Financial Planning Tips Post-Divorce from A Legal Perspective

The divorce has been finalised, the marital assets have been divided. You are now back to navigating life as a single individual. What should you do now with the share of assets you have been awarded? However much or little it is, it is important for you to have a financial plan to ensure long-term stability from hereon. 

Understanding the Financial Implications of Divorce

The divorce process involves various financial considerations, including the division of matrimonial assets, determination of maintenance obligations and even budgeting legal fees (if any).

Division of Matrimonial Assets

According to section 112(10) of the Women’s Charter 1961, “matrimonial assets” include:

• Assets acquired before the marriage but substantially improved during the marriage;
• Assets acquired before the marriage but used by both parties or their children during the marriage;
• Assets acquired during the marriage.

The Court will distribute the assets between the parties based on the “just and equitable” principle, considering factors such as the length of the marriage, the contributions of each party and the needs of any children involved. 

Spousal and Child Maintenance

Spousal maintenance is financial support that is provided to one spouse from the other, post-divorce. In Singapore, spousal maintenance may be awarded to wives, and, in rare cases, to husbands who are incapacitated and unable to support themselves. In determining the amount of spousal maintenance to be paid, the Court considers factors such as the needs of the recipient, the means of the payee, the standard of living, the age of each party and the duration of the marriage.

Child maintenance is the obligation to support one’s children financially. Parents are legally required to maintain their children until they turn 21 years of age. In determining the amount of child maintenance to be paid, the Court assesses the child’s needs, the parents’ financial capabilities and the child’s standard of living before the divorce. 

Estate Planning: Updating Legal Documents

After a divorce, it is crucial to update estate planning documents such as the Will, to reflect new intentions and ensure that assets are distributed according to current wishes.

Wills

A divorce does not automatically revoke a Will. If your former spouse is named as a beneficiary or executor in your current Will, you should revise the Will to designate new beneficiaries and executors. 

CPF Nominations

Central Provident Fund (CPF) nominations remain valid after a divorce unless they are updated. Submit a new nomination reflecting your current preferences to prevent your former spouse from inheriting your CPF savings.

Life Insurance Policies

Remember to review life insurance policies to ensure that your beneficiaries are updated. If your former spouse is a beneficiary, consider changing this to align with your current intentions. 

Lasting Power of Attorney (LPA)

If your former spouse was appointed as your donee under an LPA, the appointment is not automatically terminated upon the dissolution or annulment of the marriage unless the LPA specifically provided that it was to do so. Therefore, it is advisable to appoint a new donee to manage your affairs as soon as your circumstances change, in case of mental incapacity. 

Managing Financial Accounts and Debts

Ensure your financial independence and stability by managing your financial accounts and debts after the divorce.

Closing Joint Accounts

You should close all joint bank accounts and credit cards to prevent unauthorised access and potential disputes. It is important to note that all jointly owned property transfers to the remaining survivor upon death of one of the owners. Settle any outstanding balances before closure to avoid complications. 

Opening Individual Accounts

Establish individual bank accounts to manage personal finances independently. This separation simplifies budgeting and financial planning. 

Addressing Joint Debts

Joint debts, such as loans or credit card balances, remain the responsibility of both parties unless otherwise agreed upon. Iti s essential to address these debts promptly to prevent legal repercussions. 

Budgeting and Financial Planning

It is prudent to create a post-divorce budget to manage expenses and plan for future financial goals.

Assessing Income and Expenses

Evaluate your income sources and monthly expenses to understand your financial standing. This assessment helps in creating a realistic budget. 

Emergency Fund

Establish an emergency fund to cover unexpected expenses. This would provide financial security during transitional periods. 

Retirement Planning

Review retirement plans and make the necessary adjustments to ensure long-term financial security. Consider consulting a financial advisor to align your retirement goals with your current financial circumstances. 

Seeking Professional Assistance

Navigating financial planning issues post-divorce can be complex. Seek professional assistance to ensure that you are well-informed on decision-making so as to protect your financial interests.

Legal Professionals

Engage a lawyer specialising in family law to understand your rights and obligations regarding asset division, maintenance and estate planning. 

Financial Advisors

Consult a certified financial planner to develop a comprehensive financial plan, including budgeting, investment strategies and retirement planning. 

Tax Consultants

Work with a tax consultant to understand the tax implications of dividing assets and making maintenance payments to ensure compliance with tax laws. 

Legal Aid and Support Services

Legal aid services are available for individuals facing financial constraints.

Legal Aid Bureau (LAB)

The Legal Aid Bureau provides legal representation and advice in civil matters, including divorce, to individuals of limited means. Eligibility is based on a means test and a merits test. 

Family Service Centres

Family Service Centres offer counselling and support services to individuals and families undergoing divorce, assisting in emotional and practical aspects of the process. 

Post-divorce financial planning from a legal perspective in Singapore involves updating estate planning documents, managing financial accounts and debts, creating a realistic budget and seeking professional assistance. By taking proactive steps, individuals can navigate the complexities of post-divorce financial planning and work towards achieving financial stability and security.

As an experienced divorce lawyer in Singapore, I can provide you with the necessary legal and emotional support. Contact me today at 8039 9083 for a consultation. 

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal or financial advice. For personalised advice, please consult with a qualified legal or financial professional.