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Covid-19 and its Impact on Matrimonial Assets in a Divorce

PKWA Law

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Covid-19 and its Impact on Matrimonial Assets in a Divorce

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Introduction

News outlets all over the world are reporting a rise in the number of couples enquiring about divorce. The viral pandemic has compelled many countries to impose measures requiring their citizens to stay at home. For many couples, being confined to a small space together has not been an opportunity to spend more quality time together as some might imagine, but it has instead led to new pressures in their relationships and exposed old ones.

These marital problems are likely exacerbated by the one of the worst economic crises the world has seen since the Great Depression. Singapore has not been spared the economic devastation caused by Covid-19, with the Monetary Authority of Singapore forecasting that the local economy may shrink by more than 4% this year and undergo its worst-ever recession. This will mean the further shutdown of more businesses, reduced wages, and the laying off of employees.

If you are considering filing for divorce or are currently in the midst of divorce proceedings, it is necessary that you take into account the impact of the current economic situation on your finances and matrimonial assets.

In a divorce, the court will make orders on the division of matrimonial assets. The court does so by determining the total value of the pool of matrimonial assets, including the matrimonial home, and divides them between the parties in a proportion it finds to be just and equitable. Due to the ongoing economic crisis, determining the proper value of the matrimonial assets will be a challenging task and parties will likely be contesting each other’s proposed valuations.

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Impact on matrimonial property

The economic downturn has had a clear knock-on effect on the property market. Property prices have been falling and are expected to drop further. Buyers are far more cautious of making long-term property investments and homeowners are unable or unwilling to offer private viewings due to social distancing measures.

This will significantly impact the division of matrimonial property in the divorce proceedings. As the economy is currently bad and forecast to get worse, there may be disagreements on who should retain the property, as the transferring party may be selling their share at a lower value than what it was worth before the viral outbreak.

Furthermore, the economic situation may also cause the retaining party difficulties in financing the transfer of property. Banks will be more prudent with their mortgage loans and will be more careful with their mortgage loans. The same difficulties will apply even if parties wish to sell the property on the open market and purchase new separate homes of their own. Therefore, divorcing parties should pay careful heed to these considerations when discussing the what to do with their matrimonial property.

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Impact on investments, stocks, and other financial assets

Similar to the property market, the equities market has taken a beating over the past months, with major stock exchanges worldwide reflecting new lows. For parties who own substantial assets in shares, stock options, or other securities, the sudden loss of value of these financial assets has resulted in a situation where it may be highly advantageous for one party to pay out the other for their share of the matrimonial securities.

One way to deal with the division of matrimonial securities in a more equitable manner would be for parties to transfer the assets between themselves.

Conclusion

No one can know for sure how long the Covid-19 pandemic and its impact on the economy will last. Nonetheless, it is clear that markets will not be recovering soon and the value of property and securities will remain depressed and even fall further. Many couples intending to get a divorce will be anxious and uncertain about their job security, income, their ability to make or receive maintenance payments, and even the legal fees for the divorce proceedings.

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ABOUT PKWA LAW

Our team of family lawyers at PKWA Law Practice will be able to guide you through all these complex considerations and help you arrive at the right decision. Furthermore, our firm offers a fixed-fee model for both contested and uncontested divorces to help allay any concerns about legal fees. Please contact us at 6854-5336

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