Lottery winnings and scam losses are shared between divorcing spouses
Sign up for ST InvestMe and unlock full access to exclusive insights and financial literacy courses today. SINGAPORE – The phrase “for better or for worse” in marriage vows does have a practical meaning even when couples break up because the law often holds them liable to share fortunes and misfortunes that come their way. For instance, insurance payouts can be shared in a divorce if the policies are taken out to benefit the family, and not a particular spouse. In 2012, the Court of Appeal made a landmark ruling involving the payout of the home protection insurance scheme that most HDB flat owners would have because such policies would pay up their outstanding loans should they die or suffer disability. In that case, the husband became blind and the insurance scheme paid over $170,000 to fully discharge the outstanding mortgage loan of the matrimonial home. When the couple split up later, the court had to decide whether the scheme’s payout was solely for the benefit of the husband. If so, he would be entitled to deduct $170,000 from the sales proceeds of the flat first before the balance could be shared. But the court ruled that he was not solely entitled to the payout because the policy was specifically targeted at protecting the family home, and not him. The court then found that the purpose of the policy was not aimed at addressing the husband’s general financial concerns due to his disability, but the prospect of him and his dependants losing their home should the family have problems paying the mortgage. So the whole fully paid-up flat would be deemed as a matrimonial asset and the husband did not get to carve out his share first from the insurance payout. The situation would be different for medical insurance policies, as such payouts are meant to provide financial assistance to the insured, who may need long-term care. The High Court dealt with at least two such cases recently, involving two women who had critical illness policies. One of them received a payout of over $435,000 when she was diagnosed with breast cancer, while the other received more than $450,000 plus a monthly payment of $1,200 for life after she was hit by two rounds of strokes.