May 17, 2009
Breaking up is hard to do
Financial savvy is needed to ensure you get your fair share of matrimonial assets
By Lorna Tan
There is a lot of fallout from a downturn as severe as this one - job losses being the most obvious - but the distress can be felt much closer to home in the form of failing marriages, as arguments about money overwhelm couples.
Divorce has become a fact of life here even in good times. From 2002 to last year, the number of divorces rose by about 25 per cent.
Last year, there were 7,220 divorces and 1,700 applicants - mostly women - for enforcement of maintenance orders from divorced spouses.
Pre-nuptial agreements, where couples decide beforehand on the division of assets should there be a divorce, are still not recognised here unless they are contracted in a country which legalises and recognises such contracts, said Ms Lim Choi Ming, partner at Khattar- Wong.
So it makes good financial sense to tie the knot with eyes open, and if you are already in an unhappy relationship, it helps to know how you can protect yourself financially should divorce occur.
1 Specify the share ownership of the property at purchase
This comes in handy if it is clear that one party has paid a larger share in buying a property, said Ms Lim.
Spouses have two ways to specify how they hold a property - as joint tenants or tenants-in-common.
Under joint tenancy, ownership goes to the surviving party. If, say, the wife dies first, the property will belong solely to the husband.
If the couple holds the property as tenants-in-common, their shares will devolve to their respective estates on their deaths, said Ms Lie Chin Chin, managing director of law firm Characterist.
Case 1 (2008)
Ms Cheryl Tan (not her real name) was 55 and her husband 47 when she filed for divorce after discovering that he had a mistress. She had paid more for the matrimonial home, valued at more than $1 million when she started divorce proceedings.
However, she died from a terminal illness before the split was concluded. As the matrimonial property was in joint tenancy, ownership went to her husband.
'If the property had been purchased as tenants-in-common with a greater share to her, she would have been able to will her share of the property to their children. And if she had been alive, she would have gotten her fair share of the property,' said Ms Lim.
2 Keep track of matrimonial assets
Make a list of matrimonial assets for distribution. Detail the asset type and their estimated value held in separate names and in joint names.
Also identify each party's monetary contribution to the assets, which could include insurance policies, properties, Central Provident Fund Ordinary accounts, investments, cars, fixed deposits, joint accounts, club memberships and jewellery.
This process ensures that you do not miss out on any matrimonial assets that can be divided in case of a divorce.
It also records payment contributions to allow a fair share, advised Ms Lie.
Case 2 (1995)
Mr Robert Khoo (not his real name) decided to divorce his wife after finding a new girlfriend.
He was then shocked to discover that his wife had been gathering information on his assets, including some investments they had accumulated in the United States in their younger days.
The court awarded her half of an investment worth US$150,000 (S$221,000) that even Mr Khoo had forgotten about.
If she had not been diligent in keeping records, she would have missed out on a share of those assets that had grown over the years, said Ms Lie.
3 Keeping track of payments
Retain details of household and children's expenses by keeping receipts and credit card statements to prove the expenditure.
For example, detail the monthly expenses on food, entertainment, personal grooming, transport, clothes, shoes, medical and gym fees, phones, Internet access, insurance, maid services, home repairs, newspapers, holidays, children's pocket money, textbooks, enrichment classes and stationery.
'Doing so will enable the spouse to successfully claim a reasonable sum of maintenance,' said Ms Lie.
For the same reason, Ms Lim suggests paying for your property using CPF savings rather than cash. This makes it easy to track payments and the percentage of each party's financial contributions.
Cash payments towards a mortgage that come from a joint account into which both parties put money may prove difficult to apportion.
If one party gives cash to the other party to pay loan instalments, this may be difficult to prove later on, she added.
In the same vein, if you receive a regular sum from your spouse, get it in a form that is easy to prove, such as via cheques or Giro.
Case 3 (2007)
Mr John Koh (not his real name) was married to an accounts clerk who persuaded him to let all their mortgage payments be made from her account, while he reimbursed her in cash.
He agreed, but 15 years later when the marriage broke down, the wife alleged that he was financially irresponsible and that he did not contribute to the mortgage.
