According to National Registration Department records, 49,965 divorces were reported in Malaysia in 2017, which means at least 5 marriages break down every hour. Between 2013 and May 31st this year, 17,359 troubled marriages were due to financial issues, followed by 6,574 cases of third-party interference, and 4,884 cases of emotional and physical abuse.
No matter the cause, legally separating from one’s spouse is always an emotionally draining and stressful time – especially in the absence of a sound financial plan or agreement prior to the divorce. Unfortunately, it’s a topic we often avoid, as no one wishes to entertain thoughts about the end of a relationship, especially in the ‘honeymoon’ period. Talking about the possibility of divorce is also culturally regarded as inauspicious, or perceived as a sign of distrust in one’s partner.
In Part 1 of this Special Report, find out from Dato’ Fion Wong, a partner of Shang & Co who is actively involved in matrimonial and family law, how a legally-binding family financial plan can help to provide you with peace of mind. And how it, in fact, may help to protect your marriage.
Adelina: Has the number of divorce cases in Malaysia increased in recent years?
Dato’ Fion: Not substantially, perhaps also because there is a slight decrease in marriages. But what we know for a fact is that financial disputes are increasing. This is why I suggest that couples agree on a Family Financial Planning Agreement. So in the event that divorce happens, they’ll know what to expect and do not have to waste so much time and money on legal fees.
A: What would couples need to know when drafting out a Family Financial Planning Agreement, and what should go into that agreement?
DF: This is a very comprehensive, but very much underutilised, agreement in Malaysia. So couples, whether they’re already in marriage or anticipating marriage, should come across an agreement like this. It should cover how both parties can partner together with their incomes, their existing assets, and with future assets – or even whether they want to do so. They can plan out the goals they want to reach, such as where to get a house and in which year. There should shorter goals, as well as longer ones, such as education funds for the kids, or to retire at a certain age. So, both parties can actually know what to do with everything they have in a very practical way.
In fact, I can see that nowadays, romantic relationships are more like a partnership. No matter who has more income, couples should actually start with a goal when it comes to shared finances. For example: “Do you think that we can afford to stay here? Do you think we can afford to send our children there?” You start with questions like these, and then plot your financial goals. When you have these plans drafted up by the professionals, you’re actually compelling each other to do as agreed. You wouldn’t sway and divert too much from what you’ve planned, and it should actually bring you to your goal.
This is what you can actually see in the Family Financial Planning Agreement. As for the second part of it, in the event divorce happens, both parties can decide to agree that the income derived from properties A are to be used for child maintenance, and properties B are to be used for what purpose. They can even draft out what they wish to do during the divorce and after it, For example, how are we going to do a separation and divide the assets. It’s very much advisable to go into as many details as possible, and not leave it vague.