SINGAPORE: An introduction to Family/Matrimonial: High Net Worth

Introduction 

The family law landscape in Singapore is rapidly changing. Recent procedural changes evince a focus on efficient dispute resolution and therapeutic justice. The law on asset division/child issues has been clarified. Other areas of interest include nuptial agreements, immigration, trusts, taxation and digital assets. Additionally, Asia’s high-net-worth (HNW) individuals have increasingly selected Singapore as their go-to jurisdiction for family offices, ventures and enterprises. 

Efficiency and Therapeutic Justice 

The Family Justice Rules 2024 feature streamlined and simplified processes (eg, the mode of commencement and disclosure), provisions and terminology. This promotes access to justice, expeditious and cost-effective proceedings and fair and practical outcomes. 

Further, the Therapeutic Justice Model, which encourages families to move on from past events, involves a judge-led process where parties, lawyers and other professionals collaborate to find lasting solutions to disputes. Complex cases are managed by a mediation judge, hearing judge and Court Family Specialists from an early stage, allowing the Court to respond flexibly, address urgent child-related issues and increase parties’ involvement. 

Asset Division 

Generally, matrimonial assets are divided in an equitable manner on divorce. Matrimonial assets include assets acquired during the marriage, but may also include assets acquired before the marriage. Parties’ direct financial contributions and indirect financial/non-financial contributions are considered. 

Notably, WQP v WQQ [2024] SGHC(A) 34 held that the fact that the matrimonial assets pool comprises substantial pre-marriage assets commingled with post-marriage assets is a relevant consideration. Here, as a substantial portion of the matrimonial pool could be attributed to the husband’s pre-marriage assets, the division was adjusted in his favour. Nevertheless, it remains vital for spouses with considerable pre-marital wealth to enter into nuptial agreements to avoid disputes. 

Children 

In deciding child issues (eg, custody, care and control, access and maintenance), the Court’s paramount consideration is the welfare of the child.  

WKM v WKN [2024] SGCA 1 provides guidance regarding judicial interviews, which allow the Court to consider the child’s views in granting child orders. Whether a judicial interview should be conducted depends on factors including the child’s age, emotional and intellectual maturity, gatekeeping or alienation, the child’s wellbeing, nature of dispute, stage of proceedings and availability of materials (eg, social worker and psychiatric reports).  

The 1980 Hague Convention on the Civil Aspects of International Child Abduction, which Singapore is a signatory to, protects children wrongfully removed from their country of habitual residence or retained in any contracting state without the permission of the parent with custody/access rights. Singapore courts can hear such matters on an expedited basis and order the return of children to their country of habitual residence. Parents intending to relocate from Singapore with their children generally require the Court’s permission.  

Nuptial Agreements 

HNW individuals have increasingly entered into prenuptial and postnuptial agreements, especially where the parties have substantial pre-marital assets. While this only a factor to be considered in asset division, a court may make financial orders aligned with its terms, especially when the economically-weaker spouse had the opportunity to re-negotiate such terms during the marriage. 

Immigration 

Where foreign spouses relocate to Singapore, they are usually granted a Dependant’s Pass (DP) tied to their partner’s Employment Pass (EP). If EP-holding spouses attempt to cancel their spouses’ DPs when family proceedings are imminent, the court may grant an injunction to prevent the cancellation. 

A foreigner with a Singaporean spouse may hold a Long-Term Visit Pass (LTVP). The immigration authorities typically facilitate the renewal of LTVPs until the end of divorce proceedings if they involve Singaporean children. However, it remains challenging for foreign spouses to remain in Singapore afterwards, which may affect custody, care and control and access. 

Trusts  

A trust is an arrangement where a settlor transfers ownership of assets to the trustee, who becomes the legal owner of the assets and holds them for the benefit of the beneficiaries. 

For example, an irrevocable trust is one where the settlor cannot ask for the assets to be returned to them. If the settlor is involved in divorce proceedings thereafter, trust assets may no longer constitute part of the settlor’s assets subject to division. Conversely, beneficiaries to a discretionary trust do not acquire beneficial interest in the trust assets until the trustee, in their discretion, makes an appointment or distribution. Trust assets which have not been appointed/distributed will generally be protected from any matrimonial claims against the beneficiary.  

The court may disregard trusts in some cases, especially those created just prior to the commencement of divorce proceedings with the intention to deprive the other party from assets.  

Taxation 

If stamp duty is payable due to a transfer of immovable property arising from (a) compliance with any court order for division of assets or in consequence of divorce proceedings, and (b) the property is transferred between parties to the matrimonial proceedings and/or children of the marriage, it is generally eligible for remission. 

Digital Assets  

Digital assets are assets created and stored digitally, and are identifiable, discoverable and have value (eg, cryptocurrency, non-fungible tokens and data). This presents risks that spouses may hide their assets in the form of untraceable cryptocurrencies or purchase digital assets at an overvalue. 

In Singapore, cryptocurrencies have been recognised as property. In UTL v UTM[2019] SGHCF 10, a spouse’s investments in Bitcoin were included in the pool of matrimonial assets subject to division. However, due to the pseudonymous nature of crypto-assets, these assets are difficult to trace if spouses do not disclose ownership. As cryptocurrencies are not physically “stored” anywhere, issues may arise regarding the enforcement of court orders.  

Additionally, the volatility of crypto-assets may trigger disputes over valuation. To prevent a spouse from disposing crypto-assets, the other may apply for an injunction, but this may be difficult to enforce. 

Succession Planning 

Executing a will remains a popular means of succession planning. As a tool of testamentary disposition, an individual can specify a person(s) to act as executor(s) of their estate, obtain probate, call in assets and distribute them in accordance with the will. With the abolishment of estate duties in Singapore in 2008, an individual can focus on the main considerations of succession planning – to decide on their inheritors and their respective entitlements upon his demise. Where testamentary wishes are properly and clearly expressed in a valid will, the will is a reliable instrument for succession planning in the absence of fraud, lack of testamentary capacity or duress. 

Another common succession planning tool is the setting up of a trust. As discussed above, an individual may transfer their assets to trustees to be held for the benefit of named beneficiaries. If the trust is set up during the settlor’s lifetime, it would be an inter vivos trust. If the settlor wishes for the trust to be created only upon their death, testamentary trusts can be set out in a will. 

Setting up a family office has, in recent years, also become a popular tool in succession planning to manage the tax impact of making investments. Where a Singapore-based family office carries out fund management activities in relation to family wealth, it is possible to apply for tax exemptions. 

Three of the main fund tax exemption schemes offered by the Singapore government are: 

• Section 13D – Offshore Fund Exemption Scheme; 
• Section 13O – Resident Fund Exemption Scheme; and 
• Section 13U – Enhanced Tier Fund Exemption Scheme. 

Under these schemes, most investment gains (passive or from trading) derived by the family would be exempted from tax. 

Mental Capacity Act 

Since 2010, the Mental Capacity Act 2008 offers individuals the option of making a lasting power of attorney (LPA), an instrument where the maker (the donor) appoints a person(s) (donee(s)) to make welfare and/or financial related decisions on their behalf should they be mentally incapacitated. While technically not a succession planning tool, it is prudent to plan for the management of one’s care and assets in the event of loss of mental capacity. 

BUV v BUU and another and another matter [2020] 3 SLR 1041 clarified that the test for capacity has a functional component (ie, that the subject must be unable to make a decision) and a clinical component (ie, that this inability must be caused by a mental impairment). While expert evidence may address the clinical component of the test, it is not determinative. The functional component is for the court’s judgment based on the evidence regarding the degree of which the individual’s mental functioning is compromised.