One question that our divorce lawyers commonly receive from soon-to-be newly-weds is whether certain assets (owned before marriage) can be kept by their respective owners in the event of any subsequent divorce.
This is known as ringfencing of pre-marital assets and will be the subject of this article.
What is a pre-marital asset?
A pre-marital asset is an asset that a person owns prior to marriage. Amongst other things, this includes savings and property.
Gifts and inheritance received prior to the marriage would also be classified as a pre-marital assets.
What is the significance of a pre-marital asset?
In a divorce, the Parties’ matrimonial assets will be added together to form the matrimonial pool. If Parties are unable to agree on how matrimonial pool is to be dealt with, the Court will then decide on a “just and equitable” division as part of the ancillary matters.
For more information on how the Singapore Courts divide assets, please click here.
Strictly speaking, a pre-marital asset would not be added to the matrimonial pool as it is not “acquired during the marriage”. Accordingly, because of an asset’s pre-marital nature, it would typically not be subject to division by the Court in the event of a contested divorce.
Does this mean that pre-marital assets will never be included in the matrimonial pool?
No – pursuant to section 112(10) of the Women’s Charter, a pre-marital asset can still be transformed into a matrimonial asset in either of the following circumstances (the “Exceptions”): –
- The ordinary use or enjoyment exception: this is when a pre-marital asset has been ordinarily used or enjoyed by both parties or one or more of their children while the parties are residing together for shelter or transportation or for household, education, recreational, social or aesthetic purposes
- The substantial improvement exception: this exception applies when a pre-marital asset has been substantially improved during the marriage by the other party or by both parties to the marriage.
If either of the Exceptions applies, the pre-marital asset will lose its nature as such an asset and will be subject to division in the event of a divorce.
How do I protect my pre-marital asset(s)?
A Party who wishes to ensure that his or her asset(s) acquired before the marriage will not be divided as part of a subsequent divorce would have to ensure that the pre-marital asset is not transformed into a matrimonial asset.
To ringfence a pre-marital asset, one should ensure that they do not engage either of the two exceptions as elaborated above.
Example 1 – Monies
In the case of monies earned prior to the marriage, to avoid any transformation into a matrimonial asset, the ringfenced monies cannot be used or put towards the family’s benefit and should not be substantially improved (i.e. receive an increase in value) through the efforts of the other spouse.
It would also be prudent for one to keep the ringfenced monies separate and distinct from matrimonial assets. In other words, the monies earned or otherwise acquired prior to the marriage should not be kept in the same account as monies earned during the marriage.
Example 2 – Property
In order to ringfence property acquired before the marriage, one would have to make sure that it is not utilised as a Parties’ matrimonial home.
To avoid transformation into a matrimonial asset, such pre-marital property should also not be ordinarily used and enjoyed by the family. For instance, this would mean that the pre-marital property cannot serve as the Parties’ weekend home.
In the case of a pre-marital property, one would also be careful to ensure that the non-owner spouse does not substantially improve the same by for instance, funding or substantially assisting in renovations.
What if a pre-marital asset falls into either of the Exceptions?
In such an event, one may wish to consider having a post-nuptial / marital agreement drafted. Such an agreement while not strictly enforceable (in the event of a divorce), would still be one of the factors that the Court will consider when deciding the division of matrimonial assets.
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