Why it is important to consider superannuation in a family law property settlement?

I will often meet with clients who will say to me “I don’t want to include superannuation in a property settlement” or “John worked hard for his superannuation, I don’t want to touch it”.  Usually in discussing this further with the client, I will discover that the client will not have given consideration to all of the issues having previously not taken legal or financial advice.

Not every property settlement will have a superannuation split (that is, where part of one person’s superannuation is transferred to their ex), but superannuation should be considered in the property settlement.

As an expert family lawyer in Townsville, after taking instructions from a client I can advise them what range of percentage split they might receive and what this might look like in dollars, but I cannot advise them on what division of assets might be best for their financial future – Are they better taking the house and making a cash payment to their ex? Do they divide a share portfolio? Do they sell the business or does one party keep it? Do they divide their super or not?  These are questions for a financial advisor.

However, regardless of whether superannuation is split or not it is an asset to be included in the property pool and should be considered in any adjustment of property as per any other asset.  If you want further information about what is considered in property settlement see our webpage on financial/property settlement .

In considering your property settlement keep in mind that superannuation can be a very large asset for parties and is often the largest asset some couples will have.  Sometimes parties will have similar amounts each, other times there will be a large discrepancy between the balances of the parties. 

A large discrepancy in balances can result for a variety of reasons such as age differences, one party has had a significant period of not working (eg. Staying home with the kids or off work due to illness or injury), one party may have been self-employed and not contributing to superannuation or the incomes of the parties are very different.

By excluding superannuation from the asset pool, a negotiated outcome may not be just and equitable, this means that you may not be able to obtain Consent Orders to formalise your property settlement and whilst the option of a Financial Agreement is possible, it comes with its risks.  If your matter proceeds to Court for hearing, the judge will consider what each of the parties has in superannuation.

Just because superannuation is considered in a property settlement does not mean a superannuation split will occur.  Sometimes parties will agree that any adjustment be made using other assets, sometimes it might be considered undesirable as the fund is a defined benefit fund or is a self managed superannuation fund where assets may have to be sold to do a split which will result in other expenses.

Superannuation is an important asset to consider in property settlement matters and should not excluded.