When a marriage ends, so much of your life as you know it changes and is redefined. It’s important to make concrete plans for your future, that provide clarity, security, and independence.
Goal setting and financial planning during divorce helps you build a bridge from your current situation to your envisioned future, turning uncertainty into opportunity. By thoughtfully setting and planning financial goals, you can prepare to meet immediate needs and create a stable foundation for what lies ahead.
Why Financial Goal Setting Matters During Divorce
Setting clear financial goals is fundamental when navigating divorce, as it helps you determine what you need to ensure that you have financial security, have sufficient resources to sustain your current lifestyle and for any future plans. Here’s how to begin:
Define Your Financial Goals
Take a step back to assess your financial aspirations and visualise what you want post-divorce. Avoid rushing this process; it is crucial to be realistic and thorough in this process, particularly since any financial agreements must be fair and equitable, and ideally, mutually agreed upon. Without such an agreement, the Courts in Singapore will have to intervene and make a judgment, which may potentially lead to outcomes neither party intended.
Plan Across Different Time Frames
Consider your short-term needs and long-term vision as you set financial goals. Addressing each of these timeframes can help you structure your plan effectively:
- Short-Term (Next 5 Years): Consider your immediate needs post-divorce, including housing, daily expenses, and potential relocation costs.
- Medium-Term (5 to 10 Years): As your life stabilises, set goals aligned with building stability, such as saving for your children’s education, furthering career growth, or acquiring immovable assets, if that is part of your plan.
- Long-Term (More Than 10 Years): Prioritize retirement and financial independence, ensuring that you have a stable plan to support yourself.
Write Down and Prioritize Your Goals
Documenting your goals helps clarify your priorities, allowing you to discuss them with your lawyer and financial advisor. During this process, you may eliminate or adjust your needs and expectations, based on your circumstances and potential limitations.
Read more: Effective Legal Strategies for Wealth Management in Marriage
Financial Planning Benefits During Divorce
Creating a financial plan during divorce offers numerous benefits, from reducing stress to protecting assets. Here’s why financial planning is essential:
- Minimizing Financial Surprises: Divorce often results in unexpected expenses. Financial planning helps you prepare for costs like legal fees, child support, and alimony, providing a realistic view of your financial needs and obligations.
- Avoiding Costly Mistakes: The stress and emotional toll of divorce proceedings can cause you to make hasty decisions in the moment, that are not financially sound. A structured financial plan reduces the risk of hasty decisions that could harm your financial future.
- Protecting Your Interests: Divorce involves dividing marital assets. Knowing your needs and your rights helps you negotiate agreements, that support long-term financial stability.
- Long-Term Security: A sound financial plan lays the foundation for future stability, whether through asset division, savings, or investments.
Read more: Assessing & Protecting Your Assets Before Divorce
Asset Division Strategies and Key Considerations in Singapore
Asset division is a critical part of divorce, especially given the complexities involved with property and other financial assets. Developing a strategy tailored to your situation helps ensure fairness and aligns with your goals.
Envision Your Post-Divorce Life
When deciding which assets to keep, consider how they fit into your future:
- Would you prefer to keep the marital home, or does relocating make more sense?
- How will property or assets impact your lifestyle? For instance, can you maintain the home financially?
- For investments, consider how each aligns with your risk tolerance and goals.
- Evaluate liquidity needs. Cash reserves allow flexibility, while non-liquid assets (such as real estate) may be more challenging for immediate expenses.
HDB Rules and Property Division
In Singapore, property division is governed by specific rules, particularly regarding HDB flats. If you and your spouse own an HDB flat, consider the following:
- At least one party must be eligible under current HDB criteria (e.g., Singaporean status, age, or remarriage) to retain an HDB flat after divorce.
- If neither party qualifies, the flat may need to be sold, with proceeds divided according to the court’s decision.
- HDB property division involves understanding eligibility requirements, market valuations, and whether retaining the HDB property aligns with your financial goals.
Read more: Divorce Proceedings: CPF and HDB Standard Queries
Assess Cash Flow and Liquidity Needs
Cash flow and liquidity are key considerations in asset division. For example, real estate and retirement accounts are non-liquid assets that may not provide immediate funds. You may need accessible cash to cover immediate expenses, which you may not be able to get from such non-liquid assets.
Consider Future Benefits
Certain assets, such as pensions or CPF savings, may hold significant future value, but they won’t provide immediate liquidity. Balancing long-term assets with liquid investments helps ensure you have financial flexibility to cover your living expenses and plan for your future.
How GJC Law can help you
If you’re concerned about protecting your business and or personal assets before or during a divorce. In that case, our experienced family lawyers can provide the advice you need.
