The approximate value of each property is calculated after determining the property or funds available for distribution within the household’s total asset portfolio, including stocks, bank savings, life insurance policies or interests in trust funds, etc. The parties must therefore agree on the value of each property, otherwise it is up to the court to decide.
The Court must then consider whether it is fair or practical to maintain the present arrangements for the distribution of assets, or whether certain adjustments are necessary. There are some general principles regarding the division of properties between the parties upon divorce as follows:
a. Ownership of property
Disputes about bank accounts can arise in respect of ownership of the funds and property purchased with the funds derived therein.
If a bank account is in a spouse’s name, then it appears that any money in the account belongs to that person, unless there is a contrary intention or another spouse has made a contribution to the fund.
If a bank account is held in joint names, then it appears that any money in the account belongs to both parties jointly, unless there is a contrary intention, e.g. that the account was put into joint names for convenience.
As a general rule, any property acquired with the funds from a bank account belongs to the purchaser.
Thus, if a husband draws money from a joint account to purchase shares or real property in his sole name, then it appears that these properties belong to him. But if the parties have pooled their resources together, the Court may treat the joint account as a ‘common pool’ and held that investments purchased by the husband with money from the joint account belonged to both husband and wife in equal shares, albeit the husband had made larger contributions to the joint account than the wife.
b. A roof over each party’s head
The Court will ensure that, wherever possible, there is a roof over each party’s head. This is in particular so when there are children in the family. The Court will ensure that the children are properly taken care of by providing them a secure home.
c. Percentage of property available for distribution
In the past, it was customary for the Hong Kong courts to assess a spouse’s “reasonable request” and to distribute assets based on that assessment. The remaining assets would normally be awarded to the breadwinner, usually the husband.
However, the Court of Final Appeal of Hong Kong had ruled in LKW v DD (2010) 13 HKCFAR 537 that a wife is entitled to half of the couple’s assets when they divorce in Hong Kong.
This 50/50 rule will have major impact in cases where the financial assets are substantial. As a consequence, pre- and post-nuptial agreements will be extremely important for those in Hong Kong who wish to protect his/her personal wealth.