Divorce significantly impacts finances, making it crucial to understand how financial settlements are handled both during and after the process. Managing divorce finances involves navigating complex issues such as asset division, spousal maintenance, and debt allocation.
In Singapore, specific legal and financial considerations, including property laws and maintenance guidelines, come into play. This overview highlights the importance of grasping these financial and legal aspects to ensure a fair and manageable outcome.
Understanding finances in divorce is essential for both parties to protect their interests and secure their financial stability moving forward.
Types Of Financial Settlements That Can Be Made During And After A Divorce In Singapore
During and after a divorce in Singapore, various financial arrangements and settlements come into play. These financial arrangements often become a focal point during the divorce process, and understanding how to handle them is essential for resolving financial matters.
Joint Bank Accounts
Many married couples set up joint bank accounts to manage their finances together. However, these accounts can become a significant issue during a divorce. Here’s a detailed look at how to address the division and management of joint bank accounts in Singapore:
Handling Joint Bank Accounts
- Division of Funds: Joint bank accounts typically hold funds that may be considered matrimonial assets. This means money deposited by either spouse during the marriage could be viewed as joint property. When dealing with joint bank accounts, it’s crucial to acknowledge that funds in these accounts are often treated as part of the overall matrimonial estate
- Withdrawal Risks: If one partner withdraws money from a joint account without agreement, it can complicate the divorce. Such actions can lead to disputes and potential Court intervention, especially if the withdrawn funds are significant or used inappropriately. For example, if one spouse uses the funds for personal expenses or to favour a new partner, this could be contested during the divorce proceedings.
Consider a scenario where a couple has saved money for their children’s education in a joint account. During a divorce, deciding how to handle this account can be challenging. The funds might be repurposed for child-related expenses or divided based on both parties’ financial needs.
Steps to Close or Split Joint Bank Accounts
- Create a Comprehensive List: Start by listing all joint accounts. This helps identify which accounts need to be addressed. Ensure that you have the account details and bank statements for each joint account.
- Visit the Bank Together: If you and your spouse can still communicate amicably, it’s best to visit the bank together to close the joint accounts. This approach is straightforward and helps prevent misunderstandings. During this visit, you can also discuss how to divide the funds.
- Separate Accounts: If visiting the bank together is not feasible due to strained relations, you will need to open a new personal bank account for yourself. This new account will serve as your financial base moving forward. Meanwhile, you may need to wait until a divorce settlement is reached to formally close the joint accounts.
- Repurposing Accounts: In some cases, joint accounts might be repurposed for specific purposes, such as covering child-related expenses. Ensure that such agreements are documented clearly to avoid future disputes.
Supplementary Credit Card(s)
During a divorce, supplementary credit cards can significantly impact your financial situation. If you or your spouse have provided supplementary credit cards to each other, it’s important to understand the financial implications.
Supplementary credit cards are linked to the primary account holder’s credit line. In a divorce, the responsibility for any outstanding balances and liabilities on these cards needs to be clarified.
For example, if one spouse has used a supplementary card extensively, the primary account holder might still be liable for the debt even after the divorce.
If this balance remains unpaid, it can affect both parties’ credit scores. A careful credit report review can help identify all supplementary credit cards and associated liabilities.
To manage or transfer your credit account balance, you can follow this guide:
- Begin by obtaining a copy of your credit report to identify all credit cards linked to both spouses. Determine if you are a joint account holder or just an authorised user.
- Once you have this information, decide whether to settle or transfer the balances. It’s often best to pay off any outstanding balances and close the accounts as soon as possible to avoid future disputes and negative impacts on your credit score.
- If you have a joint credit account, you can discuss with your ex-spouse the possibility of transferring balances to new individual accounts. This option can help manage debt and maintain financial stability post-divorce. For instance, transferring a balance to a new credit card in your name alone ensures that you are solely responsible for the debt.
- If you have a credit card in your name with your former spouse as an authorised user, you can remove them from the account without their consent.
- Similarly, if your ex-spouse holds the primary account and you are an authorised user, consider removing yourself from their account to protect your credit history.
General Interbank Recurring Order (GIRO) Arrangements
GIRO arrangements are commonly used to handle regular payments, such as household expenses. Adjusting these arrangements post-divorce is crucial to ensure smooth financial management.
GIRO arrangements set up during the marriage may need to be reviewed and adjusted. These arrangements could involve payments for shared expenses, such as utilities or mortgage payments.
Assess which GIRO arrangements are still relevant and decide how to manage or update them. For example, if a GIRO payment was set up from a joint account to cover the mortgage, you’ll need to update this arrangement to reflect your new financial situation.
After the divorce, you will need to update the GIRO details to reflect the new account information. This may involve setting up new GIRO arrangements from your individual account to cover ongoing expenses. Contact the relevant organisations to update the payment details.
For instance, if the GIRO arrangement for a utility bill was previously linked to a joint account, you should update it to your personal account to avoid any payment issues.
You can also contact your bank or the institutions receiving GIRO payments to request the change. Provide the new account details and ensure that all payments are transferred smoothly. This process might involve filling out new forms or providing proof of account ownership.
Baby Bonus Cash Gift (BBCG) And Child Development Account (CDA)
Handling the Baby Bonus Cash Gift (BBCG) and Child Development Account (CDA) is a key part of managing finances during and after a divorce, particularly when children are involved.
In a divorce settlement, the recipient of the BBCG must be the parent who will have primary care and control of the child. This arrangement should be determined through mutual agreement or a Court order. For example, if one parent is designated as the primary caregiver, they will continue to receive the BBCG.
Similarly, the CDA must be managed by a trustee who is responsible for the child’s educational and healthcare expenses. If the child is under 13, the CDA trustee should be the parent with primary custody.
Adjustments to the trustee role may need to be formally agreed upon or specified in a Court order. For instance, if the original arrangement involved both parents managing the CDA, the new trustee designation should be clarified to ensure the child’s needs are met.
It is essential to establish how funds in the Baby Bonus and CDA will be used to support the child’s welfare post-divorce. This might involve negotiating who will handle these funds or seeking a Court order to formalise the arrangements.
Funds from the CDA can be used for educational and medical expenses, so agreeing on how these expenditures will be covered is crucial.
If one parent is managing the CDA, they should maintain records of all expenditures and agree on how to address these expenses. You may visit the Baby Bonus Website for more information.
Central Provident Fund (CPF) Matters
The division of CPF contributions and savings is an important aspect of the divorce process. CPF savings can be significant, and their division requires careful consideration.
The Court may order a transfer of CPF funds from one spouse’s account to the other’s or even a cash payment, depending on the specifics of the case. For example, if one spouse has a larger CPF balance, they might be required to transfer a portion to the other spouse as part of the settlement.
In addition, if CPF funds have been invested in products such as unit trusts or bonds, the division of these investments needs to be addressed. The Court may direct the liquidation of these investments and the distribution of the proceeds.
This ensures that both parties receive an equitable share of the investment returns. For instance, if significant investments were made with CPF savings during the marriage, these should be divided in a way that reflects the contributions of both parties.
Understanding CPF rules is crucial for managing asset division. CPF savings accumulated during the marriage are generally considered matrimonial assets, and the Court can order a division of these funds.
The procedures for transferring CPF savings between spouses involve submitting the necessary forms and meeting withdrawal conditions set by the CPF Board. If a Court order mandates the transfer of CPF savings, the order should be presented to the CPF Board along with the transfer request.
For more information, click here or contact the CPF Service Centre.
Insurance Matters
After a divorce, it’s crucial to re-evaluate your health and life insurance policies. This involves reviewing joint policies and adjusting to reflect your new circumstances.
For instance, if you and your former spouse share a life insurance policy, you’ll need to decide whether to continue that policy or obtain separate coverage. It’s essential to contact your insurance provider to discuss the options available and update the policy details accordingly.
If you were paying for your spouse’s insurance policies, you should address these arrangements as well. This might involve stopping payments for their policies or adjusting coverage to remove them from your plans.
For example, if you were listed as a beneficiary on your spouse’s life insurance policy, you may need to update or remove this designation.
Additionally, if your family was covered under your spouse’s employer’s group insurance scheme, it’s important to seek alternative coverage. This is because group insurance provided by an employer may not extend to you after the divorce.
Explore health insurance options available to you and your children, considering coverage that goes beyond MediShield Life if necessary.
Managing insurance claims and premiums post-divorce also requires attention. Ensure that all premiums are paid on time and that any claims are processed correctly.
If you have claims pending, follow up with your insurer to ensure they are handled appropriately. For example, if you have an ongoing health claim, ensure that it is settled before making changes to your policy.
Lasting Power Of Attorney (LPA)
A Lasting Power of Attorney (LPA) is a legal document that allows a person to appoint someone to make decisions on their behalf if they lose mental capacity. This appointment can cover both personal welfare and property matters. After a divorce, reviewing and updating your LPA to reflect your new situation is important.
If your former spouse was appointed as a Donee in your LPA, you will need to take action to update or revoke this arrangement.
To terminate your spouse’s role as a Donee, you should notify the Office of the Public Guardian (OPG) by submitting a copy of your divorce decree within 14 days of the divorce finalisation.
This ensures that your former spouse is no longer authorised to act on your behalf. You can send the necessary documentation via post or email to enquiry@publicguardian.gov.sg.
If you have not yet created an LPA and are considering doing so, it is advisable to seek legal advice to ensure that your new appointment aligns with your current wishes and needs. This will help you manage your property and personal welfare effectively in the future.
If you have not made an LPA and wish to find out more, you can click here.
Will
Following a divorce, it is important to review and update your will to ensure that it reflects your new circumstances. If your existing will includes provisions for your former spouse, these may no longer be appropriate.
Divorce does not automatically revoke a will, meaning that unless you make changes, your former spouse may still be entitled to the assets you had originally designated for them.
First, examine your current will carefully. Identify any clauses that allocate assets to your former spouse or involve them in the management of your estate. For example, if your will names your ex-spouse as an executor or beneficiary, you will need to make amendments.
It is advisable to create a new will that supersedes the old one, removing any references to your ex-spouse and updating the distribution of your assets to reflect your current wishes.
Updating your will ensures that your assets are distributed according to your intentions after the divorce. This might involve appointing new executors, redistributing assets among family members or other beneficiaries, and revising any special instructions.
For instance, if you previously allocated a portion of your estate to your ex-spouse or their family, you may want to redirect those assets to your children, other family members, or charitable causes.
Be aware that without updating your will, your former spouse could potentially still benefit from your estate. This can lead to unintended consequences, especially if your financial situation or family dynamics have changed significantly.
By revising your will, you can ensure that your assets are allocated according to your current wishes and that your estate planning aligns with your new circumstances.
Asset Distribution Between Spouses In A Divorce
In Singapore, dividing assets during a divorce involves several key principles and processes. When couples divorce, the Court will determine how to distribute assets between the parties.
This can be straightforward in uncontested divorces where the spouses reach an agreement on asset division and other financial matters. However, if the parties cannot agree, asset distribution often becomes a contentious issue.
The Court’s primary aim is to ensure a fair distribution of assets. Factors such as the contributions made by each spouse, the needs of any children, and the overall financial situation are evaluated.
The division may involve distributing specific assets, selling assets and sharing the proceeds, or a combination of both. It is essential to be aware of these considerations to navigate the process effectively.
Matrimonial Assets Acquired
Matrimonial assets are defined under Section 112(10) of the Women’s Charter as assets acquired by either party during the marriage.
This includes the matrimonial home and any other assets accumulated during the marriage. For instance, a family car, shared financial accounts, CPF savings, and insurance plans are typically considered matrimonial assets.
When dividing these assets, the Court looks at several principles. Contributions by each party, both financial and non-financial, are considered.
This includes cash contributions, efforts in acquiring or maintaining assets, and any debt incurred for the benefit of the family. Contributions towards the welfare of the family, such as homemaking or supporting the other party’s career, are also considered.
The Court evaluates various factors including the length of the marriage, with longer marriages often seeing a greater weight placed on indirect contributions. The needs of any children and any existing agreements between the parties on asset division are also important.
For example, if one spouse has supported the other’s career or if the children have specific needs, these will influence the division of assets.
In practice, this means that if one spouse has been the primary earner while the other has managed the household, both contributions will be recognised. Similarly, if the couple has taken out loans to finance their assets, these will be factored into the division.
The Court’s goal is to ensure a just and equitable distribution. This could involve dividing specific assets or selling them and sharing the proceeds.
For more guidance, tools like the Divorce AIDE (Assets Informative Division Estimator) can provide insights into how assets might be divided. Additionally, the CPF website offers information on dividing CPF savings and other related assets.
Please visit the Family Justice Courts’ (FJC) website for more information on matrimonial assets.
Housing & Development Board (HDB) Flat
When dividing or selling an HDB flat during a divorce in Singapore, there are several guidelines and considerations to follow.
If you and your spouse jointly own an HDB flat, you might face a decision on whether to sell the property or transfer ownership to one party. The decision to transfer ownership depends on several factors, including whether the Minimum Occupation Period (MOP) has been fulfilled.
The MOP requires that the flat be occupied for a minimum period before it can be sold or transferred. Additionally, the financial ability of the party wishing to retain the flat must be considered. This includes their ability to buy out the spouse’s share and manage ongoing HDB or housing loan repayments.
Another consideration is the age of the party wanting to retain the flat. Generally, one needs to be above 35 years old to retain an HDB flat solely in their name. The party must also be able to form a family nucleus, including a child for whom they have care and control or other family members.
If neither party can retain the flat, it will need to be sold on the open market or surrendered to HDB. The division of the proceeds from the sale will then be based on the Court’s order, which takes into account both parties’ financial situations and contributions.
Spousal Maintenance
Spousal maintenance is financial support ordered by the Court when one party is unable to support themselves after a divorce. In Singapore, while it is often assumed that only women claim maintenance, the law has evolved to allow incapacitated men to seek maintenance from their wives as well.
The Court determines the amount and duration of maintenance based on several factors. These include the age of the parties, the length of the marriage, and the financial resources and earning capacity of both parties.
The Court also considers any physical or mental disabilities, the standard of living enjoyed during the marriage, and contributions made towards the family’s welfare.
Maintenance can be sought even before the divorce is finalised. For example, a wife or incapacitated husband can apply for maintenance during the divorce process. Additionally, maintenance can be sought for children, but it is important to note that CPF monies cannot be used to settle maintenance claims.
To apply for maintenance or enforce an existing order, you can visit the Registry at the Family Justice Courts located at 3 Havelock Square, Singapore, or other locations listed here. For assistance with enforcement, the Singapore Council of Women’s Organisation (SCWO) offers support.
Additionally, those paying maintenance might be eligible for tax reliefs, such as Spouse/Handicapped Spouse Relief and Qualifying/Handicapped Child Relief. Click here for more information.
To find out more about child and spousal maintenance, click here.
Coming To A Mutual Agreement
Reaching a mutual agreement on financial matters during and after a divorce can significantly ease the process and reduce emotional strain, especially on any children involved.
Collaborating with your spouse to address these financial issues helps both parties understand their shared concerns and make informed decisions.
Step 1: Clear Your Mind
For effective decision-making, mental clarity is essential. Strong emotions during a divorce can cloud your judgment and make it challenging to think clearly. Decisions about finances, such as asset division and spousal maintenance, have long-term consequences and require careful consideration.
