There are both legal and tax implications to be considered when former partners in a SMSF decide to split after the breakdown of the relationship.
It is possible to transfer assets, such as property, from one super fund into another; however, there are four things individuals need to consider:
1. Separating couples need to work out how they will go about splitting their superannuation fund.
They can choose to enter into a formal written agreement, seek consent orders, or if the separating couple cannot reach an agreement, they can seek a court order.
2. It is important to have the necessary documentation as they are essential in the event of an ATO audit.
Due to there being beneficial tax consequences in splitting a superannuation fund, it is essential that the documentation, such as the notice for splitting the super, show a genuine separation.
3. If the super fund has property as the major form of investment there is the potential that it may create a liquidity problem; however, this can be addressed with future contributions. Individuals will also need to aware of the market valuation rules for real estate in DIY funds.
4. If the new fund is to be a single member fund it is advisable to incorporate a special purpose company to be the trustee. This avoids having a second person as a trustee.
