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FEATURE |
As a blueprint for an aspect of asset management, the pre-nuptial deed should not be stigmatised or perceived as a document signifying distrust and greed if it is deployed not as an instrument of aggression but one of protection for parties preparing for marriage.
First, a Short Story
My
friend is a virtual single parent, having single-handedly been responsible for
the family coffers and her daughter’s education right through post-graduate
studies. Her husband who is now separated from her was never able to
sufficiently provide for the family financially. Through sheer sweat and toil
and some God-given wisdom, my friend managed to amass respectable assets to be
able to pass on part of these assets to her only daughter who is now to be
married. Among her wedding gifts which she is bestowing on her daughter is a
pre-nuptial deed. But then, she heard from someone in the legal profession that
such an arrangement is not enforceable. A misplaced perception?
The
practice and attitude in this part of the world towards a pre-nuptial contract
is nowhere close to that seen in the
My
friend simply wanted to protect her hard-earned acquisitions from being shared
among the unintended extended family by default of a divorce occurring. More
importantly, she wanted to prevent her daughter from the heart-rending
experience of having to deal and cope with such emotionally draining and nasty
realities at a time when she would be nursing her grief if such an event as a
break-up of the marriage should come to pass.
This
mother thus again drew on her God-given wisdom and diplomatically but resolutely
arranged for a pre-nuptial deed to be drawn up — signed, sealed and delivered,
along with the collection of custom-made jewellery, the stocks and shares and
the terracotta roof-tiled bungalow she was providing for the newly-weds. She
finally persuaded the couple to reluctantly agree to sign on the dotted line by
telling them to look upon the pre-nuptial deed as an ‘insurance’.
‘Assets’ in the Context of the Women’s Charter (Cap
353)
As the term implies, the pre-nuptial deed is a contract
in anticipation of marriage. It is executed by the intending bride and groom.
There are no unusual constraints regulating the execution of the deed other than
those governing technicalities of form and execution normally applying to the
completion of deeds in general. In considering the relevance of the pre-nuptial
deed, it is observed that the Women’s Charter provides statutory criteria for
the treatment of pre-acquired and post-acquired assets by the spouses and for
the distribution of property termed ‘matrimonial assets’. Bearing in mind
the identification made of ‘matrimonial assets’, ‘matrimonial
home’ and ‘pre-acquired’ and ‘post-acquired assets’
under the Women’s Charter, solicitors may need to examine the application of
the law to the respective assets under these generics and to alert their clients
to their legal and practical implications for the purpose of determining if
those assets are subject to distribution in a divorce. The types of
assets which would be addressed in such consultations would include:
•
inherited assets and property;
•
gifts from relatives;
•
other property acquired before
marriage;
•
marriage settlements;
•
property individually and jointly
acquired during marriage;
•
income from joint investments; and
•
gifts to each other.
Considerations for costs of transfers of assets and impact of cross-border
laws and regulations and conflict of laws situations are some of the other
concerns which the solicitor in consultation with all parties involved will need
to consider and address in the deed.
Getting the Objectives Right
As to the doubts expressed in some quarters as to the legality, validity
or enforceability of arrangements made under a pre-nuptial deed, particularly in
the context of the protective scheme of the Singapore Women’s Charter, the
writer would urge the legal profession to take another look at the relevant
provisions of the said Charter.
Such a deed will not only call for the drafting skills of the solicitor
but more importantly, his vision and advice in utilising the deed as an
instrument for asset management on the contingency of a divorce.
It is no doubt a sensitive and awkward situation when parties about to
embark on a marriage should be making provisions for a possible break-up.
However, such planning and preparation on the part of the would-be spouses may
be necessary in the context of present-day realities, when a failure to manage
may cause the family assets to change hands by such default. So, the controversy
between sensitivity and realism may indeed test the parties’ relationship.
However, that is an extra-legal issue which parties must first overcome.
