Who’ll get the super money if you break-up?

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.

Most Aussies are married for just 12 years

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.

What will happen to your super if you separate?

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―the MoneySmart website provides information about free legal services that can help.

You can find out more, including answers to some common questions about super splitting, at the Attorney-General’s Department website.

Stay on track financially

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:

  1. Assess your financial situation and what it will look like after the separation―a financial adviser can help you understand how it will affect your financial position.

  2. Get your super sorted and understand how any super may be allocated between the two of you.

  3. Work out what to do with jointly held accounts― including bank accounts, insurance policies, and car loans for example.

  4. Understand the financial adjustments you may need to make―for example, you may need to create a new budget based on less income.

  5. Establish a property settlement goal to work towards—for example, any items you own together will need to be divided, so it’s helpful to plan ahead and consider which things are most important to you and how you can meet your ex-partner on middle ground.

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.

Find out more in the article about Dealing with a marriage breakdown.

Help is at hand

When it comes to getting your finances in order during a divorce or separation, we are here to help. We can help you sort out your super―call us and we’ll help you bring your super together or find any you may have lost.

We can work in tandem with your solicitor to make sure you receive holistic advice―that you receive your entitlements and if your ex-partner is entitled to some of your super, you can work towards making up any shortfall and enjoying a comfortable retirement.
 

Source: AMP

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/abs@.nsf/mf/3310.0.

3 Superannuation Splitting Laws, Frequently Asked Questions: 

https://www.ag.gov.au/FamiliesAndMarriage/Families/SuperSplitting/Documents/Superannuation%20splitting%20frequently%20asked%20questions.pdf

 

Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.