Superannuation in Family Law cases

Back

On 28 December 2002, the law in relation to superannuation in Family Law cases involving marriage only was changed.

Prior to the change in the law, superannuation was generally treated as a financial resource in most cases. This meant it was not treated as property, which is something a person owns and can currently deal with, such as sell or transfer it. A financial resource, however, is something from which a person obtains a financial benefit, but the person receiving the benefit cannot deal with it like an asset.

With superannuation funds, most people obtain a benefit from it at some time in the future. This had an impact on how the assets of the parties were to be divided. However, just what impact it had on a person’s entitlements to property was not always clear. This has long been a source of struggle for both Family Lawyers, and the Family Court.

The amendments introduced by the Family Law Amendment (Superannuation) Act 2001 provide a new mechanism for dealing with superannuation. From now on, superannuation is treated as property. As a result of the new law, when determining what assets of married parties exist for division, superannuation is included.

After identifying the parties’ superannuation interests, they must be valued. The Family Law (Superannuation) Regulations sets out valuation methodologies for different types of funds. Where formal valuations are required, they are carried out by appropriately qualified accountants.

It is then a matter for Family Lawyers to apply the other steps in property matters to superannuation interests, in order to determine a division of the property which is just and equitable.

What the new superannuation provisions of the Family Law Act now permit is a Court Order which binds a trustee of a superannuation fund to effect a “split” of the fund. This results in a division of a fund where each party receives a proportion of it. This is meant to provide some certainty as to what the parties would be entitled to receive of the other property.

Prior to the changes in the law concerning superannuation, each party in most cases retained the benefit of their superannuation fund in the future, and then some adjustments were made to what they received out of the other property. Determining what adjustment should be made, if any, was often a source of disagreement.

The new superannuation law provides more options to parties dealing with a property division to tailor a just and equitable division to their needs. However, there is a view that it has created new legal issues, and Family Lawyers look eagerly to the Family Court for case law concerning these issues.

Back