How Long After Divorce Can You Claim Superannuation?

Divorce marks a significant turning point in life, not only emotionally but also

financially.

Understanding how to manage and claim your superannuation stands out as a critical financial consideration.

Superannuation, often one of the largest assets individuals possess, plays an important role in securing your financial stability in the post - divorce phase.

Whether you're contemplating the initial steps of separation or already navigating the final stages of a divorce settlement, it’s essential to comprehend your legal entitlements and the strategic options available for claiming superannuation.

In this guide, we delve into the essential aspects of superannuation in the context of

divorce.

When You Can Claim Superannuation After a Divorce?

The timing for claiming superannuation after a divorce is governed by specific legal deadlines, which vary depending on your marital status. For married couples, claims must be made within 12 months after the divorce is finalised. De facto relationships have a timeframe of up to two years from the date of separation to make their claims.

These periods can be extended under special circumstances if a court order is obtained. It’s crucial to initiate the process early, as superannuation is considered part of the property settlement and must be divided according to the legal agreements or court orders specifying how assets are split between parties.

The specifics of the superannuation fund might also affect when you can access these funds. Regulated super funds generally follow the standard procedure post - receipt of necessary documentation like a court order or a financial agreement. In contrast, self-man aged super funds (SMSFs) adhere to the terms set out in their trust deeds, which can vary significantly. Therefore, understanding both the legal timelines and your specific fund's rules is essential for a smooth and compliant claim process.

Understanding Divorce & Superannuation

Superannuationis a compulsory system for saving retirement money in Australia, where employers must contribute a percentage of an employee's earnings into a superannuation account.

This account is then managed by a super fund, which invests the funds until the individual retires or meets conditions of release, such as reaching a preservation age or experiencing financial hardship, e.g. divorce.

Under Family Law Act 1975, the Family Court of Australia is limited in addressing superannuation entitlements during divorce proceedings, as superannuation is not considered 'property' unless it becomes payable. This has led to approaches such as offsetting non-superannuation assets or

adjourning property proceedings until superannuation benefits are payable, though these methods have proven inadequate in fully addressing the division of superannuation upon a relationship breakdown.

Knowing how superannuation is handled in legal proceedings is important for both parties involved, whether the relationship was a marriage or a de facto relationship.

Find out more about our family law services.

Types of Super Funds

Public Sector Superannuation Schemes

These are often subject to specific rules and regulations that may differ from private sector schemes. Public sector funds are generally open to employees working for the Australian (federal), state, and territory governments. They may offer defined benefits and constitutionally protected funds (CPFs) to their staff, reflecting the unique employment conditions within the public sector.

Self - Managed Super Funds (SMSFs)

Self Managed Super Funds (SMSFs) offer more control over investment choices and strategies but come with their own set of complexities in a divorce scenario. As a superannuation fund trustee, you are legally responsible for all investment decisions and for complying with super and tax laws. This can add layers of complexity in ensuring that these funds are managed according to legal requirements, especially when dividing assets during a divorce.

Regulated Super Funds

These are the most common types of super funds and are managed by financial institutions under strict regulatory guidelines. Options include industry funds, which may be limited to workers in a specific industry or under a specific award, and retail funds, which are typically run by banks or investment companies and are open to the general public. These funds often come with a range of investment options and different levels of risk and return, designed to cater to the diverse needs of their members.

How to Claim Superannuation After Divorce

1. Obtain Legal Advice

Start by consulting with a family law attorney who can provide independent legal advice on your rights and the specifics of your superannuation entitlements e.g. marital relationship, de facto couples. A lawyer will ensure that your claim complies with family law and superannuation regulations, helping to safeguard your interests.

2. Gather Necessary Documentation

You will need to collect important documents such as your divorce decree, any financial agreements related to the divorce, and your superannuation statements. These documents are necessary to support your claim and are often required by superannuation funds to process your entitlement.

3. Formalise the Agreement

If it hasn't been done already, you need to formalise how the superannuation will be split. This might involve obtaining a court order or finalising a financial agreement.

Ensuring the agreement is legally binding is crucial for enforcing the terms of the super split.

4. Notify the Superannuation Fund

Inform your superannuation fund(s) about the division agreement or court order. You

will need to submit all necessary documentation to the fund to process the division of superannuation assets.

5. Implement the Split

The superannuation fund will carry out the division according to the agreed terms. This might include transferring funds to another account or adjusting account balances. Be prepared for this process to take some time, as funds often require several weeks to implement the changes.

