What Happens to Property and Assets Located Overseas Upon a Divorce in Singapore?
Upon the granting of a divorce, the court has the general power to order the division of any matrimonial assets. Alternatively, the court could also order for the sale of such assets and for the resulting proceeds to be divided between the parties according to the proportions the court thinks is just and equitable.
Definition of “Matrimonial Asset”
Under the Women’s Charter, “matrimonial assets” include any asset of any nature acquired during the marriage by one or both of the parties to the marriage. The Women’s Charter also clarifies that assets acquired by one or both of the parties before the marriage can also constitute the parties’ pool of matrimonial assets if they were:
- Ordinarily used or enjoyed by both parties or their children for shelter or transportation or education, recreational or social purposes while the parties were residing together; or
- Substantially improved upon during the marriage by the other party or by both parties to the marriage.
However, any asset acquired by one party to the marriage by way of a gift or inheritance which has not been substantially improved by the other party or both parties to the marriage, is excluded from the parties’ pool of matrimonial assets. However, this exception does not apply to the parties’ matrimonial home.
Pertinently, the definition of “matrimonial assets” in the Women’s Charter does not differentiate between assets located in Singapore and those located overseas. Nevertheless, the Singapore courts have in numerous cases regarded assets located abroad to fall within the definition of “matrimonial assets” and thus included for division. Overseas assets, particularly immovable property such as real estate, have been recognised for division.
Thus, as long as the overseas assets falls within the definition of a “matrimonial asset”, they will be liable to be included for division between the parties.
Issues with Enforcement of the Court Order for Division of Overseas Assets
After determining the proportions that each party should receive of their matrimonial assets, the court will issue a court order. The enforcement of the order, which is a necessary pre-requisite to the actual division, might present a challenge when the assets include property that is located overseas. This is because:
- Courts will usually decline to deal with property situated overseas, especially immovable property.
- Further, given that the Singapore court order must be enforced in the overseas jurisdiction where the asset is physically located, there is a possibility that the overseas jurisdiction might not give effect to the foreign court order concerning property within their jurisdiction.
- Legally, whilst the Singapore courts are not precluded from making orders to include overseas property in court orders, judges may use their discretion and not make an order on the foreign property itself.
Steps Taken by the Court to Circumvent the Enforcement Issue
It is important to bear in mind that the courts do not physically divide up the assets between the parties when dealing with the issue of division. Rather, the courts deal with the value of all matrimonial assets liable to be divided, including any assets located overseas. In doing so, the court undertakes the following steps:
- Ascertain the current value of the matrimonial asset, whether situated locally or overseas from evidence submitted by the parties.
- Deduct value corresponding to the part (if any) of the matrimonial asset which both parties do not legally own. This usually applies to property subject to mortgage. Accordingly, the mortgaged value is deducted from the current value of the asset.
The remaining net value of the matrimonial assets, whether held locally or overseas, will then be divided in just and equitable portions between the parties. Thereafter, the court has two options in respect of foreign assets:
- Order for the sale of the foreign asset and for the resulting sale proceeds to be paid in the proportion ordered to the other party; or
- Include the value of the foreign asset into the calculation of the total value of the pool of matrimonial assets available for division, before making any orders affecting local property only.
Option (a) is less favoured as there may be difficulties with regards to enforcement as the party might not comply with the order. On the other hand, option (b) is preferred due to the ease of execution of orders made against the more accessible local property.
Option (b) was the approach of the Singapore Court of Appeal in a 2011 case where a property in Gold Coast, Australia was included as part of the pool of matrimonial assets liable for division. Ultimately, the wife was awarded a share of the total value of the pool of matrimonial assets. In implementing this order, no transfer of any part of the Gold Coast property itself was required.
Thus, despite the problems with enforcing a Singapore court order that deals with property located overseas, there are other options available to the Singapore courts to practically effect a division of the value of the foreign property without dealing with the foreign property itself.
Dealing with a divorce and the subsequent division of assets may be complex, more so if it involves property located overseas. Experienced lawyers will be able to guide you through the process and provide practical recommendations that solve the situation amicably for all parties involved.
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