Australian Family Law question - When working out my settlement,

Dear msfif,

Testamentry trust just means a trust that is created by a will. Depending on the terms of the trust, it can sometimes insulate the assets of the trust from the division of property in divorce proceedings, but you would need to read the terms of the trust to get an understanding of how this works. In terms of a SMSF, the Family Law Act basically treats superannuation as another aspect of marital property. THis means that

• ALL superannuation is taken into account, regardless of when it was acquired (including SMSFs).
  
• There is NO automatic 50/50 division of superannuation interests
• There is a broad discretion in the court to make an order that is just and equitable
• You may recall that the 1998 Government position paper Superannuation and Family Law outlined a proposed regime in which:

The relevant act can be found here: http://www.comlaw.gov.au/ComLaw/Legislation/Act1.nsf/framelodgmentattachments/9DEBB8B2D8C1F764CA2573FE0001F19C


I hope this additional information helps.

Regards,

XXXXX XXXXX

NOTES ON SUPER SPLITTING:

Superannuation splitting law

The superannuation splitting law treats superannuation as a different type of matrimonial property. It lets separating couples value their superannuation and split superannuation payments, although this is not mandatory. Splitting does not convert it into a cash asset – it is still subject to superannuation laws (for example, it is usually retained until retirement ages are reached).

Options for splitting superannuation

Separating couples may either:

• enter into a formal written agreement to split superannuation. A formal written agreement requires that both you and your partner instruct a lawyer who must sign a certificate stating that independent legal advice about the agreement has been given. Once this agreement is made you do not need to go to court. The agreement is not registered in court and you must be careful that each of you retains a copy, or
• seek consent orders to split superannuation, or
• if you cannot reach an agreement, seek a court order to split superannuation.

Even when an application is made to a court, it is possible to reach an agreement at any stage, without the need for a court hearing.

You should get legal advice about these options.

What you need to do to split superannuation

Step 1: Obtain valuation information

You need to get information to value the superannuation. You should provide the following forms to the trustee of the superannuation fund:

• Form 6 Declaration. This satisfies the trustee of the fund that you are entitled to get the information for this limited purpose, and
• Superannuation Information Request Form (accompanied by the appropriate Superannuation Information Form).

The superannuation fund may charge a fee for providing the information, and this is paid when you send the forms. The Superannuation Information Kit provides the information and the forms you need. The kit is available under the 'Forms' section of this website, by calling 1300 352 000 or at your nearest family law registry.

The information from the trustee may be enough to value the superannuation. However, the valuation of some superannuation interests can be complex. An expert may need to provide a further valuation. You should get legal advice about this.

How super is valued

There are different types of superannuation. The superannuation splitting legislation sets out methods for valuing most types of superannuation, but there are exceptions, including:

• self-managed superannuation funds – they are generally valued with the assistance of an expert such as an accountant
• where the Attorney-General has approved a fund using a different valuation method.

Step 2: Decide the method of splitting

Either enter into a formal written agreement or obtain a court order.

Obtaining a court order

You get court orders about the division of matrimonial property in two ways:

• by consent of the parties. If you and your partner have reached an agreement at the outset, then a Application for Consent Orders application can be filed in the Family Court, accompanied by a consent order recording the agreement. The orders can then be made in chambers without either of you attending court, or
• as a result of a court hearing. Even if you start proceedings, you can reach an agreement at any stage and once the orders recording the agreement are made you do not need to attend court further.

Either way, you need to file an application with the Court. Registry staff can tell you what forms to file. To start proceedings in the Federal Magistrates Court you must file an Application, and Information Sheet and a Financial Statement. The other party will file a Response and a Financial Statement. To commence proceedings in the Family Court you must file a Application for Final Orders together with a Financial Statement. The other party will file a Response to an Application for Final Orders together with a Financial Statement.

The Superannuation Information Kit is available under the publications section of this website, by calling 1300 352 000 or at your nearest family law registry.

The information from the superannuation fund trustee will help you to complete the Court forms. You must disclose all superannuation, even if you do not intend to split superannuation payments.

Informing the superannuation fund

If you are seeking court orders about superannuation, you must tell the superannuation fund trustee about the orders you are seeking. The trustee must have an opportunity to attend the court hearing and object to the orders that you are seeking. This is called providing the trustee with ‘procedural fairness’.

Once the superannuation order is made, whether by consent or after a hearing, it is important to provide a sealed copy of the order to the trustee.

For more information on superannuation splitting laws, including frequently asked questions, visit the Attorney–General’s Department Superannuation and Family Law website.