6. Confirm the Transaction

Once the superannuation has been split, make sure to confirm that the amounts you receive are correct and in line with the agreement. If there are any discrepancies, contact the superannuation fund immediately to address them.

7. Update Your Financial Plan

Reflect on how this change affects your financial situation and update your budget or financial plans accordingly. Also, plan how you will manage your superannuation moving forward, including making future financial and non financial contributions.

Important Considerations to Keep in Mind

Valuation

Determining the value of superannuation interests is a critical first step in the division process. This valuation must consider the type of super fund and any underlying conditions related to accessibility and use. Accurate valuation is essential for ensuring that the division is equitable and reflects the true worth of the superannuation assets.

Tax Implications

The division of superannuation might have tax implications for both parties, which should be considered when negotiating a settlement. Understanding these tax consequences can prevent unexpected financial burdens and facilitate a smoother negotiation process.

Financial and Consent Orders

Financial Orders

These are legal decrees made by a court that dictate how assets, including superannuation, should be split. Financial orders are necessary when parties cannot reach an agreement independently. They ensure that the division of assets, like superannuation, adheres to legal standards and fairness.

Consent Orders

If both parties agree on how they want to divide superannuation, they can formalize this agreement through consent orders. These orders must be approved by the court but provide a faster and often less contentious path to settlement. Consent orders also allow for more flexibility and mutual satisfaction in the division of assets.

Strategies for Dividing Superannuation in Divorce

When a relationship ends, determining how to split superannuation is one of the most import

ant financial decisions you will make. Several options are available, each suited to different circumstances and objectives. Understanding these can help you and your ex-partner find the most equitable and effective solution.

Superannuation Splitting

This is the most common method used, where superannuation splitting laws allow for part of the superannuation to be transferred from one partner’s fund to the other’s, typically implemented by a financial agreement or court order. This method provides both parties with direct access to superannuation funds in their own accounts, allowing for independent financial planning and investment.

Deferring the Decision (Flagging Agreement)

Less common but useful in certain scenarios, flagging delays the division of superannuation until a specified event occurs, such as retirement. This approach is beneficial when the superannuation fund is complex or involves certain types of pensions, or when the parties prefer to wait to make decisions based on future circumstances.

Leaving Superannuation Intact

In some cases, couples decide not to split the superannuation immediately but consider its value in the overall property settlement. This strategy simplifies the immediate financial separation and is p

articularly useful if accessing the funds is not an immediate priority or if liquidating other assets is more beneficial.

Importance of Seeking Legal Advice When Claiming Super Post-Divorce

Expertise in Family Law

Superannuation laws are intertwined with family law, which can be highly complex and continually evolving. A skilled family law attorney brings a deep understanding of these laws and how they apply to your specific situation. This expertise is crucial in ensuring that all legal a

spects of your superannuation claim are handled correctly, from the initial valuation to the final division and settlement.

Tailored Legal Strategies

Every divorce is unique, and so is every superannuation fund. Legal professionals can develop customised strategies that consider the specifics of your superannuation arrangements — whether it involves a straightforward regulated fund or a more complex self - managed super fund (SMSF). Lawyers work to safeguard your interests, ensuring a fair and equitabl e distribution of superannuation that recognises your financial contributions to the marriage.

Avoiding Costly Mistakes

The consequences of errors in splitting superannuation can be significant and long - lasting. Legal advice helps avoid common pit falls such as incorrect valuations or failing to comply with legal and fund - specific regulations, which can lead to disputes or financial losses.

Negotiating and Mediating

In many cases, superannuation claims can be resolved through negotiation or mediation, without the need for contentious court battles. Legal professionals play a key role in these negotiations, using their skills to advocate on your behalf and reach a settlement that reflects your needs and circumstances.

Peace of Mind

Having a trusted legal advisor by your side provides peace of mind during what is often a stressful and emotionally charged time. Knowing that your superannuation claim is in expert hands allows you to focus on moving forward and planning for your future.

Keeping Your Best Interests at Heart

At Norton Law Group, we are committed to providing our clients with the highest level of legal support during their family law proceedings. We encourage anyone going through a separation or divorce to seek leg al advice early in the process to ensure that your superannuation and other financial assets are protected. Let our experienced team guide you through every step, ensuring that your financial future is secure. For further assistance, or to discuss your specific circumstances with one of our family law experts, please don't hesitate to

contact us.

We are here to help you navigate this challenging time with ease.