Single-digit millionaires may be above-average on the wealth rung; but as I often point out, it’s still far from being truly affluent and secure. When it comes to a messy divorce, a billionaire losing half their assets is shocking…but still recoverable. A single-digit millionaire losing half their assets is often a permanent disaster, especially if it happens later in life. Here’s some added risks to consider:
1. Statistically, women live longer than men
On average, Singaporean men live to about 80 or 81 years old, whereas women live to around 85. This impacts your financial planning in various ways.
The most obvious implications are also the nastiest: men in a marriage need to consider how children, grandchildren, siblings, etc. may try to wrest assets away from their surviving spouse.
Keep in mind that the woman living five years longer is just an average – your surviving partner may live much longer than that (e.g., a decade or more). In that time, losing the house or funds you leave to them is a real risk. This is where tools like trusts may have to be set up, to ensure the surviving spouse is protected.
There is an added complication here, for single-digit millionaires: most people in this category tend to have more complex assets. This can include active businesses, trade portfolios that are meant to be actively managed, or assets that require a specialist to understand (e.g., fine wine collections, art, antiques, and so forth).
For some of these assets, even a conventional finance expert may not suffice. E.g., your financial advisor may be great at picking the right funds for you, but that doesn’t he knows how to auction your signed first-editions of Proust.
Written or video instructions, as well as a trust, can go along with conventional tools such as a will. You need to ensure your assets can continue to be managed, beyond just handing them over to your spouse.
2. Joining all your finances can collectively torpedo your credit scores
I don’t need to explain the risks of pooling all your resources with your spouse, because your wealth manager / lawyer / financial advisor will come inches from literally boring you to death about it.
You get it right? If you pool all your resources, you may lose a fortune when you get divorced (if the bulk are deemed matrimonial assets). It makes you a mark for gold diggers; a tragic character in a Channel 8 drama about evil wives / husbands.
The simplest way around this is to ring-fence your assets, via a pre-nuptial agreement. This can be set up by a law firm; and while the discussions can be uh, sensitive, it’s imperative for single-digit millionaires; especially if you’re bringing substantial accrued wealth to the table.
Here’s the next, often overlooked issue:
If you keep pooling all your assets, bank accounts, etc. till you resemble a single legal entity, your creditworthiness becomes an issue. If either you or your spouse wrecks the portfolio, and you end up in default (unpaid mortgage, credit cards, etc.) then the last thing you want is for both your credit scores to reflect it.
If at least one of you maintains healthy separate accounts, then at least one of you will still have good credit. This can make a huge difference in how quickly your finances recover, and how soon you carry on ahead with your life.
As an example: if you’ve ever been declared bankrupt, and then emerged from it (you have the official letter of discharge from bankruptcy), you still need to wait five to seven years before you can get a home loan.
If you’re married, you can probably see the benefits of only one of you being declared bankrupt, rather than both you having that on your credit record.
In an ideal situation, debt is handles such that – if you get divorced – both parties handle their own debt separately.
3. If you’re a business owner or have a high profile, you’re at greater risk of scandals or leaks
Single-digit millionaires are more likely to be business owners, and you may have a higher level of public prominence. This unfortunately adds a risk that most married people don’t face: that’s a scandal or leak.
Examples could be a divorced spouse threatening to leak trade secrets related to your business; or to reveal information damaging to your character to the media. This could affect your moral authority to lead a company, as well as the public’s reception to your company’s products and services.
Having any degree of celebrity status worsens this. The drama with the couple behind Night Owl Cinematics, and their high-profile divorce, is an example of what can happen.
This is an added consideration to bring to your lawyer, beyond the usual issues of matrimonial versus non-matrimonial assets.
On a tangential note, consider that as your wealth increases, your public profile tends to as well. This means that public perception – particularly the danger of “bad optics” – will continue to rise as a risk factor.
4. If marrying someone less affluent, their family can become freeloaders
If you’re marrying someone less well-off, it’s best to minimise their family’s awareness of your wealth (you probably won’t succeed, but at least don’t flaunt your priciest assets in front of them).
Just because your spouse isn’t a gold digger, it doesn’t mean the rest of their family won’t be. A common hazard are the new in-laws, or other extended family, deciding you’re now in a position to fix their problems, as you’re “one of them.” You may even find yourself pressured to be a customer. E.g., if your in-law is a real estate agent, you might feel obliged to sell property assets through them.
This can lead to a lot of social pressure to take on debts, or other obligations, that you never considered at the start of the marriage. On an emotional level, turning down these people isn’t just uncomfortable for you; it’s potentially stressful on your spouse as well.
Communication is vital here, as you need to work out – with your spouse – where lines are drawn, and how much of your wealth should become common knowledge. This means having jointly-established policies about buying from family, lending to family, or the extent of gifts to either side.
Some of these can be tricky, so if you have questions, do reach out to us at Single Digit Millionaire. Also follow us from news and stories, from Singapore’s most sandwiched demographic.
