Financial issues in a divorce are often among the most important matters to consider. Decisions made during the divorce may affect your home, savings, CPF monies, maintenance obligations and financial position after the marriage ends.
Questions often arise about joint bank accounts, matrimonial assets, the family home, debts and maintenance. In some cases, one spouse may also be concerned that money is being transferred or assets are not being fully disclosed.
Understanding your financial position early can help you make more informed decisions before agreeing to a settlement.
Key Points
- Financial issues can include property, savings, CPF, maintenance and debts.
- Matrimonial assets are not automatically divided equally.
- The matrimonial home is often one of the most significant assets.
- Joint accounts and liabilities should be considered carefully during divorce.
- Financial disclosure becomes particularly important where assets are disputed.
Managing joint accounts
If you have joint bank accounts with your spouse, you should consider how those accounts will be managed while the divorce is ongoing.
Joint accounts may contain savings accumulated during the marriage and may form part of the overall financial arrangements that need to be considered when matrimonial assets are divided. The Singapore Courts specifically identify monies in joint bank accounts as one of the matters spouses may need to address when considering asset distribution.
It may be useful to establish:
- what joint accounts exist;
- the current balances;
- who is contributing to and withdrawing from them;
- what regular household expenses are being paid from them; and
- whether there have been significant or unusual withdrawals.
This does not mean you should immediately empty or close a joint account. Moving money without considering the legal consequences may create further disputes.
Keep copies of relevant statements and transaction records, particularly if you are concerned about significant withdrawals.
Changes in Income and Expenses
Divorce can result in significant changes to the financial position of both spouses.
Instead of maintaining one household, the family may need to fund two. There may be additional expenses involving accommodation, children, transport, household costs and legal proceedings.
If one spouse has historically depended financially on the other, maintenance may also need to be considered. Maintenance of a spouse and children is one of the ancillary matters that may be dealt with as part of divorce proceedings.
It can therefore be useful to prepare a realistic picture of your: income + regular expenses + debts + assets + future housing needs.
This can help you understand your financial position before settlement discussions begin.
Read More: The Importance of Financial Disclosure in a Divorce
Division of Matrimonial Assets
The division of matrimonial assets is often one of the most significant financial issues in a divorce.
Assets that may need to be considered can include:
- the matrimonial home;
- other properties;
- bank accounts and savings;
- investments and shares;
- business interests;
- insurance policies;
- vehicles;
- CPF monies; and
- other valuable assets.
However, not every asset owned by either spouse is necessarily treated in the same way. Whether a particular asset forms part of the matrimonial asset pool can depend on matters including when and how it was acquired and what happened to the asset during the marriage.
This is particularly important where a spouse owned property or other significant assets before the marriage, or received assets by gift or inheritance.
Where ancillary matters are disputed, the Family Justice Courts require parties to provide extensive financial information and may require evidence supporting a position that particular assets should not be treated as matrimonial assets.
The court looks into many factors, including prenup agreements, the needs of the children, if any, and the direct financial contribution made by the parties to acquire the assets before dividing them.
Are Matrimonial Assets Always Divided 50/50?
No. There is no automatic rule that matrimonial assets must always be divided equally.
The Court considers the circumstances of the marriage and the parties’ contributions before arriving at a division that is just and equitable.
For this reason, simply calculating the total value of the assets and dividing the figure by two may not accurately reflect the eventual outcome.
Read More: 3 Myths Surrounding Division of Matrimonial Assets
The Matrimonial Home
Accommodation is often one of the most immediate financial concerns following separation.
If you own an HDB flat or private property, questions may arise about:
- whether one spouse can retain the property;
- whether it should be sold;
- how the outstanding mortgage will be dealt with;
- how sale proceeds will be divided;
- CPF monies used towards the property; and
- where each spouse and the children will live after divorce.
The Singapore Courts specifically identify the matrimonial home, CPF monies and other financial assets as matters spouses should consider when dealing with asset distribution.
Where an HDB flat is involved, the available options will also depend on HDB eligibility requirements.
