Separation and Divorce

No one wants to go through a divorce, but sometimes it is unavoidable. In Singapore, a person cannot start divorce proceedings unless at least three years have passed from the date of the marriage. Exceptions to this three year rule can happen if you can prove to the court that you are suffering from extreme hardship or a high degree of cruelty. The years preceding the divorce are known as separation.
During separation, the estranged couple is still legally married to each other. This is where estate planning problems can arise. Many married couples execute reciprocal wills and lasting power of attorney. That is, husbands and wives often leave a majority of their assets to their spouse, and name each other as decision makers in the event that they become incapacitated or lose their mental capacity to manage their life, financial or otherwise. If you have made the decision to go through with a divorce, you probably do not want your spouse to inherit your property and assets. Therefore, deliberate estate planning is crucial.

Estate Planning Implications during Separation

1. Separation has no effect on existing will, CPF nomination, and life insurance nominations.
2. Legally, an estranged couple going through a separation is still a married couple; therefore the spouse still has significant legal rights under the law. This is illustrated in the intestate succession act, inheritance act, insurance act:
   • Intestate Succession Act (Section 7): The estranged spouse will inherit 50% of your estate if you die without a will during your separation. Notice that your estranged spouse in this case has more legal rights than your elderly parents.
   • Inheritance (Family Provision) Act (Section 3): If your will excludes your estranged spouse totally, he/she can still rely on Section 3 of the Inheritance Act to seek the Court’s opinion to get some pay-out from your estate.
   • Insurance Act (Section 61): The estranged spouse can claim your life insurance proceeds as a proper claimant if you did not make any nomination of beneficiary in your life policy.
3. Most couples own their matrimonial properties as joint-tenancy. If one party dies, the other spouse will get the whole property under the right of survivorship rule on joint tenancy.

Estate Planning Implications at Divorce

1. A divorce has no effect on the existing will, CPF nomination, and life insurance nominations.
2. If you do not update your will, CPF nomination and life insurance nominations, your estate could end up with your ex-spouse.
3. If you are receiving alimony or a child maintenance allowance from your ex-spouse, his death will terminate this income stream.
4. If you leave a substantial estate to your minor children without naming a guardian, your ex-spouse can lay his/her hands on your estate in the capacity as parent of your children.

Estate Planning Solutions for Separation and Divorce

1. Once you have decided to go through with a divorce, you need to re-write your will to designate an appropriate executor, trustee and guardian for your children.
2. Your new will should also re-designate your estate to the appropriate beneficiaries.
3. Make use of other wealth transfer tools (e.g. the assignment of your life policy; life insurance nomination, living trust) to transfer assets to your beneficiary with legal certainty. As mentioned earlier, your net-estate in the will can be diluted by Section 3 of the Inheritance Act if you die during separation.
4. CPF nominations will not be revoked by a separation or divorce. You should make a fresh CPF nomination.
5. Life insurance nominations will not be revoked by a separation or divorce. You should re-do your life insurance nominations.
6. If you are a woman and are receiving alimony and child maintenance allowance from your ex-husband, it is important that you continue to hold a life policy on him, as his death could mean the end of the alimony and child maintenance allowance.
7. Whether you remain a single parent or are considering a second marriage, you have to think about the guardianship of your children should you die prematurely.
8. You have to re-assess your estate financial needs as your financial situation could be very different from a dual income couple.
9. You have to re-assess your current medical and life insurance needs as your situation has changed. Do note that insurance is a risk pooling product, and can be difficult to obtain if your health is compromised. Therefore, during the process of the division of your matrimonial assets, it is wise to negotiate to maintain your existing insurance policies.