For Want of a Better Title

Formula for Dividing Matrimonial Assets

July 30, 2010 at 12:00 am | In But Seriously | No Comments

The Courts have come up with a formula (see AJR v AJS [2010] SGHC 199)
Taken from Singapore Law Watch

[Note: This is just a guide]

The High Court set out a methodology which it used as a rough check on its exercise of discretion in the division of matrimonial assets.

Parties to a marriage may make direct financial contributions to the marriage in different ways, some of which are totally unrelated to the acquisition or maintenance of any identifiable matrimonial asset, eg food, education etc (“direct unattributable financial contributions”) whilst others are traceable to matrimonial assets (“direct attributable financial contributions”). The methodology set out at [26] – [38] of the judgment consists of eight steps. It takes into account the parties’ direct attributable and unattributable financial contributions to the marriage as well as their indirect contributions to the marriage.

Step 1: The notional total net value of the matrimonial assets to be distributed will be ascertained (“S$A”). This consists of the total net value of the matrimonial assets to be distributed (“S$m”) plus the value of any matrimonial asset proved to have been unfairly or unjustly dissipated by a party as well as the value of any matrimonial asset expended by either party for a personal investment in which the other party cannot reasonably have expected to participate in. S$m is the total value, as at the date on which judgment is given on the share of the matrimonial assets to be awarded to each party, of all matrimonial assets which existed on the date of interim judgment, less any outstanding liabilities (eg tax liabilities) which were incurred by either or both parties before the date of interim judgment. If any asset has been sold or liquidated after the date of interim judgment, the net proceeds of sale or liquidation will be used to represent the value of that asset in the calculation of S$m.

Step 2: The total contributions of both parties to the marriage will be apportioned into the percentage total direct contributions of both parties to the marriage (B%) and the percentage total indirect contributions of both parties to the marriage (C%). B% and C% together add up to 100%, being the total direct and indirect contributions of both parties towards the marriage partnership. The ratio of B% to C% depends on the facts of the case and factors such as the length of marriage, number of children in the family, existence of a third party carer, extent of giving of assistance or support to the other party and total amount of time and effort that both parties had spent looking after the welfare of the family may affect the relative weightage or importance of the total direct contribution as against the total indirect contribution of both parties.

The direct contribution of each party to the marriage will be considered separately from the indirect contribution of each party to the marriage at Steps 3 and 4 respectively.

Step 3: The husband’s share of the total direct contribution to the marriage (D%) and the wife’s share of the total direct contribution to the marriage (E%) will be determined. In determining a party’s direct contribution, unless disputed, it will be assumed that the party has applied all matrimonial assets (as defined in s 112(10) of the Women’s Charter (Cap 353, 2009 Rev Ed)) that he or she has received in the course of the marriage to the welfare of the family. This includes that party’s earned salary, other monetary emoluments and other income from business (including stock options earned) and the amount he or she has accumulated in his or her CPF account. D% and E% together should be 100%, representing the total direct contribution of both parties towards the marriage partnership. D% and E% will be multiplied by B% separately to obtain DB% and EB% as the percentage of matrimonial assets which is to be awarded to the husband and wife respectively, arising from his or her direct contribution to the family.

Step 4: The husband’s share of the total indirect contribution to the marriage (F%) and the wife’s share of the total indirect contribution to the marriage (G%) will be determined on the facts of the case. F% and G% together should be 100%, representing the total indirect contribution of both parties towards the marriage partnership. F% and G% will be multiplied by C% respectively to obtain FC% and GC% as the percentage of matrimonial assets which is to be awarded to the husband and wife respectively, arising from his/her indirect contribution to the family.

Step 5: The notional total value of matrimonial assets to be distributed to the husband is the sum of the total percentage of matrimonial assets for distribution which is to be awarded to him arising from both his direct and indirect contributions to the family (DB% + FC%) multiplied by the notional total value of all the matrimonial assets available for distribution (S$A).

Step 6: The notional total value of matrimonial assets to be distributed to the wife is the sum of the total percentage of matrimonial assets for distribution which is to be awarded to her arising from both her direct and indirect contributions to the family (EB% + GC%) multiplied by the notional total value of all the matrimonial assets available for distribution (S$A).

