When couples decide to go their separate ways, the division of assets and property can be a contentious issue. This is where a Binding Financial Agreement (BFA) comes in handy, as it is a legal document that outlines how the assets should be divided between the parties involved. A BFA can also be used to specify how superannuation, or retirement funds, should be divided between the parties.
When it comes to superannuation, there are two ways it can be split: a flagging order or a payment split. In a flagging order, one party`s superannuation is « flagged » as an asset to be divided in the future. This means that when the owner of the superannuation reaches retirement age, the flagged amount can be split between the two parties. The advantage of a flagging order for the non-owner of the superannuation is that they do not have to wait for the owner to retire in order to receive their share.
A payment split, on the other hand, is an immediate division of the superannuation. This means that the agreed-upon percentage of the owner’s superannuation is transferred into a separate account in the name of the non-owner. The non-owner can then invest or withdraw the funds as they see fit. The advantage of a payment split is that the non-owner does not have to wait for the owner to retire in order to access their share of the superannuation.
If you are considering a BFA with a super split, it is important to seek legal advice. A BFA is a legally binding agreement, so it is important to understand your rights and obligations. You may also want to seek advice from a financial planner to help you understand the financial implications of a super split.
It is important to note that a BFA with a super split can only be entered into if both parties have their own superannuation fund. If one party does not have a superannuation fund, then they cannot participate in the super split. It is also important to ensure that the BFA is fair and reasonable to both parties. If a court finds that the BFA is unfair or that one party was coerced into signing it, it may be invalidated.
In conclusion, a BFA with a super split can be a useful tool for couples who are separating. It allows for a clear and agreed-upon division of assets, including superannuation. However, it is important to seek legal and financial advice to ensure that the agreement is fair and legally binding.
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