Divorce is stressful
Divorce is ranked as the second most stressful life event on the Holmes and Rahe Stress Scale, following the death of a spouse and two places before imprisonment and death of a close family member.
“Divorce is deceptive. Legally it is a single event, but psychologically it is a chain – sometimes a never-ending chain – of events, relocations and radically shifting relationships strung through time, a process that forever changes the lives of the people involved.”
– Judith Wallerstein and Sandra Blakeslee, Second Chances
The impact of divorce reaches far beyond the disruption, restructuring, and rupture of the marital attachment bond. Divorce affects relationships in every aspect of the couple’s lives – the relationships with their children, with extended family members, friends and community support systems, both in the present time and into the future. Divorce disrupts and often destroys one of the most significant and powerful attachment bonds that we adults form – the bond with our marriage partner, thus also threatening the feelings of safety, security and survival this attachment bond has ensured
An often ugly, and much-ignored face of divorce tend to be the contest for ancillaries. For divorcing couples, ancillaries often can be tricky and can become a ferociously contested area given that under Section 112 of the Woman’s Charter, the court has complete power to divide assets of the parties in a just and equitable manner. Ancillaries then cease being a matter of dollar and sense, but rather a barometer to quantify the amount of time and effort each party puts into divorce. After all, “just and equitable” can mean a variety of things, and for a divorcing couple, they will always consider their own case to be “just” and they should in the circumstances, receive “equitable” restitution. Needless to say, if children are involved, the ancillary process becomes trickier.
Prenuptial as insurance
Prenuptials can be a sensitive topic and may be perceived by some to be a sign of distrust. Contrary to popular belief, a prenuptial agreement does not provide the party with a stronger economic position an escape clause to renegade all financial responsibility to their spouse, but rather, it is an instrument for resolving the difficult issues of the division of premarital, as well as marital, assets calmly and rationally. In fact, a prenup should not be viewed any differently from an insurance policy – both documents are not strictly necessary and they both deal with issues that are not particularly pleasant to think about but they can help to minimise risk, reduce doubt and offer peace of mind. The truth is that every marriage can potentially end in a divorce.
Married couples can prepare a prenuptial agreement to offset the cost of divorce
One way for married couples to protect their assets and their wealth is to prepare a prenuptial agreement. A prenuptial agreement (or ‘prenup’) is an agreement made before a marriage that outlines the terms for the distribution of assets, debt liability, maintenance and other relevant matters in the event of a divorce.
A prenup can be enforced under Section 112 of the Singapore Women’s Charter
At a later stage of divorce, couples in Singapore can submit a prenup for the court’s reference. Section 112 of the Singapore Women’s Charter states that “any agreement between the parties with respect to the ownership and division of the matrimonial assets made in contemplation of divorce” will be taken into consideration during divorce proceedings.
As such, under section 112 of the Women’s Charter, the court has the power to divide the matrimonial assets of the parties in a just and equitable manner with reference to the prescribed circumstantial factors. In the midst of doing so, the court can refer to the prenuptial agreement to reach its just and equitable determination. But it is not bound to enforce the agreement.
Although a prenup is not enforceable by itself, it can be useful in certain circumstances:
- a prenup may be helpful in guiding court proceedings;
- a prenup can help steer parties to a swift resolution of divorce proceedings;
- a prenup may be a good reference point for negotiations; and
- a prenup can be a form of inheritance protection
Ideally, both parties should seek advice from their own lawyers so that both parties are clear about the legal implications of the prenup. As previously mentioned, the court will generally be more inclined to consider giving effect to a prenup when both parties have received independent legal advice. Just remember that a prenup may not be a guarantee that the court will settle a divorce based on what has been agreed between the parties but it does go some way in protecting the respective interests of both parties in the relationship.
Couples must be prepared to meet the Singapore court’s stringent standards for enforcing prenups
Nonetheless, the prenup is only one consideration among others as stated in the Women’s Charter. The prenup itself is held to relatively stringent standards under the Singapore court’s scrutiny. Lawyers Sharanjit Kaur and Suzanne Kingston write of the Singapore court being so far “reluctant” to enforce prenups as opposed to other countries where prenups are more likely to be strictly enforced.
As a result, couples in Singapore must be prepared to undergo negotiations and seek the appropriate legal advice to create a prenup that will meet the standards of the Singapore court.
Get started with this prenup checklist
If you are unsure of how to begin discussing your prenup, use this checklist of the essential steps to prepare and finalise your prenup.
- Start preparing the prenup before planning your wedding
- Engage separate and independent legal representation
- Set an effective date
- Create a list of separately owned premarital property
- Discuss the division of matrimonial assets in the event of marital dissolution
- Include clauses to limit your debt liability
- Make a parenting plan
- Establish the property rights of your children
- Choose the governing law for your prenup
- Sign the agreement at least 28 days before your wedding
#1. Start preparing the prenup before planning your wedding
The time required to prepare a prenup depends on two factors: The total amount of assets between both parties
- The total amount of assets between both parties
- The complexity of the required clauses
By starting early, you and your spouse will have ample time to negotiate the prenup’s terms and ensure full and accurate disclosure of your respective finances.
