Love, and decisions borne out of love can be irrational, but the laws involving divorce and the asset ownership are decidedly not.
One woman learnt this lesson the hard way during her divorce proceedings.
The Starting Capital
The woman initially inherited $2 million in shares from her late father, which she sold and poured the proceeds into a joint investment account to fund the purchase of their house.
The wife and husband had well-paying jobs: the wife was a doctor, while her ex-husband was a career Singapore Armed Forces officer, though he retired in 2008 to become a homemaker and raise their children.
The couple’s marriage lasted for 24 years, before the wife filed for a divorce and was granted an interim judgement in July last year.
Just prior to their divorce, the joint CDP account had around $66,000, the wife’s personal account possessed $3 million, while the husband’s account had around $740,000.
Judging from their bank account figures, it appears that both of them were active stock market and property investors.
Their Bukit Timah house, which was bought in 2012 for $3.2 million, is now valued at $4.3 million. It was paid for with the sale proceeds of two other properties and some of their stocks.
Taking Stock of Personal and Matrimonial Assets
The thing is assets acquired during the course of the marriage are considered part of the matrimonial pool. Should you make a successful investment, your spouse gets a share of profits.
The only exception to this rule is when the stocks are bought before the marriage, or if you only used the money that was given to you by your parents.
This forms the basis of the wife’s argument.
She claimed that her CDP account was opened five years before the marriage and the later shares were bought with the inheritance money from her late father or were directly transferred from his estate.
Additionally, the wife claimed that she was the primary investor between the two; the fund manager dealt only with her while her husband never made any contributions.
As such, she wanted her $3 million stocks excluded from the matrimonial pool.
Therein lies the biggest problem in her claim: she previously sold the stocks and poured the proceeds into a jointly owned account.
The Fine Print in Jointly Owned Accounts
As the title implies, jointly owned accounts mean that both people share an equal sense of ownership.
Even if only one owner contributes to the account, the law presumes that the contributor intends to allow the other to make use of the funds.
Of course, when it comes to dividing the sum in the case of divorce or conflict, the person who contributes will naturally get a bigger share, but this is under the condition that the contributions are well-documented and can be proven before the law of court.
Moreover, if one owner dies, the other will automatically inherit the balance unless there is a will or other evidence that proves that the funds should be divided differently. Such is the right of survivorship.
Having said that, you can probably guess the counterarguments that the husband used.
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Where The Money Went
Since the wife transferred the proceeds from her inheritance into the joint account, the court found that those assets “lost their character as inheritance”.
High Court Justice Choo Han Teck noted that since the wife transferred it into the jointly owned account, it shows her intent to share the assets with her husband.
Justice Choo also commented that the wife likely shared her assets with her husband out of love during the happy phase of their marriage, but now that their marriage is broken, she wants to retract her past decisions.
He proceeded to compare it to the concept of gift giving, wherein a person cannot reverse or take back their gifts simply because they wish for it.
If that was not painful enough for the woman’s bank account, the husband pointed out that she could not produce any evidence which shows that the shares were derived solely from her inheritance.
Even if she used the $236,000 she initially got from her father and invested for the next 23 years to amass a $3 million fortune, she must have grown her investment at a consistent rate of return of 11.71% annually.
If she was this successful in her investments, she may as well give up on her job and become an investor full-time, because that percentage of return surpasses many professional managed funds.
Hence, the husband posited that it was more plausible that the wife poured in more money from her income into her CDP account during the course of their marriage.
This would mean that the account was composed of “co-mingled funds”—money gathered from before and during their marriage—hence it should be considered part of the matrimonial pool.
Given that the wife could not provide conclusive evidence to support her claim, the judge ruled in the husband’s favour that her shares should be included in the common pool.
Therefore, the couple were battling over $10 million worth in assets.
Upon examination, it was clear that the wife was the primary caregiver when raising their three children.
The husband retired in 2008, becoming a homemaker who managed the upkeep of their house for the most part, though he still contributed to household expenses.
The judge considered the total cash contribution from both parties, as well as the effort expended to raise their children.
The wife ended up with a bigger portion of their assets, 56.53% to be exact, which gives her $5.8 million.
The husband was entitled to the rest, which was $4 million in total.
A moment of silence for the $3 million in the woman’s CDP account.
The important lesson to remember here is always document your expenses and investments, and do not put your money in jointly owned accounts unless you are certain that you are willing to share it.
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