‘Creative’ super splitting strategy knocked back by court

A first attempt at a “creative” splitting order put forward by a man indebted to his former mother-in-law has been knocked back by the Family Court.

Speaking to SMSF Adviser, Townsends Business & Corporate Lawyers special counsel for superannuation Michael Hallinan said the court held that the splitting provisions of the Family Law Act only permitted the splitting of super interests between couples – whether married or de facto.

In this particular case, Mr Hallinan said, the husband was indebted to his former mother-in-law and the husband and wife agreed that his super interest could be split in favour of the mother-in-law as partial payment of that debt.

“It’s outside the powers conferred by the Family Law Act to split benefits,” he said.

This decision by the Family Court will prevent people from trying to split benefits with other third parties, such as children, Mr Hallinan said.

“People may want to, say, split super, not with a spouse, but with the children of a marriage – that’s obviously not possible because it’s restricted to just the parties of the marriage,” he said.

“Full marks for lateral thinking but not successful this time."

 

 

 

 

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