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Superannuation Splitting / Flagging Orders in your Family Law Settlement

Getting your Fair Share in a Family Law Settlement, deemed dividends
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Superannuation is an asset that all Australians should have.  Often, however, when one spouse is not the primary income earner, he/she will have only a small amount of superannuation, or in some cases, none at all.

Many clients who come to us for advice are not aware that:

  • they may be entitled to receive some of their former spouse’s superannuation in their family law settlement
  • combined superannuation entitlements between parties may be of benefit to both
  • depending on your age and your spouse’s age – one may be better off taking a higher share of the total marital superannuation.

Here is some important information about how superannuation can be divided between you and your former partner in your family law settlement.

Superannuation Splitting / Flagging Orders

  • The Family Court and the Federal Circuit Court have the power to make orders to “split” either your and/or your former partner’s superannuation so that it is divided between you.  This order is known as a “superannuation splitting order”.
  • A superannuation splitting order works as follows:
    • The Court can order that a specific amount of your spouse’s superannuation be transferred to a superannuation fund nominated by you, for your benefit, within a specific time frame.  This option allows you to control how and where that sum is invested.
    • The Court can order that when your spouse becomes entitled to receive their superannuation as a lump sum, that a percentage of their superannuation as accumulated at a particular date or a specific amount, be paid to you, instead of to your former partner.
    • The Court can order that when your spouse becomes entitled to receive their superannuation as a periodic payment or pension, that a percentage or proportion of that periodic payment be made to you, instead of to your former partner.
  • The Family Court and the Federal Circuit also have the power to make a “flagging order”. A flagging order prevents the trustee of the superannuation fund from making any payments to the member spouse for a specific period of time.   A flagging order may be necessary, for instance, if the member is about to retire or you are concerned that your spouse will abscond from the jurisdiction.

Determining how superannuation should be divided between a couple when they separate is a very important conversation to have.  Depending on your age, it will hardly ever be advantageous for either party to end up with either no superannuation or all of the superannuation available between you.

If you have a question in relation to superannuation splitting / flagging orders in your family law settlement, contact a member of our Family Law Team for further assistance.

 


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