Overview

Extra care must be taken if you are going through separation and have a self-managed superannuation fund (SMSF). 

There are generally three options to deal with the SMSF as part of a financial settlement:

• Winding up (closing) the SMSF and rolling out the member interest to other superannuation funds
• One member rolling their interest out to another fund and the other retaining the SMSF
• Keeping the SMSF intact with both parties as members (not usually recommended)

In addition, member interests can remain intact or can (with correctly prepared legal documentation) be split by an agreed proportion as part of the financial settlement. 

Practically speaking, every fund is different and it is important to look at the actual assets (e.g. real estate, shares, cash, etc) in the fund and tailor the settlement accordingly. 

Dealing with SMSFs as part of a financial settlement can also have tax consequences, although with advice from a good accountant or other tax advisor this can often be minimised. 

Despite the financial pressures of separation, it is crucial that you do not withdraw money from your SMSF or reside in property owned by the SMSF without confirmation by legal, accounting or financial advice that this is permitted. Getting this wrong could result in the fund becoming non-compliant and incurring penalties. 

How we can help

We can help you understand how your SMSF will be dealt with as part of the financial settlement including:

• The process to obtain a valuation of the SMSF or its assets 
• How the value of the SMSF fits in with the overall settlement
• How the SMSF member interests can be split 
• How the settlement documents need to be prepared

We can also work closely with your accountant, tax advisor, or other financial professional (or refer you to a professional in our network if you require) if you need advice from them about:  

• How your SMSFs can be wound up
• The taxation consequences of the financial settlement involving the SMSF
• When you can access your superannuation