How could SMSF member entitlements be "reduced in value" to avoid proper division in a separation?

Hi all, My ex-partner had a SMSF member entitlement of about $1.5mil. In recent court disclosure the value of this entitlement seems to have been diminished to $144 000. The other members in the SMSF are my ex-partner's parents and brother. The document that has been disclosed suggests that the fund holding $144 000, although bearing the same name as the one that had the large entitlement, has only been active since a couple of months before we separated. How could this have been orchestrated? and what documents could be subpoenaed to establish the truth. I overheard discussions that proposed a likely "cost of $450,000 to fix the super problem" I am not a greedy person trying to get my hands on this money, quite the opposite...my ex-partner has used this huge shift in equity to take me to court to try to obtain a property adjustment from me.

 

One way is that the assets of the super fund are valued down by a friendly valuer - especially if the assets are property development type or private business assets.

The member now has a lower value SMSF interest. A relative joins the SMSF with cash. The original member now rolls over their lower SMSF interest to say... Australia Super. The relative is the only member in the SMSF.

The SMSF asset is now valued up. The original member has a super balance that has gone from $1.5m to $144k.

Not a nice thing to do. Not something I would do.

Guaranteed to get attention by all and sundry.

 

The parties should seek information that explains the change in member entitlements which would likely start with the member statements including financial reports which explain changes in member benefits over time. One minor issue is that SMSF reporting is not bound by accounting standards BUT are obliged to value assets at market. A independent expert (accountant) may need to review the reports for issue/s. It may comprise many reasons including actual benefit payments (age dependant), a rollover to another fund, a reduced valuation (unlikely), taxes, div 293 tax, excess contributions tax. The expert would assist to identify what to subpeona. I would rule out a death benefit payment.

Transfer of preserved benefits to another member are illegal. Transfer to a reserve not permitted.

The court would be quite sus to a sudden loss of matrimonial assets of that value. And a members of a SMSF cant blame others. Equality of decision making is a fundamental which can also hold the trustee / member accountable for depletion of assets. She cant blame others.

Its not greed. Family Law requires all assets to be considered. Incl all super. $1.3m+ of lost benefits must be explained. For large super balances many lawyers seek orders early limiting the trustee during period of diligence and information gathering.