Divorce and the Split of Assets
Written and accurate as at: Nov 01, 2014 Current Stats & Facts
Suncorp recently released a report titled “Untying the Knot”1 which provides an insight into the “average” Australian divorce. Their research found that:
- Approximately 50,000 divorces are granted in Australia on average each year.
- The average age of men at divorce is 45, while for women it’s 42.
- One in two divorces involve children. Typically the average divorce involves two children.
- January is the most popular month of the year to start divorce proceedings.
- Queensland is the divorce capital of Australia per capita, while the Northern Territory has the lowest rate of marriage breakdowns in the country.
- The average marriage length prior to divorce is nine years.
- The average time it takes from separation to divorce is three and a half years.
- Russia has the highest divorce rate in the world with 4.7 divorces per 1,000 people. Australia’s rate is over half at 2.2 divorces, which is higher than China, France, New Zealand and the UK.
- On average legal costs for a straight forward divorce are around $3,600 per couple, while a contested divorce averages at just under $10,000. However these costs do not take into consideration other costs such as relocation costs, child care costs and the cost of lost work and other expenses.
- According to the Australian Taxation Office (ATO)1, the average 45 year old males’ superannuation balance is $128,000, compared to $42,000 for women at their average age at divorce of 42.
- Divorce can have a significant impact on our retirement, adding around 10 years to the working lives of Australians, the most common retirement age for married couples is 65-69, whilst for divorcees it increases to 75 years or older.
When it comes to divorce or settlement, the legal process of dividing assets is referred to as a Property Settlement. Typically a couple’s assets may include the family home, investment properties, investments, savings and sometimes business ownership.
Legally, superannuation is an asset that can be included in property settlement with all or part of a superannuation benefit able to be transferred from one spouse to the other in the event of a relationship breakdown. This also applies to de-facto couples, including same sex relationships, living together on a genuine domestic basis and relationships registered under a particular State or Territory Law.
A superannuation interest that is transferred as part of a property settlement must be made proportionally from tax components and will keep the same preservation status when transferred to an ex-partner. For example, if the superannuation account is 100% preserved, then it will remain 100% preserved when transferred.
There are two ways that a superannuation interest can be legally split being via a superannuation agreements or court order. A superannuation agreement is part of a binding financial agreement which provide couples with the option to split property without going to court. A binding financial agreement can be made at any time before, during or after a relationship has ended.
Binding financial agreements cannot, except in rare circumstances, be overturned by a court, however for an agreement to be binding, both members of the couple must receive independent legal advice prior to signing the agreement and must retain a copy of the agreement for their own records.
If a couple cannot reach agreement then they will generally need to seek a court order from the Family Court in order to split their assets. If the couple are in agreement but do not have a binding financial agreement, they can apply to the court to issue a consent order. If they cannot come to an agreement then the court will issue a financial order which will outline how assets are to be divided.
In all situations and even if the couple doesn’t go to court it is important to seek legal advice as certain parts of the asset and superannuation splitting process require both members of a couple to declare that they have received independent legal advice before settlement can take place.
The split of assets is not the only important decision that will need to be made in the event of a relationship breakdown. Other financial matters that may require attention may include the need to set a new budget, restructuring savings and investments, setting new goals and retirement plans, reviewing superannuation fund beneficiary nominations and revisiting Wills and other estate planning arrangements.
As always, it pays to seek professional help. Counselling, legal advice, financial planning advice and advice from Centrelink's Financial Information Service (FIS) can all be beneficial and will help to explain your options and assist with the administration and paperwork involved. You can also read more in our Life Event: Divorce.
1 Suncorp “Untying the Knot” Report released July 2013
