SMSF members faced with splitting an asset to settle a relationship breakdown may be able to push back against an order to do so if they can argue it will impinge on procedural fairness to others in the fund.
BDO Adelaide senior consultant Peter Crump said this approach was particularly useful where an adult child was a member of an SMSF with their parents and other immediate family members, but was undergoing a separation with a partner outside the fund.
“One of the issues you might have is whether to just provide information about the SMSF. What then happens with the superannuation splitting process after you have gone through that process?” Crump said during a presentation at the recent SMSF Association Technical Summit 2026 in Sydney.
“The member of the fund has a superannuation balance of, for example, $100,000 and their former partner has a balance of $20,000 and they say ‘let’s equalise the superannuation’.
“The splitting order says $50,000 should be split from the SMSF to the non-member spouse. Have you got enough cash to pay that?
“Some cash is going to have to leave the fund in some form to make that superannuation split, but what if there is not enough cash? If you have got a large asset, but insufficient cash, then I would think procedural fairness [would apply].”
He said at this point the family lawyer for the person outside the SMSF should ask the trustee for some feedback on any draft splitting orders on the basis of their impact on the fund.
“The trustee can say: ‘[To make the split] we have to sell this asset and that would affect this person, this person and this person, but not this person, therefore, we don’t think that’s fair,’” he said.
“In a case where you have got large illiquid assets, you want to ideally negotiate the process by not involving the SMSF investments.
“If you have smaller liquid assets, they are going to take up a larger portion of the portfolio once some cash leaves.
“So having a member participate in a family law dispute and having money leave the fund can be problematic in terms of what the members are left with in that process.
“[in this case], we are not even concerned about the key people in the fund, it is actually someone outside the fund, how their split occurs and if you have the assets to sustain that.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason