When self-employed spouses don’t pay for family expenses

When love is all but lost, dollars and cents tend to be what matter most in a marriage, as an entrepreneur with several failed ventures found out.

The 47-year-old man started five companies during his 15-year marriage – including two related to investments and a tech start-up that provided queue management services.

Four of these ventures eventually failed, and none generated any real income for himself, let alone his family. By his admission, the remaining venture was “not generating any profits” and he was not earning any regular income.

So not surprisingly, the bulk of household expenses and contributions to the family home came from his wife, a regional human resource manager. Her salary was not disclosed but she managed to accumulate more than $4 million in cash, investment and property during the marriage before being retrenched in 2023.

By comparison, her husband had just over $200,000 of assets in his name, or 5 per cent in terms of financial contribution to the pool of matrimonial assets.

Normally, homemakers score lower in financial contributions but more than make up for it in managing the household and taking care of the children.

But in this case, the wife was also the one who scored higher in indirect contributions, not only because she paid for most of the family’s expenses, but she was also the primary caregiver for their two children despite her job.

She said her former husband’s contributions were minimal, as he would be out “drinking and partying on the pretext of networking for business”. She said she not only paid most of his expenses, but he also took her money when he went on long overseas holidays by himself.

When the case came before the High Court, Judge Choo Han Teck found that the family’s phone messages showed the wife’s parents were very involved in the day-to-day care of the children, and not their father.

“I am of the view that the WhatsApp messages in the various chats show the grandparents played a greater role than the husband in taking care of the children,” he noted.

As the man’s various businesses also failed to take off, he could not prove he had made significant payments for family expenses.

In the end, he was given a 25 per cent score for indirect contributions, and when this was considered in the overall score, his share of the matrimonial assets was only 15 per cent, with his former wife taking 85 per cent.

Justice Choo’s ruling made three important points on financial planning that all couples should take note of.

Maintenance for children

Parents have a shared responsibility to provide for their children and they cannot shirk this by simply saying they cannot afford to do so.

In this case, the wife wanted her husband to pay $2,000 a month for their two children, as she was already footing about $4,000 of their living expenses. But the man was willing to pay only $1,000.

At the time of the hearing, the wife had just been retrenched and the man’s “entrepreneurial efforts” had yet to bear fruit.

But Justice Choo said it would be inequitable for the husband to use his continued unsuccessful entrepreneurial efforts as a reason to cut his payments for the children.

“The husband is not a homemaker who cannot find full-time employment if he tries harder,” said the judge, adding that prior to his failed ventures, the man worked as a private banking director earning about $5,500 a month.

Just as the husband expected his former wife to look for another job again to support the children, he too must find full-time employment to help out with family expenses, Justice Choo added.

“There cannot be double standards where the wife is expected to leave her state of unemployment now to find full-time employment, while the husband is allowed to continue his unsuccessful entrepreneurial efforts of more than a decade and not find full-time employment – this is similar to unemployment,” he said.

The judge said it was fair to make the father pay $2,000 a month in maintenance for both his children since his former wife already had to bear the greater burden of $4,000 a month.

Date of divorce

When it comes to splitting the pool of matrimonial assets, the assessment would be determined by the date of the interim judgment that dissolved the marriage.

This means that any fresh income after that would not be considered and, similarly, any money spent on the family assets, such as mortgage payments, would be refunded to the spouse who paid it.

In this case, the wife had over $110,000 refunded to her because she was still paying the mortgage after the marriage was dissolved. After all, reducing the mortgage would increase the net value of the matrimonial home, which would be shared by both parties later.

Because the wife was retrenched after her divorce, the undisclosed sum of her severance package was hers to keep, and not for sharing.

The husband wanted to take $100,000 off the table because he claimed that the sum, which was transferred to him just before the date of the interim judgment, was a loan from his aunt.

But the judge disallowed this because he could not prove that the sum was spent on the family.

The husband could not set off his legal fees because such costs should be paid by parties out of their own share of the matrimonial assets after division and not from pooled assets.

He also tried to set off about $16,000 of investment losses, but this claim was also rejected because any gains or losses associated with this stock portfolio would not be shared after the date of the divorce.

Records of payments

When it comes to proving financial contributions, nothing beats having proper records showing clearly that you are the one who has been making the various payments for the family.

For instance, both spouses claimed to have paid about $30,000 each for home renovations. But the husband could barely provide any evidence to support his claims, as he only had a copy of the cheque to a contractor for $15,000 and an invoice for about $3,400 for kitchen furniture.

The wife, however, had a comprehensive compilation of receipts, invoices and bank statements in support of her outlays, which amounted to $35,000.

As a result, the judge allowed the wife’s claim for $35,000 and the husband’s claim of $18,400, an amount based on documents that he could provide to support his renovation spending.

After deducting the home loan and other liabilities, the court found that the couple had matrimonial assets totalling about $4.5 million. The wife was awarded an 85 per cent share of the split, so was entitled to keep $3.83 million, while the husband got $670,000 as his share.

If there is a financial takeaway from this case, it is that marriage is akin to a long-term investment. It would be priceless if couples stayed married, but if they break up, each spouse is only entitled to receive proceeds that are commensurate with their efforts to build that investment.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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