Interpretation and Application of S 112
of the Women’s Charter
For those who are ready to take on the pre-nuptial deed, they would look
upon such a step as another necessary aspect of asset management. Prudence would
demand that parties to the deed should seek clarification for instance, on the
way that the Women’s Charter perceives ‘matrimonial asset’ and
‘matrimonial home’ and those pre-acquired assets which the parties may wish
to protect from being treated by the court as such. Suffice it to mention here
that an interested party should be clear on his understanding of the generics of
assets statutorily identified under the Women’s Charter and the need to take
the time to plan ahead. There are indeed provisions under the Women’s Charter
which require the spouses to take pre-emptive measures in their respective
treatment of their pre-acquired as well as post-acquired assets.
The prescribed reference to ‘matrimonial assets’ is provided in s 112
of the Charter. The pertinent ss 112 (10) reads as follows:
For the purposes of this section, ‘matrimonial asset’
means —
(a) any asset acquired before the marriage
by one party or both parties to the marriage —
(i) 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; or
(ii) which has been substantially improved during the marriage by the other party or by both parties to the marriage; and
(b) any other asset of any nature acquired during the
marriage by one party or both parties to the marriage,
but does not include any asset (not being a matrimonial home) that has been acquired by one party at any
time by gift or inheritance and that has not been
substantially improved during the marriage by the other party or by both
parties to the marriage. (Emphasis added)
The above provisions deal with both pre-acquired and post-acquired assets.
Here, it is significant to observe that in exercising their power to order a
division of ‘matrimonial assets’ courts are to consider inter alia the
commitment of the parties to ‘substantially improve’ their
pre-acquired assets (gifts and inheritance included) for mutual use or enjoyment
of the spouses and their child/children.
The justification for preparing a pre-nuptial deed will now be considered
in the context of ss 112 (2) of the Women’s Charter, reproduced below:
‘(2) It shall be the duty of the court in
deciding whether to exercise its powers under subsection (1) and, if so, in what
manner, to have regard to all the circumstances of the case, including the
following matters:
(a) the extent of the contributions made by each party in
money, property or work towards acquiring, improving or maintaining the
matrimonial assets;
(b) any debt owing or obligation incurred or undertaken
by either party for their joint benefit or for the benefit of any child of the
marriage;
(c) the needs of the children (if any) of the marriage;
(d) the extent of the contributions made by each party to
the welfare of the family, including looking after the home or caring for the
family or any aged or infirm relative or dependant of either party;
(e) any agreement between the parties with respect to
the ownership and division of the matrimonial assets made in contemplation of
divorce;
(f) any period of rent-free occupation or other benefit
enjoyed by one party in the matrimonial home to the exclusion of the other
party;
(g) the giving of assistance or support by one party to
the other party (whether or not of a material kind), including the giving of
assistance or support which aids the other party in the carrying on of his or
her occupation or business; and
(h) the matters referred to in section 114 (1) so far as
they are relevant.’(Emphasis added)
The above provisions point to the ‘duty of the court’ to take
into account the matters listed in the said ss 112 (2). This gives added
dimension to the definitive ss 112(10) of the Charter in the way that a
pre-nuptial deed will be given due consideration when issues of ownership and
distribution of assets are to be deliberated upon by the court. More
significantly, the said ss 112 (10) translates into the need for parties to
properly pre-plan the usage and maintenance of their assets within the
prescriptive parameters set out thereunder. An awareness of the prescriptions
set out in ss 112 (10) is the first step towards recognising that pre-acquired
and post-acquired assets may be deemed or doomed as the case may be, as
‘matrimonial assets’ depending on whether or not the parties observe the
statutory directions and take the necessary precaution to treat them as such. It
is therefore incumbent on the courts to consider and take into account the
incidents listed in ss 112 (2)(a) to (h) should it decide to exercise its powers
to order inter alia the division of the parties’ matrimonial assets. In the
light of the clear and express direction contained in ss 112(2) it is unlikely
that the court will ignore the mutual intentions of the parties evidenced in a
pre-nuptial deed.
