Gifts and Matrimonal AssetsNovember 27, 2011 at 8:06 pm | Posted in Misc | Leave a comment
Disclaimer: I thought I’d share what I understand about the this matter. This is my understanding. Please ask a lawyer if you want a legal opinion, and a marriage counselor to see if a divorce is avoidable.
So two cases came out from the High Court that seem opposite to one another. They are
- Tan Cheng Guan v Tan Hwee Lee  SGHC 216 (“Tan“)
- Wan Lai Cheng v Quek Seok Kee  2 SLR 814 (“Wan“)
In Tan, Choo Han Teck J (a judge I respect for always doing justice when needed) pointed out that the division of assets is a 3-stage process
- Pooling of the assets and determining the value of the pool (“Pooling”)
- Deciding what the “fair and equitable” division between the parties should be (“Decision”)
- The division (“Division”)
Choo J, held that
- Concept of an irrevocable gift remains valid, but it only applies at the division stage
- Inter-spousal gifts should not be excluded at the Pooling stage as the exception in the Women’s Charter is only for property that was not part of the matrimonial asset in the first place
- Inter-spousal gifts should also be considered at the Decision stage
- Wan is distinguishable because the source of the gifts are uncertain (spouse or third-party?)
How I see it
The judgement in Tan is a sound and fair one.
Gifts from 3rd parties should be excluded unless the non-receiving spouse did something to that gift to improve it. For example, the wife won a diamond ring in a lucky draw and the husband resets it with sapphires to a necklace.
Inter-spousal gifts are an expenditure of the matrimonial assets. Since money earned by a spouse is part of the matrimonial asset, so buying a gift for the other spouse must mean a drawing down of the common matrimonial pool. The gift must then be part of the matrimonial asset. For example, wife uses her year-end bonus to buy her husband an expensive watch as a gift. That watch would be a matrimonial asset
But it would be unfair to ask for the watch back at the divorce. It was a gift. So to reconcile the two, the watch is a matrimonial asset that the husband will keep at the division.
Allow me illustrate
Ms. A marries Mr. Z
In their 3rd year of marriage Ms. A uses her salary and year-end bonus to buy Mr. Z a nice watch costing about $20,000. That $20,000 watch is a gift.
In their 7th year of marriage, Ms. A just feels like there are irretrievable differences in the marriage and wants to divorce Mr. Z. Assuming there is no need to wait 3 or 5 years, they head to the court on ancillary matters. Also assuming they have no children, then all that there is left to do it is the division of matrimonial assets.
Let’s say they own 1 HDB flat worth $680,000, and they also bought a condominium 5 months ago at $1,750,000. Mr. Z also has a car valued at $40,000.
Ms. A has a bank account with $120,000, as well as 2 fixed deposits ($10,000 and $15,000 respectively). She has a life insurance policy valued at $300,000.
Mr. Z has a bank account with $45,000, as well as shares valued at $72,000. He has 2 life insurance policies valued at $150,000 and $200,000 respectively.
They also have a joint bank account with $60,000.
For simplicity sake, we assume that all of these properties are fully paid for (no loans).
So the total value of their assets (w/o the watch) is $3,322,000. Adding the watch it will be $3,342,000.
Assuming that the court rules that the division of assets should be 50/50, they will each get $1,671,000.
Immediately $20,000 will be deducted from the money that is to come to Mr.Z as he will get to keep the watch. So he will be expecting $1,651,000.
So, it is fair that the gift should be considered as part of the division since Ms. A expended matrimonial monies to purchase that watch, but it is unfair for her to demand it back from Mr. Z. It was a gift and it should belong to Mr. Z. He has been using the watch for 4 years after all.
Just my 2 cents worth.