the same way they divide other marital assets, following the Family Law Legislation Amendment (Superannuation) Bill 2000.
In the past, the value of superannuation assets could be taken into account in a property settlement, however because they are owned by trustees, rather than individuals, the Courts had difficulty dealing with them.
Macquarie’s David Shirlow says: “There was no consistent approach to the value of superannuation assets. They were sometimes forgotten by the Courts because valuation was too hard. The new legislation clears up the valuation process as well as dealing directly with superannuation.”
The other difficulty was that when super was taken into account by the Courts, one partner was usually left with the superannuation assets while the other was left with more liquid assets.
Count Wealth Accountants Marianne Perkovic says: “Under the old legislation, if a couple went to court the judge would take into consideration the super benefits. But if the husband had, say $200,000 in super, it would have to remain in his name. To compensate his spouse, the court would award the wife other marital assets of the same value.”
In other words one person in the relationship — usually the husband - became asset poor in the present, but income rich in retirement; while the other partner — usually the wife — became asset rich in the present and income poor in retirement.
The Association of Superannuation Funds of Australia (ASFA) is concerned about the extra responsibilities which will be placed upon the shoulders of super fund trustees following implementation of the legislation.
Spokesperon Ella de Rooy says: “Super fund trustees will have more onerous responsibilities as a result of this legislation and clear guidelines are needed to help them understand and effectively administer the division of super in these cases.”
ASFA will be seeking to ensure that the process is manageable for trustees.
The new legislation will have broad coverage across all types of superannuation, including public sector and self-managed superfunds, however it will not apply to couples in de facto relationships.
Recommended for you
The RBA has handed down its much-anticipated rate decision, following widespread expectations of a close call.
Two national advice businesses have merged to form a leading holistic advice business with $2.5 billion in funds under management.
Insignia Financial has completed its transition of a range of administration and technology functions to SS&C Technologies as it seeks to be a leading wealth manager by 2030.
ASIC has permanently banned a financial adviser after he allegedly concealed information from clients and misused client funds, among other breaches.
