“[Splitting orders] generally take one of two forms, and there are lots of variations. It can either be a based amount where there’s a fixed amount that’s got to be paid from one party to the other or there’s a percentage split,” said Mr Busoli.

In rare cases where there are complying pensions, Mr Busoli said there’s also a split on benefit payments going forward.

“The problem that we have though is that when we receive these orders, unless there’s been a great deal of thought into the actual formulation of the detail of them, we can find ourselves in a very difficult situation in trying to comply and fit a square peg into a round hole,” he said.

Fixed amounts, for example, can be inequitable where there has been a major market correction, he said.

“In one case I was involved in, the guy staying in the fund ended up with a lot less than he expected as a percentage of the overall fund because he had to settle with his wife from a diminished pool of capital because the market went down,” Mr Busoli explained.

“If you’ve got a percentage split, it means that it’s more equitable in terms of each party having a percentage of risk and return. But that doesn’t always suit the particular situation.”

In some situations, Mr Busoli said the separating spouses might want to consider a splitting order with multiple splits as that can potentially achieve better outcomes for the clients, particularly around preservation.

“We need to bear in mind that the amount that’s transferred from a member spouse to a non-member spouse retains the preservation and tax components of the member spouse. That gives us the opportunity to do a couple of things,” he explained.

Mr Busoli reminded SMSF professionals that when discussing family law super splits, the member spouse refers to the person whose account is going to be diminished, while the non-member spouse is the person whose account is going to be increased.

“Let’s say, for example, you have a member spouse who is 65 and a non-member spouse who is 55, the 65-year-old by virtue of age has fully unrestricted non-preserved monies,” he explained.

“The non-member spouse is fully preserved, and you’ve got a situation where the member spouse has $500,000 and the non-member spouse has $300,000, so the older person has $500,000 and the younger person has $300,000. Let’s assume for argument’s sake that they’re all taxable components, we’re just talking preservation.”

This can be split in one of two ways, said Mr Busoli.

“What we’re trying to achieve here is a complete swapping of the member balances so that the younger person has the $500,000 and the older person is reduced to $300,000. We could do that by making the older person the member spouse, splitting $200,000 across to the non-member spouse and that would leave the younger spouse, the non-member spouse, with $500,000, which is what was intended. $200,000 would be unrestricted non-preserved,” he explained.

“[However], doing this another way, the younger spouse could become the member spouse under this particular process and move 100 per cent of their balance, the whole $300,000 to the non-member spouse, which is now the older person. The older person now has an $800,000 balance all unrestricted non-preserved and the younger person has no balance.

“The older person now swaps roles and becomes the member spouse and moves $500,000 back to the non-member spouse. So, you’ve achieved the same result, the older person has $300,000 and the younger ex-spouse now has $500,000, and that’s now fully unrestricted non-preserved, whereas it wouldn’t have been if you had done it on a single process.”

Mr Busoli said there are other strategies that can be done with tax, but it’s important to be aware they cannot be done after the event.

“You can’t get the splitting orders and say, well how are we going to do this in the most effective way? Those particular steps have to be within the orders themselves, otherwise you can’t do them, and that’s why you need to be involved in the situation from an early stage,” he cautioned.