She claimed that she had single- handedly paid for everything, said lawyer Amolat Singh from Amolat and Partners.
Mrs Koh also produced receipts for renovations for which the couple had a similar arrangement - she charged the cost to her credit card and he reimbursed her in cash.
Mr Koh had accepted this arrangement because, as a con- struction businessman, he often carried cash.
Although he claimed that the financial contributions were equal, he was given only 20 per cent of the net proceeds from the sale of the matrimonial property, based on what he could prove.
Case 4 (2002)
Mr Ken Loh (not his real name) had a huge inheritance and was worth at least $5 million.
He had no reported income although his wife was convinced he had a viable business. Until the marriage broke down, he had been providing for the family.
However, inheritance is not divisible upon divorce.
Mrs Loh did not keep records of their expensive lifestyle. When the divorce was settled, she was awarded a monthly maintenance sum of $500 as she was found to be financially independent by the court and was unable to produce documentary evidence of higher living expenses provided by her husband, said Ms Lie. This left her feeling short-changed.
4 Keep records of indirect contributions
These include contributions made towards the household and buying assets, said Ms Lie.
It might involve a wife who gave up her career to let her husband pursue his job while she did household chores and looked after the home, aged or sick relatives or dependants.
'Indirect contributions made are taken into consideration for a greater share in the matrimonial assets,' said Ms Lie.
Case 5 (2006)
Ms April Lee (not her real name), a nurse, had a job offer in Australia with good prospects. There were several other career opportunities that she gave up in order to look after the family and enable her husband to pursue his PhD and progress in his career.
Upon divorce, she produced evidence of her loss of opportunities. Her sacrifices and care for the family were taken into consideration and she was given 70 per cent of the matrimonial assets, which amounted to $3 million, although the respective financial contributions were equal, said Ms Lie.
5 Update your will
If you have no will and if you die before the divorce is finalised, half your assets will go to your spouse and half to your children. Similarly, update the nomination for CPF funds, failing which your spouse may end up inheriting part of the funds.
Case 6 (2007)
Mr Edward Chin (not his real name), 70, married a 32-year-old woman after his first wife died, but the marriage fell apart.
The young wife originally deserted him, but when she learnt of his death, she returned to claim her share of half his estate, which was worth about $1 million.
He had not made a will, so there was much tension between the wife and the children from the first wife.
The children were convinced their father had wanted to leave all his assets to them, but the laws of intestacy prevailed in the absence of a will, and the second wife was awarded about half his estate.
6 Be clear on ownership of monies in joint accounts
Some spouses may maintain joint accounts with their aged parents or siblings, and the source of the funds may originate wholly or predominantly from the aged parent or sibling.
Ms Lim said that it is important to have proof of where the funds from this joint account came from to avoid having the account become a matrimonial asset.
As long as it is clear to the court that the money in the joint account did not come from either spouse, the account will not be a matrimonial asset to be split upon divorce.
7 Nominal maintenance
In some cases where a lump sum is not appropriate or the husband does not have the means to pay, the wife may let her emotion and pride rule and declare that she needs no maintenance.
This could prove costly as she will not be able to return to the court to ask for maintenance.
A wife should consider asking for nominal maintenance, even if it is just $1 or $10 a month, as it preserves her right to maintenance.
This will keep the door to the court open if she wants to seek a higher amount, so long as she can show a material change in the circumstances, said Mr Singh.
NOTE THIS BEFORE YOU SAY 'I DO'
§ These assets are liable to be divided between a couple upon divorce:
§ Those acquired during the marriage by either party, such as Central Provident Fund savings, shares, unit trusts, insurance policies, club memberships, family car, jewellery and savings.
§ Those acquired before the marriage and used or enjoyed by the couple or their children, such as a house.
Those acquired before the marriage and substantially improved during the marriage.
For example, a wife who helps in her husband's business, even though it might have been started before marriage, may claim a share if she played an active part in expanding the company. Matrimonial assets do not include gifts or inheritance given to one member of the couple. An exception is when the gift or inheritance has been substantially improved during the marriage, or if it is the matrimonial home.