It is also interesting to note the exceptions embedded in the last
limb to ss 112(10) — defining the assets which may otherwise be considered
‘matrimonial assets’ and the circumstances which provide for the exceptions
to prevail — even for post-acquired assets.
Hence, subsections 112(2) and (10) need to be read together to identify
and map out the pre-acquired and post-acquired assets and the precautions which
may be exercised by the parties to the pre-nuptial deed to protect and maintain
their target assets so that they qualify as exceptions to those assets which
would otherwise come under the prescribed definition of matrimonial assets.
Furthermore, there appears to be no impediment or justification to
interpret the said provisions as limiting the application of the said criteria
to determine merely the quantitative distribution rather than the qualitative
aspects of the assets. Due vigilance on the part of the parties may yet prevent
the pre-acquired assets and post-acquired assets (gifts and inheritance) from
being roped in as ‘matrimonial assets’. (Subsections 112(10) (a) & (b))
Unintentional Default?
Indeed, in adopting a qualitative interpretation of the said s 112 of the
Charter, solicitors would alert the parties to a pre-nuptial deed to these
provisions to enable them to prepare and plan the intended dealings with and
‘usage’ of such assets. It is questionable if the said ss 112(10) would
admit any plea of unintentional default since the intention of the parties in
such legislation is not likely to be a legally defensible position.
The protective scheme under the
Women’s Charter notwithstanding, it does not look like the spouses’
pre-acquired and post-acquired assets (matrimonial homes excepted) are doomed to
be committed to the common coffers of the marriage. One will need to look to the
safeguards accorded to married men underlying the more obvious and patent
protection accorded to women under the said Charter. Parties will have to
recognise the spirit of fairness of the legislation and read between the lines
of the Charter to seek out the boundaries of the husband’s rights as well.
Asset Management?
In
As a blueprint for an aspect of asset management, the pre-nuptial deed
should not be stigmatised nor perceived as a document signifying distrust and
greed if it is deployed not as an instrument of aggression but one of protection
for parties preparing for marriage. Additionally and at worst, the pre-nuptial
deed would minimise the acrimony which would otherwise be attendant on a divorce
when the parties’ expectations are not pre-defined and understood.
Traditionally, the pre-nuptial deed would be deployed to limit or settle
claims on the spouses’ respective assets and property. Such deployment serves
its rightful purpose when its objectives are fair and reflect the intentions of
the parties. It goes without saying that mutual consideration shown by the
signatories to each other will ensure that no party is being taken advantage of
by the other.
The Deed in Perspective
There are of course obvious limitations in the deployment of the
pre-nuptial deed. However, as repeatedly mentioned, the deed can serve as an
instrument which directs the spouses’ attention to the fact that through
proper identification and positive planning in managing their respective assets,
the spouses may yet find a way of benefiting from such positive application of
the distribution rules under the Women’s Charter. It does not help that at
present there appears to be no local case-law dealing with the issues
surrounding pre-nuptial deeds. This notwithstanding, the fact remains that the
Women’s Charter does take cognisance of the ‘agreement … with respect to
the ownership and division of the matrimonial assets made in contemplation of
divorce’. Solicitors would take their cue from this provision.
There is no requirement for registration of the pre-nuptial deed under
local laws. To avoid challenges based on technical or drafting defaults (eg
failure of consideration), it would be prudent to have the document executed
under seal — hence the deed rather than a simple agreement or contract. No
stamp duty is chargeable on the pre-nuptial deed. Beyond these logistics, legal
consultation for such a deed will be crucial in identifying the objectives of
the parties and the nature and scope of protection it seeks to establish. Once
the limitations to the pre-nuptial deed are understood, one must seek out a
solicitor who is convinced and believes in what the pre-nuptial deed can do for
a couple preparing for marriage — not one who is pre-occupied with what the
deed cannot do.
As for post-nuptial deeds? This may have to be a subject for another
discussion.
Hairani Saban
Hardjoe
Chung Tan &
Partners
E-mail: hsh17@singnet.com.sg