For most people, superannuation is one of the largest assets in a separation. For a business owner it can be one of the most complicated – the family business and the self-managed super fund are often tied together. What happens to your super in a settlement is rarely as simple as the balance on your statement.
This blog explains how superannuation is treated in a property settlement in Western Australia, how it is valued and split, and what business owners with a self-managed super fund need to watch. Where something needs advice, we say so.
Why superannuation is treated as property
In a family law settlement, superannuation is treated as property and can form part of the asset pool. It can be split between you and your former partner, either by agreement or by a court order. So while super is not cash you can draw on today, it counts, and it is on the table in the settlement.
How superannuation is valued and split in WA
In Western Australia, property settlements are dealt with in the Family Court of Western Australia, under the Family Law Act 1975 (Cth) for married couples and the Family Court Act 1997 (WA) for de facto couples. The court identifies the asset pool, weighs each party’s contributions, considers future needs, and checks that the result is just and equitable. Superannuation is valued and included as part of that pool. You can read more on our property and financial settlement page.
Valuing super is not always straightforward. Accumulation accounts, defined benefit interests and self-managed funds are each assessed differently, and the figure on a member statement is not always the value used in a settlement.
Why an SMSF makes it more complex for business owners
A self-managed super fund adds another layer, and this is where business owners need to pay attention. An SMSF is assessed differently from a standard fund. That is especially so when it owns commercial property or the premises your business trades from, which usually calls for an expert valuation. Splitting the fund can also have flow-on effects for the business, including tax and liquidity. A split does not automatically force the sale of an asset the business depends on – but getting there takes coordinated legal, accounting and financial advice. Keeping the business running through it is the focus of our Retaining Your Business service.
Take a common setup. Your SMSF owns the building your company operates from, and most of your retirement savings sit inside that fund. A split cannot mean selling the building out from under the business, so the settlement has to be structured around both at once.
Strict time limits apply to superannuation claims
Timing matters. If you were married, you can apply for a divorce once you have been separated for at least 12 months, though the property settlement is a separate step. If you were in a de facto relationship, Western Australia has its own framework, and de facto partners generally have two years from separation to bring a claim. This area has moved in recent years, so it is worth confirming the current position for your situation. Our super in de facto relationships page covers the de facto side in more detail.
How to protect your superannuation
You cannot quarantine super from a settlement, but you can protect your position. Get the fund valued properly rather than relying on a statement figure, and keep your accountant and financial adviser involved, especially with an SMSF. Then formalise the outcome. Consent orders can record an agreed split in a form the Family Court recognises. A binding financial agreement can help in some circumstances, though the High Court decision in Thorne v Kennedy set limits on when one holds.
Speak to Leach Legal
If you are a business owner working through a separation, your superannuation and your SMSF deserve early, specific advice. Leach Legal acts for business owners in Perth and has advised on family law matters for more than two decades. We specialise in separation and asset division. You will be assigned a lawyer who handles your matter from the first meeting to final settlement.
To talk it through, book a confidential 15-minute phone consultation with Leach Legal.