To achieve mental clarity, consider taking a break from the immediate stress of the situation. Engage in activities that help you relax and refocus, such as meditation, exercise, or simply taking a walk.
Another useful technique is to write down your thoughts and concerns. Creating a list of your priorities and goals can help organise your thoughts and clarify what you need to achieve in the financial discussions.
Emotional well-being plays a crucial role in reaching financial agreements. High stress and unresolved emotions can hinder productive discussions.
If you find it difficult to manage these feelings, consider seeking support from a therapist or counsellor. Professional guidance can help you navigate your emotions and focus on the financial aspects of the divorce.
Step 2: Create a Budget List For Your Marital Assets, Loans And Debts
Creating a comprehensive budget list is crucial for understanding your financial position during and after a divorce. This list will help you and your spouse come to an agreement on how to divide assets and settle debts.
Start by listing all your marital assets, loans, and debts. This will give you a clear picture of your financial situation. Here’s how to approach it:
1. List Your Assets: Include everything that you and your spouse own, both jointly and individually. This may include:
- Personal and Shared Financial Accounts: Bank accounts, investment portfolios, and retirement accounts.
- Property: Your home, any other real estate properties, and family vehicles.
- Insurance Plans: Life insurance, health insurance, and other relevant policies.
For example, both should be listed if you own a family car worth SGD 30,000 and a house with a market value of SGD 600,000. You may wish to download this template and use it as a guide to start creating your own list.
2. Identify and Value Loans and Debts:
- Secured Loans/Debts: Loans backed by collateral, such as housing loans or car loans.
- Unsecured Loans/Debts: Credit card debt, personal loans from banks or financial institutions, and any loans from moneylenders and other business and service providers.
For example, if you have a mortgage with an outstanding balance of SGD 250,000 and credit card debt totalling SGD 15,000, list these amounts accordingly.
3. Organise Your Financial Information: Use tools such as spreadsheets for budgeting apps to keep track of your assets and liabilities. Templates can be helpful for structuring your information clearly. For example, download a budget template to create a detailed list of assets, loans, and debts. This will help ensure you don’t miss anything.
Step 3: Consider Your Financial Capacity
Evaluating your financial capacity is crucial to managing your finances effectively after the divorce. Begin by assessing your current financial situation, which includes reviewing your income sources and monthly expenses.
This should account for any maintenance payments you may receive or need to make and any adjustments in your living costs.
Consider whether you can afford to retain significant assets such as a family home or vehicle. Evaluate if your income and any maintenance you receive will cover the ongoing costs, including mortgage payments, utility bills, and other expenses.
For example, if you plan to keep the family home, ensure your budget can handle the mortgage, utilities, and maintenance.
It’s also important to evaluate your ability to meet any remaining debts. Assess whether your income is sufficient to manage debt repayments without causing financial strain. For instance, if you want to keep the family car, make sure you can cover the loan repayments, insurance, and maintenance costs.
Finally, plan for both short-term and long-term financial stability. Set up a budget that addresses immediate post-divorce expenses and any necessary adjustments to your living situation.
Consider your long-term financial goals, including retirement savings and investments, to ensure you maintain financial stability over time.
After the divorce, planning a budget that accounts for changes in income and living costs and setting aside funds for future needs will help you achieve a stable financial future.
Step 4: Develop A Proposed Plan For Asset Division And Maintenance
Creating a fair and practical plan for dividing assets and setting maintenance arrangements is a crucial step in the divorce process. Start by outlining how the marital assets will be divided.
This includes determining which assets will go to each party and how the value of these assets will be shared. For example, if you have a family home, you might propose that one party buy out the other’s share or sell the home and split the proceeds.
Consider the financial situation of both parties when developing this plan. If one party has a significantly higher income or more assets, it may be fair for them to take on a larger share of the debt or provide a higher maintenance payment.
