According to the data from the Ministry of Social and Family Development (MSF), a greater proportion of married couples here in Singapore are divorcing. There have also been reports of divorce in other parts of the world, particularly after the Covid-19 pandemic. The need to balance work progress and family obligations from the typical dual-income household, child care, and possibly the financial and emotional stress of being in the sandwich generation may have also had an impact on the length of the marriage.
Divorce can be difficult, not just emotionally, but also financially. Many people are concerned about how a divorce would affect their financial situation.
How marital assets will be shared, the cost of the divorce, and the availability of maintenance fees for their spouse and children are some of the top worries.
Even though it may seem overwhelming, arming yourself with knowledge and planning can help you safeguard your assets and begin a new chapter of your life on the right foot.
Here is a quick rundown of the typical financial concerns associated with divorce in Singapore:
Cost of a divorce
The cost of a divorce in Singapore varies depending on whether it is uncontested or amicable. Simple uncontested divorces usually involve easier process and cost ranges between $1,500 and $3,500.
On the other hand, a contested divorce may be more expensive and costs between $10,000 and $35,000 which involves at least one period of divorce between the parties.
Please be aware that the quoted rates are only estimates and will change depending on the law firm.
Distribution of marital assets
Since the partition of marital assets during a divorce can have a long-term effect on one’s way of living, it is frequently an issue of contention. Matrimonial assets in Singapore include:
- Assets accumulated by either one party or both throughout the marriage
- Assets used by one party or both and their children for various purposes
- Pre-marital assets that significantly improved in quality during the marriage
Such circumstances are typically decided on a case-by-case basis because there is no particular approach for dealing with this issue.
It is advisable to maintain track of the main marital assets and your payments to them in order to protect your assets.
For instance, if you are the one paying the preschool costs for your child, you can demonstrate your commitment to the family by providing bank bills that show the monthly withdrawals from your account.
Marital home
The majority of your and your partner’s assets would likely come from the marital home. Couples have a few options for dividing the marital house depending on whether it is a HDB or private property.
If both of you agree, you or your partner can sell the flat and divide the proceeds in a specific way, or you can transfer one of your interests in it to the other.
Again, it is crucial to have documentation of your contributions, thus in this situation, using CPF savings is definitely the best course of action. Keep the receipts for any home improvements you paid for as evidence of your financial support of the marital home.
Please be aware that the marital residence must meet the requirements to qualify as a marital asset. It might not count as a marital asset, for instance, if the property was received as a gift from a family member before the couple were married or was passed down to one spouse’s mother after she passed away.
If you have been assigned to keep the HDB flat, you must also meet the requirements for eligibility set forth by HDB in order to do so. You must fit into one of these two categories:
Situation 1: You are capable of paying back the house loan for the flat and you have custody of your children.
Situation 2: The Single Singapore Citizen Scheme qualifies you.
Fees for spousal and child support
The Women’s Charter of Singapore has provisions about the right to maintenance. In the past, only the wife received maintenance, but in recent years, modifications have been made to provide a specific exception for spouses who are unable to support themselves due to a condition.
The court will consider the evidence to decide if the party requesting maintenance has a need for it, as well as the proper level of maintenance. What constitutes “reasonable expenses” in spousal support is a possible source of contention.
Similarly, child support must be paid because it is a legal requirement for parents to support their children until they become 21. If you have custody of the child or are the legal guardian, you may ask your spouse for child support. The amount of spousal or child maintenance that should be paid is not determined by any formula.
The court will take into account a number of things, such as:
- The past, present, and projected earnings of each party, as well as their potential earnings
- The long-term financial requirements and duties of each party/child
- The standard of living of each party before the marriage broke down
- Any contributions to the household that each party has made, both directly and indirectly
- How long the marriage has lasted
One crucial piece of advice for individuals requesting spousal maintenance is to constantly fight for at least minimal maintenance payments. This guarantees that, should the need arise, you will still be able to request an increase in maintenance.
There will be no chance to get maintenance later on if the judge decides not to grant any maintenance at all.
Although nobody enters a marriage expecting to divorce, it may become essential if a marriage cannot be saved. Because our finances are intertwined with our marriage, the need to break the marriage could have a significant financial impact.
Due to the emotional nature of divorce, it is preferable to reach an amicable resolution as opposed to prolonging the process and causing pain to all parties involved (as well as to your wallet). Knowing how a divorce could affect your finances might help you make the best choices to speed up the process and, hopefully, lessen everyone’s financial and emotional suffering.
Get going already!
For a financial health check and advice on how to properly arrange your funds, reach out to a financial advisor as soon as you’re ready to start.