Superannuation - Defined benefits funds

Valuation - scheme specific methods and factors

The Attorney-General's Department has provided some information concerning the valuation of defined benefit superannuation funds. This relates specifically to addressing current applications to approve scheme specific methods which have not been determined.

Legislative framework

1. Subsection 90MT(2) of the Family Law Act 1975 commenced with the other provisions of new Part VIIIB of the Act on 28 December 2002. It requires a court to value the interest in respect of which superannuation benefits are payable before it orders that they be split in property settlement proceedings.

2. The court is required to value the interest in accordance with any method set out in the Family Law (Superannuation) Regulations.

3. The Regulations provide methods for determining the value of defined benefit superannuation interests in the growth phase (rr.28 and 29 and Schedule 2).

4. They also provide for the Attorney General to approve in writing methods or factors for determining the gross value of a defined benefit superannuation interest that is in the growth phase (r.38). Applications may be made to the Attorney-General by funds for this purpose.

Method of valuing defined benefit superannuation interest - factors

 

5. The method in Schedule 2 for valuing a defined benefit superannuation interest in the growth phase has been developed by the Australian Government Actuary's Office, on a typical private sector defined benefit scheme.

6. However, it is recognised that this method of valuation may be misleading, in relation particularly, to public sector funds.

Applications for scheme specific methods or factors

 

7. Consequently, applications for scheme specific methods or factors for valuing defined benefit interests in the growth phase are expected to come mainly from the public sector superannuation funds. To date applications have been received and are being considered from:

Name of Fund

 

New South Wales Parliamentary Contributory Superannuation Fund

 

8. The Attorney-General's Department is currently going through the process of approving the necessary scheme specific factors and methods. Funds affected are likely to advise their members that they have applied for approval of such methods and factors and suggest that non-member spouses await the results of those applications.

9. Applications for adjournment of proceedings may flow in such situations.

10. The Family Court is liaising with the Attorney-General's Department and will provide information on its website when it is notified that applications have been approved in relation to particular funds.

Approved Applications - Name of Fund

Commonwealth Parliamentary Contributory Superannuation Scheme

Commonwealth Public Sector Superannuation Scheme

Commonwealth Superannuation Scheme

Defence Force Retirement and Death Benefits Scheme

Ford Employees Superannuation Fund

Ford Management Retirement Plan

GlaxoSmith Kline Superannuation Fund

Hanson Australia Pty Limited as a participating employer in Sunsuper (previously shown as Pioneer International Limited Staff Superannuation Plan) Military Superannuation & Benefits Scheme

New South Wales Energy Industries Superannuation Scheme

New South Wales Local Government Superannuation Scheme

New South Wales Police Association Superannuation Scheme

New South Wales Police Superannuation Scheme

New South Wales State Authorities Non-contributory Superannuation Scheme

New South Wales State Authorities Superannuation Scheme

 

New South Wales State Superannuation Scheme

Queensland Local Government Superannuation (known as LG Super)

Queensland Parliamentary Contributory Superannuation Scheme

Queensland Superannuation (State Public Sector) Scheme (known as QSuper)

RACV Superannuation Fund South Australian Judges' Pensions Scheme

South Australian Local Government Superannuation Scheme

South Australian Parliamentary Superannuation Scheme under the Parliamentary Superannuation Act 1974 (SA)

South Australian Police Superannuation Scheme South Australian Superannuation Scheme

UniSuper (the Superannuation Scheme for Australian Universities)

South Australian Superannuation Scheme

Victorian Parliamentary Contributory Superannuation Fund

Victorian pension schemes - Governor, Judges, Masters, Chief Magistrate, Solicitor-General, Director of Public Prosecutions and Chief Crown Prosecutor

Victorian Racing Industry Superannuation Fund

Victorian State Superannuation Fund

WA Government Employees Superannuation Fund

Western Australian Gold State Super Scheme

Woolworths Group Superannuation Scheme

Woodside Superannuation Fund

Methods and Factors for Valuing Particular Superannuation Interests Approval 2003

A special Gazette issued on Friday 24 January 2003 notified the making by the Attorney-General of an instrument, titled the Methods and Factors for Valuing Particular Superannuation Interests Approval 2003, which contains approvals, under r.38 and 43A of the Family Law (Superannuation) Regulations 2001, of methods for valuing a range of interests in superannuation schemes administered by the Victorian Government Superannuation Office.

The instrument can be viewed at: http://scaleplus.law.gov.au/html/instruments/0/80/top.htm