Superannuation and Divorce Settlements

SUPERANNUATION payouts are now up for grabs in divorce settlements in a move to ensure divorcees don't become homeless or poverty-stricken.

The Federal Government honoured an election commitment by introducing laws allowing couples to make agreements on the division of super on separation.

Current laws forbid the Family Court from dividing super even when separating couples want to split the funds.

Family Lawyer, Bill Ross, says couples would now have access to a pool of money (currently worth about $440 billion) that would help them adjust to their new circumstances.

What you commonly see is that the wife will get the house and the husband will retain the superannuation.

The result is that one has accommodation and no retirement income and the other has income but no accommodation.

Bill Ross predicts both women and men would support the new arrangements.

"You could sell the family home and buy two apartments," he says.

"Or you could divide the superannuation so that each party has access to some retirement income."

"It gives a flexibility that is currently not there."

The Law Council of Australia has welcomed the move calling it a more 'equitable' arrangement.

Clarification is still needed however on whether parties would be required to obtain independent legal advice before entering a super agreement.

Bill Ross reports that women often traded off super benefits for the family home in a divorce settlement.

"This isn't always the best solution for women's future financial security," he says.

The new laws would not increase legal battles between divorcing couples, but would be a win for both parties.

The laws include rules allowing partners to be aware of the worth of each other's superannuation fund.

Australia's superannuation pool will reach $1 trillion by June 2010.

The new law will allow benefits to be split with the non-contributing spouse becoming a member of the other spouse's super fund.

Under the existing approach, superannuation assets are not regarded as property of the marriage partners. Under the new law, the partners themselves can agree to split one party's superannuation benefits or the Family Court can order a split.

The new law may run into problems however of administration by super fund trustees including the prospect of being unconstitutional. There is still to be resolved the question whether the Family Court could issue an order to divide super entitlements to a super fund trustee who is not a party to the marriage. We may then see an alternative approach adopted - a "flagging" agreement under which the trustees have to notify the Court when a benefit becomes payable.

This would operate much like a Caveat so that the spouse's interest in the super fund could not be dealt with without taking into account the other spouse's interest.

If you have a query on superannuation or any other Family Law or Defacto Relationship problems, then ring for an appointment to see our Bill Ross.

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