Help! My ex has taken all our super
Last week, my former partner accessed the SMSF bank account and transferred $100,000 to a personal super account at Australian Super and $10,000 to her personal bank account. At the time the total amount in the bank account was $110,042.02.
The account now has just $42.02 remaining and is unable to meet its financial obligations. What are my options in such circumstances?
– Greg
A: There are a number of options to deal with the complex set of issues raised in your question, says Stephen Bourke, a director of SuperSplitting, an internet-based superannuation law practice specialising in super and family law, and it is likely that some court action would be required.
However, the first thing you must do immediately is secure the superannuation interest now in Australian Super to avoid it being rolled over to another super fund. The easiest way to do so is by obtaining a flag order under the Family Law Act 1975.
Flag order
A flag order, says Bourke, is a unique type of order available only under the Family Law Act. There is no need to obtain the consent of the member before you get a flag order but you must tell the Australian Super trustee you are seeking this before the order is made.
The effect of a flag order, explains Bourke, is to impose an obligation on the trustee of Australian Super not to pay any money out of the member account until there is a further order made in relation to the superannuation.
Your former partner cannot then access the super covered by this order or roll it over to another fund but it can be accessed under compassionate or hardship grounds. So swift action is required.
A court injunction is an alternative and this can be wider than the flag order to prevent payments on compassionate and hardship grounds. Obtaining this will require evidence to convince the court these grounds should be included in the injunction.
Either way, it would secure the $100,000 of superannuation held in Australian Super until the rest of your complex set of issues are dealt with, says Bourke.
While you say your former partner had a member account in the SMSF which in the 2019 financial statements amounted to $39,872 and this was the amount to be rolled out of the SMSF under the court order and transferred to your account, Bourke says the following can be done when there is a dispute over the member accounts.
First, check your SMSF trust deed and the constitution of the fund’s corporate trustee. Confirm the voting rights and see if you have a majority of votes or a casting vote (the chair of any SMSF meeting may, for instance, have a casting vote).
If you have the casting vote or a majority of votes (counted by one vote per dollar of member entitlement), call a meeting of the trustee and put the resolution that the accounts are true and correct.
Although this might seem cumbersome, it is an important step to getting your super back. You will need it as evidence you have done the right thing.
It may also be as simple as preparing a set of minutes to be confirmed by circulating them and not physically meeting. Check the trustee company constitution to confirm this.
The next step focuses on the trust or fiduciary obligations that being a superannuation trustee imposes on the directors of a trustee company.
As directors, says Bourke, each of you has a legal responsibility to the other to act with honesty and to exercise care, skill and diligence when dealing with the property of another person as well as act in the best interests of the beneficiaries of the SMSF. These obligations are set out under superannuation law as covenants which are agreements between the director and each of the members.
They apply even if the fund trust deed doesn’t contain them. From what you say, it seems clear there may have been a contravention of the covenants.
Where there is non-compliance with the covenants, this can lead to legal action for loss or damages but you will need to go to court to start this. There is a six-year limitation period that…
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