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Changes to super contributions may impact divorce settlements

The main role of family mediators is to help couples reach agreement on the care of their children and financial settlement when they separate or divorce.

In our training, and in the course of our work, we learn and share with clients current best practice when it comes to the ongoing parenting arrangements of children.

Understandably, we don’t spend as much time acquiring new knowledge in relevant areas of personal finance, referring people to other experts if faced with sophisticated situations including specialist family lawyers and accountants.

This article caught our eye the other day. It reminded us of the need for family mediators to keep up to date their working knowledge of personal finance issues relating to divorce.

In summary, the Government announced a controversial superannuation policy before the last Federal Election – a lifetime cap of $500,000 on after-tax super contributions to replace the current annual cap of $180,000. This would limit people’s ability, over their lifetime, to transfer investment money into their super fund in order to be taxed at a lower rate.

Treasurer Scott Morrison is now proposing a number of exemptions to his own $500,000 lifetime cap proposal, saying that perhaps it wouldn’t apply to proceeds from the sale of small business, or from inheritance – or from a divorce.

 

Why is this relevant for our job as family law mediators?

It’s relevant for us to have a high-level awareness of the key financial consequences triggered by divorce, so we can take this into consideration when working with our clients and so we can encourage them to investigate and seek additional professional advice where necessary. That way, we help manage the risk that subsequent ‘surprise’ revelations will disrupt the process of ‘getting to yes’ and reaching agreement in mediation.

We are by no means financial experts and don’t pretend to be. But we know the relationship tensions caused by financial issues don’t go away when a couple decide to split.

They can worsen and if not addressed, hinder people’s ability to move forward in the most amicable way possible under their own particular circumstances.