When a couple have separated and wish to sever financial ties, it is not uncommon for property settlement orders to include a superannuation split. This involves a portion of one party’s superannuation (“the member spouse”) being transferred directly into the other party’s nominated superannuation fund (“the non-member spouse”).
One of the economic consequences of COVID-19 is the falling share market which in turn has led to a reduction in superannuation balances. In the context of family law and property settlement negotiations, this has meant that there are now circumstances where:-
- the member spouse has previously agreed to a superannuation splitting order providing for the non-member spouse to receive a base amount of their superannuation, eg $50,000.00.
- the member spouse now has less superannuation than they did at the time the agreement was reached.
- the superannuation split would therefore result in the member spouse receiving less of the property pool overall, or could even render the agreement unworkable in circumstances where there are now insufficient funds to effect the split.
What can I do if my superannuation has been affected by COVID-19?
The first thing you must do is obtain an updated superannuation statement to work out exactly how much superannuation you have.
You may wish to change the type of superannuation splitting order to a percentage order. This would mean that the non-member spouse receives a percentage of your superannuation, rather than a fixed amount. The benefit of a percentage order is that it will take into account any further drops in superannuation up until the date the order is implemented. However, it will also include any contributions made by the member spouse to the fund after the agreement is reached.
Please contact our family law team if you would like further information or have concerns about your property settlement orders on 07 4963 2000 or through our online contact form below.