Postnuptial agreements in Singapore: Certainty amidst trying times

Article Experience

No one enters into a marriage expecting to get a divorce. When one of the most (if not the most) important relationships of a person’s life breaks down, the uncertainty and stress over disagreements in relation to the financial issues, how the marital assets are to be divided and certainly how the children are to be cared for and parents’ roles in their children’s lives can be highly daunting.

This is in addition to the inevitable emotional stress and drain that arises from a breakdown of the former family unit. In this article, we look at what postnuptial agreements are, how they help and what should go into a postnuptial agreement.

What are postnuptial agreements?

Simply put, postnuptial agreements are akin to contracts entered into by a couple of a legally binding marriage where they agree on how they intend to separate, the terms on which they intend to file for divorce and often an agreement on the financial issues once they separate or divorce.

Postnuptial agreements can be called many names such as “Deed of Separation” or “Deed of Financial Arrangement”. In cases where an agreement is reached between parties shortly before or during the commencement of divorce proceedings, the terms of these agreements are often recorded as ‘Consent Orders’ or binding Court Orders where parties have agreed on the terms.

Postnuptial agreements often include parties’ agreement on how they wish to settle the finances upon a divorce, division of the matrimonial assets, terms on which they would be able to live their lives separately prior to a divorce, maintenance and in appropriate cases, an agreement on children’s issues.

When can postnuptial agreements be made?

As the name suggests, postnuptial agreements can be made or entered into by parties after they have entered into a legally binding marriage. There is no restriction on when or at which stage of the marriage that a postnuptial agreement may be made. The contents and aim of the postnuptial agreement may depend at which stage of the marriage that the agreement is made given that different concerns may be in play when parties decide to enter into a postnuptial agreement.

Generally speaking, there are three main stages of a marriage that a postnuptial agreement is entered into.

The first stage is where things are going fine and the marital relationship has not broken down yet. At this stage, parties who decide to enter into a postnuptial agreement tend to do so not because they anticipate, let alone desire the marriage to breakdown but more to serve the function of ‘insurance’. They hope the unfortunate (a divorce) does not happen but if it does, the couple appreciates the certainty that an agreement on how to deal with the finances would provide and the resultant reduction of animosity given parties have already agreed on how they intend to settle their financial issues. A postnuptial agreement entered into at this stage is very similar in tone and outlook to a prenuptial agreement. The parties do not desire the marriage to fail but like any good insurance, sets out their agreement on how the financial matters are to be dealt with in the event of a divorce.

The second stage is where the marriage has already broken down and parties now wish to set out their understanding on how the family’s assets and finances are to be dealt with in the event that either party files for divorce. At this stage, the marital relationship has already broken down and the overarching function is one of minimising any potential fall out as parties move on with their separate lives. Being able to sit down, discuss and reach an amicable resolution of the financial matters and where appropriate, an agreement on parenting issues for the children, is a good aspect of planning that allows parties to move on with their lives with minimal animosity. This removes the element of uncertainty that would arise should parties not have a prior agreement before commencing divorce proceedings and allows both parties to plan for their separate lives and that of their children moving forward.

The third stage is where divorce proceedings have already commenced or are impending. At this stage, a postnuptial agreement serves as an amicable resolution between the parties to settle the outstanding ancillary matters. This would often include the reason for the breakdown of the marriage, parties’ agreement on how to divide the matrimonial assets, maintenance as well as parenting orders (custody, care and control and access) for the children of the marriage. The agreed terms which are usually reached after negotiation between parties and their lawyers or at mediation are then recorded as a binding Order of Court known as a consent order.

In all stages, a postnuptial agreement should be made in contemplation of divorce even if parties (especially at the first stage mentioned above) do not desire that the marital relationship fail at the time that the agreement is entered into.

Are postnuptial agreements valid in Singapore?

Yes, postnuptial agreements are valid in Singapore. It is important to note that such agreements are not Orders of Court and are not automatically enforceable as of right. Postnuptial agreements may always be reviewed by the Singapore Courts if there is a dispute as to the terms or agreement. Such agreements though are important and would be taken into consideration by the Court as evidence of parties’ intentions and their agreement on how to retain ownership and division of the matrimonial assets in the event of a divorce.

It is also important that the contents of the postnuptial agreement are reasonable and any agreement should be properly drawn up with both parties having had a chance to review, discuss and agree on the terms with the benefit of independent legal advice.

The primary consideration is that the agreement is ‘fair’. The agreed financial terms can be given conclusive weight by the Court if parties have negotiated at arms length, have had independent legal advice and the terms are reasonable. What parties agree in relation to their ownership and division of the matrimonial assets does not have to mirror what the Court may order (in the absence of an agreement) in order to be fair.

What are the benefits of entering into a Postnuptial agreement?

One of the main benefits is having certainty in otherwise what may potentially be very trying times as to how the financial issues would be resolved in the event of a divorce, how the assets are to be divided, who looks after the children and even how parties will go about filing for divorce.

By being able to sit down with your spouse (with the benefit of legal advice), discuss and reach an agreement on the important matters, you still retain control over the process and ultimately what is agreed on knowing best what works for you and your family. That control is absent once the decision is placed in the hands of a third party, in this case, the Court where the judge would make a decision based on the facts of the case and the law.

Needless to say, postnuptial agreements also make the already uncomfortable process of a divorce as amicable as possible and reduces any animosity that would inevitably arise if there was no prior agreement on the important issues.

Should I enter into a postnuptial agreement?

If you are contemplating entering into a postnuptial agreement or wondering if it is appropriate in your current situation, it is best to speak to a family lawyer who would be able to advise you. A lawyer would be able to advise you on what terms should be incorporated in the postnuptial agreement and whether there are any issues with the proposed settlement terms.

There is no one size fits all approach or no template for a ‘standard’ postnuptial agreement. A good postnuptial agreement should be comprehensive and the terms should be reasonable and accurately reflect parties’ intentions. Done well, a proper and comprehensive postnuptial agreement is one you would be glad to have around in times of need.