Superannuation joins divorce spoils

WHEN a relationship fails, who gets the super? What happens when one person has worked full-time and the other hasn't?

Couple arguing

Superannuation joins divorce spoils

ANY marriage breakdown is tragic. And it's a sign of the times that one of the first thoughts -- hopefully after the kids -- is the division of assets.

Today assets of a marriage are no longer confined to the family home, the Kingswood in the drive or grandma's Royal Doulton tea-set.

One of the biggest assets of any partnership -- especially long-term ones -- is often superannuation.

When a relationship fails, who gets the super? What happens when one person has worked full-time and made a big contribution to a superannuation fund?

The other half, meanwhile, has been working at home looking after children, with no income as such, and has not contributed to a super fund.

Under the Family Law Act superannuation is bundled up and included in marriage "assets''. Just like other assets, it gets separated and divided. If the split is on good terms, the parties can often agree on who gets what of the super.

Although sometimes the couple might agree the value of super is better maintained by not dividing it. In this case, the super fund can be  "flagged''.

"Factors that affect the real value of super, such as taxation, may impact on negotiations between the parties,'' said Bernie O'Sullivan, partner of funds management and superannuation at law firm Maddocks.

"Also, the requirement that super must be kept in a super fund until a condition of release is satisfied -- for example the member attaining 65 years of age -- may make it more attractive for a person to take non-super assets.''

Mr O'Sullivan said if one party had a defined benefit super interest that was expected to grow significantly then it might be more appropriate for parties to flag the interest and divide it later.

But if the separation is bitter, and lawyers are involved, then the Family Court can order all assets -- including super -- be split. Generally, a superannuation fund will be split 50-50 on the breakdown of a marriage. If there were contributions made by the husband, for example, before the marriage, or a prior marriage, then those factors are taken into account.

Family law barrister Doug Potter said it didn't matter to a court if the husband was the sole contributor to a fund, the court had to take into account the woman's role in the relationship, the size of the overall asset pool and any disparity in the income-earning ability of the pair.

"The court quite rightly must have a proper regard to the work that goes into running a home and the benefit to the main income earner that provides.

"No party should be acting to their detriment when they are fulfilling the important role of homemaker and child carer.''

The Family Law Act states that when a judge considers splitting a couple's assets -- including super -- he or she has to take into account ``the contribution made by a party to the marriage to the welfare of the family, any children of the marriage, including any contribution made in the capacity of homemaker or parent.''

Mr O'Sullivan said this raised an important asset protection issue.

"A person contributing money into a superannuation fund should be mindful that their spouse (or future spouse) may have a claim on their superannuation,'' he said.