Discussing the terms of your prenup early also allows you and your spouse to get comfortable with making concrete plans for your married life.
#2. Engage separate and independent legal representation
Before drafting the actual prenup, you and your spouse must each engage a lawyer. Engaging your own lawyer allows both of you to access trustworthy legal advice which you would need to prepare an agreement that is fair for both parties.
The involvement of independent legal counsel ensures that:
- Neither party signed the agreement under duress or have signed without mental capacity (ability to make decisions when decisions need to be made)
- Both parties fully understood their rights, and were not compromised by emotion or ignorance of any legal implications
- The terms of the agreement are in line with the Singapore Women’s Charter
Through ensuring that the terms of the agreement are fair, your lawyer (and your spouse’s) provide invaluable legal support in encouraging the court to uphold your prenup should you need to use it.
#3. Set an effective date
An effective date establishes when the agreement will take effect. For most prenups, the effective date is usually the date of the couple’s marriage.
If a couple does not marry by the effective date, the prenuptial agreement will be rendered invalid and neither party can enforce its terms.
#4. Create a list of separately owned premarital property
Premarital property refers to the property individually owned by each party before the marriage.
Matched with the appropriate clauses, a clear and finite list of premarital property in your prenup enables you and your spouse to retain ownership of your individual property during and after your marriage.
#5. Discuss the division of matrimonial assets in the event of marital dissolution
Marital dissolution, or the end of your marriage, can take place due to divorce or death.
a) Marital dissolution due to divorce
A divorce is a legal procedure that ends a marriage. After the first stage of getting a divorce approved, the second stage involves the division of matrimonial assets.
Singapore Women’s Charter defines a “matrimonial asset” as:
- Assets acquired by either party before the marriage that has been
- Used or enjoyed by both parties or their children, including the matrimonial home where both parties reside with their children
- Substantially improved during the marriage
- Other assets of any nature acquired during the marriage
Marital assets do not include any asset acquired by gift or inheritance, provided that it has not been substantially improved during the marriage by either or both parties.
During this stage of divorce, you can use your prenup to protect your inheritance and other valuable assets. Legally speaking, there is no exact legal definition on what it means to “substantially improve” an asset. Hence, this ambiguity may lead to conflicting opinions on who deserves ownership over certain assets, thus resulting in a lengthy and contentious divorce.
b) Marital dissolution due to death
This section of your prenup is useful in ensuring that in the event of your or your spouse’s death, the surviving spouse can continue to live in your matrimonial home. To do so, you and your spouse will have to agree that whoever survives the death of the other will receive the personal residence, furnishings and personal property of the deceased party.
In addition, this section can complement your Will, a document which sets out the distribution of your assets after your death. You can include a clause which states that the surviving spouse agrees to waive all rights to the other’s assets save for their share as stipulated in the deceased spouse’s Will.
#6. Include clauses to limit your debt liability
You may choose to address two types of debt:
- Debts acquired before marriage–Do you intend to help your spouse clear their premarital debts, or do you both agree to each be responsible for your own debts?
- Debts acquired during marriage–How do you intend to split the responsibility for marital debt? It is helpful to put both your intentions in writing for reference when making plans to jointly apply for a loan, or for any other situation where the issue of debt may arise.
A debt clause can also protect you from taking on debt incurred by your spouse. This may happen even if you are completely unaware that your spouse has made an agreement with a creditor on their own. By limiting your liability from the start, you can keep creditors from going after your marital assets, such as your business.
#7. Make a parenting plan
A parenting plan generally addresses matters of
- Child custody and access
- Child and spousal maintenance (financial support)
Creating a parenting plan in advance can expedite the divorce process in two ways:
1) You can replicate or amend the terms for your official parenting plan form as part of your divorce application if you have children below 21 years old
2) You can be exempted from the Mandatory Parenting Programme if you have children below 14 years old
#8. Establish the property rights of your children
This section is most relevant for individuals who are remarrying and have children from prior marriage(s).
You may need to delineate the property rights of your children:
- Born from prior marriage(s)
- Born to you and your current spouse
#9. Choose the governing law for your prenup
Your choice of governing law indicates the system of law which your prenup will be based on.
A prenup’s governing law is a major factor in determining its enforceability during divorce proceedings. In Singapore, the seminal case TQ v TR [2009] shows that prenuptial agreements based on foreign law are more likely to be strictly enforced, especially if the prenup’s holders are both foreign nationals.
#10. Sign the agreement at least 28 days before your wedding
Like with starting to discuss your prenup early, you should also finalize your prenup as early as you can. Finalizing your prenup too close to the wedding date may give the impression that one party was pressured into signing it at the last minute.
By signing early, perhaps even before sending out the wedding invitations, you can better convince the court that you and your spouse were not compromised by ignorance or emotion at the time the agreement was made.
Have a question on drafting prenupital agreements?
If you have a would like to set up a prenuptial agreement, you can request a quotation from Stephen. Alternatively, you can talk to a lawyer by getting a Quick Consult. When you get an AsiaLawNetwork Quick Consult, a lawyer will call you back within 1-2 days for a transparent, flat fee of S$49 to answer your questions and give you practical legal guidance on your potential next steps.
This article is written by Stephen Wong from Sterling Law Corporation and Joseline.
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