The financial consequences of retaining a property should therefore be considered alongside the legal question of whether you are entitled and eligible to do so.
Read More: Common Questions About Matrimonial Property Upon Divorce
Debts and Liabilities
Divorce involves considering not only what the spouses own, but also what they owe.
Debts may include:
- housing loans;
- personal loans;
- credit-card balances;
- vehicle financing;
- business liabilities; and
- other financial obligations.
A debt being in one spouse’s name does not necessarily answer every question about how it should be treated during the divorce. The circumstances in which the debt was incurred may be relevant.
Where ancillary matters are contested, the Courts may require evidence of outstanding debts and information explaining why they were incurred.
It is therefore important to obtain a clear picture of both assets and liabilities before assessing a proposed financial settlement.
Financial Control and Undisclosed Assets
Financial abuse or control can occur in different ways.
One spouse may control access to bank accounts, provide limited information about the family’s finances, prevent the other spouse from accessing money, or make significant financial decisions without their knowledge.
Another concern that sometimes arises during divorce is whether assets are being hidden, transferred or undervalued.
You may not know:
- how much your spouse has in bank accounts;
- what investments they own;
- whether they have business interests;
- whether money has recently been transferred;
- what insurance policies exist; or
- what assets are held overseas.
A lack of knowledge about the family finances does not necessarily mean that you should simply accept the information provided by your spouse.
Where financial matters are disputed, the Court process provides for substantial financial disclosure. Depending on the circumstances, this can include bank statements, CPF statements, property information, investments, shareholdings, business interests, insurance policies, vehicles, liabilities and other valuables.
If you are concerned about unusual transactions, preserve the financial records already legitimately available to you and obtain legal advice before taking action.
Read more: Full And Frank Disclosure In Divorce Proceedings
What Financial Documents Should I Prepare?
It is useful to begin organising your financial information early, particularly where significant assets are involved.
Depending on your circumstances, relevant documents may include:
- recent bank statements;
- CPF statements;
- payslips and income information;
- IRAS Notices of Assessment;
- property and mortgage statements;
- CPF housing withdrawal information;
- investment and shareholding records;
- insurance policies;
- business ownership information; and
- documents relating to loans and other debts.
These broadly correspond with the categories of financial documents the Family Justice Courts may require where ancillary financial matters are contested.
Preparing this information can help your lawyer understand the overall financial picture and identify areas where further information may be required.
Read more: The Importance of Financial Disclosure in a Divorce
Should I Agree to a Financial Settlement Before Getting Legal Advice?
Reaching an agreement with your spouse can reduce conflict, time and legal costs. However, an agreement should ideally be made with an understanding of what you own, what you owe and the consequences of the proposed settlement.
For example, keeping the matrimonial home may initially appear preferable to selling it. But you may also need to consider the mortgage, CPF implications, affordability and your longer-term housing needs.
Similarly, accepting a particular percentage of the matrimonial assets without understanding what falls within the asset pool may make it difficult to assess whether the proposal is reasonable.
Obtaining legal advice does not necessarily mean that the divorce must become contested. It can help you understand your position so that negotiations take place on a more informed basis.
Understanding Your Financial Position
At GJC Law, our divorce lawyers regularly advise on the financial aspects of divorce, including matrimonial assets, HDB and private property, CPF monies, maintenance, businesses, investments, debts and disputed financial disclosure.
Where substantial or complex assets are involved, early advice can help identify what information should be obtained, the issues likely to require negotiation and the possible implications of a proposed settlement.
If you require advice about your particular financial circumstances, you may arrange a Strategic Divorce Consultation with Gloria James-Civetta or one of our divorce lawyers to discuss your financial position, understand the issues that may affect you and consider your options before agreeing to settlement terms.
We’re here for you
GJC Law offers a range of consultation options, including a complimentary 20-minute Divorce Process Consultation and 30-minute or 1-hour Strategic Divorce Consultations.
Speak with GJC Law before making significant financial decisions in your divorce.
