Relationship breakdown is already enormously stressful. When a TPD claim is involved — either underway or recently paid — questions arise about how the payout fits into the division of assets. The short answer is that it can be complicated, and specific legal advice is important.
Is a TPD payout part of the asset pool?
Under Australian family law, the court has a broad discretion to consider all financial resources of both parties. A TPD lump sum — particularly one received during the relationship or around the time of separation — may be treated as a financial resource or asset that forms part of the pool to be divided.
However, courts also consider the purpose of the payment — that it replaces lost income and compensates for disability — which may lead to a more favourable treatment than a standard inheritance or windfall.
Super fund TPD and "splitting"
Superannuation (including a TPD amount held within a super account) can be subject to a superannuation splitting order in family law proceedings. Once a TPD payout has been released from super and is in your bank account, it's treated as ordinary cash/assets rather than super.
Timing matters
Whether a claim was lodged before or after separation, and whether the payout was received before or after, can affect how it's treated. Getting family law advice early is important. Start with our free eligibility check to understand your TPD position independently.