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Splitting assets when couples part

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.

Posted on 13 February '14 by , under Super.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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