For instance, if one spouse has a substantial retirement portfolio and the other has lower earnings and fewer assets, the proposed plan might include a greater share of the retirement funds for the lower-earning spouse to balance the financial outcome.
When drafting your proposed plan, be detailed and realistic. Include all relevant aspects, such as the division of property, allocation of debts, and any spousal maintenance. Document your reasoning and considerations clearly.
For example, if you are proposing a certain asset split, explain how you arrived at the division and consider the financial contributions each party made during the marriage. This transparency will facilitate a smoother discussion with your spouse.
Step 5: Remain Open-Minded And Work Towards A Mutual Agreement
Flexibility and compromise are essential in negotiating and finalising a divorce settlement. It’s important to approach the discussions with an open mind, acknowledging that both parties may need to make concessions to reach a fair agreement.
For instance, if you’re attached to keeping a particular asset but your spouse needs more financial support, consider how you might adjust your expectations to accommodate both needs.
Effective communication is key to resolving conflicts and reaching an agreement. Clearly express your needs and concerns, and listen actively to your spouse’s perspective.
Use strategies such as reflecting on what you hear to ensure you understand their position. For example, if your spouse expresses concern about maintaining financial stability, acknowledge their worries and discuss potential solutions together.
The benefits of reaching a mutual agreement include a smoother transition into post-divorce life and potentially reduced legal costs.
An agreement that both parties find acceptable can also lessen the emotional strain on you and your family, especially if children are involved. It ensures that the division of assets and financial arrangements are handled amicably, which can foster better cooperation in future interactions.
Conclusion About Divorce Finances In Singapore
Managing finances during and after a divorce requires careful consideration and planning. Addressing divorce finances involves creating a comprehensive budget, evaluating your financial capacity, and developing a fair plan for asset division and spousal maintenance.
Clear communication and flexibility are crucial for reaching mutual agreements that balance both parties’ needs and contributions.
Thorough financial planning and seeking legal advice are vital to navigating the complexities of divorce and finances. Professional guidance can help you understand your rights and obligations, ensuring that your financial situation is addressed effectively.
If you are facing challenges with divorce finances or need assistance with managing the legal aspects of your divorce, consider Tembusu Law.
Our team of experienced family and divorce lawyers in Singapore can provide you with the support and expertise you need throughout the divorce process. We specialise in handling complex financial matters, asset division, and spousal maintenance issues.
Contact us for a free consultation today and ensure your financial and legal affairs are managed carefully and precisely. Let us help you achieve a fair resolution and gain peace of mind during this challenging time.
Frequently Asked Questions About Divorce Finances In Singapore
Are Prenuptial Agreements Considered In The Division Of Assets?
Yes, prenuptial agreements are considered in the division of assets if they are legally binding and properly executed.
These agreements outline how assets and debts will be divided in the event of a divorce, and they can influence the final division based on the terms agreed upon by both parties. However, the Court may review the agreement to ensure it is fair and compliant with current legal standards.
Does The Division Of Matrimonial Assets Include Retirement Accounts?
Yes, retirement accounts are typically included in the division of matrimonial assets. The Court or the parties involved will assess the contributions made to these accounts during the marriage and divide them accordingly.
The division process may involve calculating the accumulated value and determining how it should be split to reflect each party’s contributions and entitlements.
Are There Tax Implications For Dividing Marital Assets?
Yes, there can be tax implications when dividing marital assets. For example, transferring or selling assets may trigger capital gains tax or other tax liabilities, depending on the nature of the assets and their value.
It is important to consult with a tax advisor to understand and plan for any potential tax consequences related to the division of assets.
Can I Negotiate A Financial Settlement Without Going To Court?
Yes, you can negotiate a financial settlement without going to Court through methods such as mediation or collaborative law.
These approaches involve working with a neutral mediator or a team of professionals to reach an agreement that is acceptable to both parties. Negotiating outside of Court can often lead to a more amicable resolution and reduce legal costs and emotional stress.