Step 7: The total value of moneys or assets proved to have been unjustly dissipated from the pool of matrimonial assets by one party or expended by that party for the acquisition of personal investment(s) in circumstances in which both parties did not intend the other party to participate in such investment(s) will be deducted from the notional total value of matrimonial assets to be distributed to that party. Assuming the husband has removed S$H worth of assets from the pool of matrimonial assets, the actual value of matrimonial assets which will be distributed to him will thus be [S$A (DB% + FC%) – S$H]. If the wife has removed S$J worth of assets from the pool of matrimonial assets, the actual value of matrimonial assets which will be distributed to her will thus be [S$A (EB% + GC%) – S$J].

Step 8: The final ratio of the value of the matrimonial assets to be received by the husband and the value of matrimonial assets to be received by the wife can be calculated as [S$A (DB% + FC%) – S$H]: [S$A (EB% + GC%) – S$J]. This constant ratio may be applied to the total pool of matrimonial assets actually valued at the total net amount of S$m or to the net value of each and every matrimonial asset if the matrimonial assets are to be distributed individually.

Applying the methodology to the facts of this case, the High Court found that it supported a division of the matrimonial assets in the ratio 20%:80% in favour of the wife, which ratio the High Court had arrived at, independently of the methodology, in its application of a broad brush approach to determining what it felt would be a just and equitable distribution of the matrimonial assets in the present case. The High Court emphasised that the methodology is no more than a useful guide and is not a substitute for the judicial approach to the division of matrimonial assets as set out in NK v NL [2007] 3 SLR(R) 743.

The High Court also ordered that the husband pay the wife a sum of S$2,375 per month for the maintenance of the three young children of the marriage. Additionally, 50% of any lump sum expenditure incurred for the well-being of the children on enrichment classes, hospitalisation charges beyond that covered by medical insurance and visits to an orthodontist was to be paid by the husband to the wife on a reimbursement basis. Any expenditure on a driver, children’s toys, pets, enrichment books (excluding books required as part of the children’s school curriculum) and holidays would not be shared but would be borne by the party who chooses to incur such expenditure.

At AJR v AJS [2010] SGHC 199 at [22] – [38], [62]. To view the judgment, click <here>.

My Simple Example:

Step 1: You own a HDB flat worth $540,000. There are two joint accounts with combined sums of $120,000. There was also an investment (funds) worth about $55,000. This is S$m (total net value of matrimonial assets to be distributed). Let us assume that the husband has dissipated matrimonial asset unfairly or unjustly when he gambled it away at the IRs ($60,000) . So S$A (Notional net value) = $715,000 (S$m) – $60,000 = $655,000

Step 2: [Entirely dependent on Situation]

Let’s say Direct Contributions (B%) make up 60% and Indirect Contributions (C%) 40%

Step 3: [Direct Contributions] Husband’s Share of the Total Direct Contributions (D%): 65%, Wife’s Share of the Total Direct Contributions (E%): 35%

So, DB% = 39% and EB%= 21%

Step 4: [Indirect Contributions] Husband’s Share of the Total Indirect Contributions (F%): 20%, Wife’s Share of the Total Indirect Contributions (G%): 80%

So, FC% = 8% and GC% = 32%

Step 5: Husband’s Share of S$A: DB% + FC% = 47%

Step 6: Wife’s Share of S$A: EB% + GC% = 53%

Step 7: Husband’s dissipation that was unfair or unjust (S$H): $60,000, Wife’s dissipation that was unfair or unjust (S$J): $0

Husband’s Actual Value: (47% x $655,000) – $60,000 = $247,850

Wife’s Actual Value: (53% x $655,000) – 0 = $347,150

Step 8: Husband to Wife’s Ratio: 247,850: 347,150 = 1: 1.4

So the Husband should get $297,916.66, and the Wife $417,083.33. The $0.01 gets eaten by the Math Monster.

P.S.: This does not include maintenance or other costs that may be tacked on to either spouse.

Hope this helps someone.