Super, Separation and Divorce – Part 1
Arguably for most, separation and divorce is a time of immense stress and anxiety, particularly with children from the marriage or previous marriages. During married life, often one partner will handle the majority of the financial decisions while their spouse is charged with the other tasks of running a family unit.
After separation this poses a huge challenge for the spouse with poor financial literacy as complex decisions often need to be made in a short period of time. Mistakes are often made and unnecessary costs incurred. This highlights the need for professional advisors in each component of the separation. These include but are not limited to accounting, legal representation, and financial advice.
There are some interesting statistics from the Australian Bureau of Statistics (ABS):
– In 2014, there were 121,197 marriages registered in Australia, and there were 46,498 divorces granted.
– The median age at divorce for males was 45.2 years of age and the median age of females was 42.5 years of age for those divorces granted in 2014.
– In 2014, divorces involving children represented 47.0% of all divorces
This poses a number of considerations for superannuation that are often overlooked. This list is not exhaustive and is a general guide only. I recommend you seek professional advice before implementing changes to your financial affairs.
– The Family Law Court will consider assets in super part of the matrimonial pool. There are specific provisions in legislation to allow the court to split super assets if necessary.
– Consider your current beneficiary nomination. If you have made a binding nomination to your ex-spouse, this may see them in receipt of your retirement assets as opposed to your desired beneficiaries.
– Divorce does not invalidate your Will. You should consider updating it according to your new family arrangement to ensure your intentions after you die are carried out. This is particularly important if you have nominated your legal personal representative as the beneficiary of your super fund.
– Review your investment strategy before you attend your first court hearing. It may be wise to assess the inherent level of risk in your portfolio in light of a potential superannuation split.