The Financial Cost of Divorce
By Candace McCune, Esq.
In addressing only the Financial Cost of going through either a Separation or a Dissolution of Marriage (both requiring court involvement), I do not minimize the huge impact emotionally and physically of divorce. However, the financial is one piece not always fully analyzed by those entering the process.
There are variables in the cost directly related to the path people choose to follow in getting to the end result of a Separation Decree or a Dissolution Decree. So I will address each path, including the pros and cons, and give the best estimate I can regarding the financial expense:
1. Neither party interacts with an attorney. The self-help forms are online for people to complete them and file them with the court. They can go through the whole process with no attorneys. And this is the way the majority of people go. However, if you disagree on parenting plans, division of property, or any issue required to be decided, you will have to prepare for court and go to represent yourself in front of a judge who will make the decision on the issue for you. You can see templates online for Parenting Plans and Separation Agreements – these will outline the issues you need to agree upon or leave to the court to decide. You also will pay for the filing fees, parenting classes, and share an evaluation cost ($5,000 or more) if the court orders one to be made for parenting situations. The court may also order the parties to mediation, so they will split that cost as well (see below–option 4). Financial cost: your own time and expenses for filing, parenting classes if children are under 18, any parenting evaluation required and perhaps mediation.
Pro: low cost if you have the time available and have certainty that you know enough about the choices you are making to not suffer financial consequences in the long run.
Con: you may miss an important legal insight that would have helped you in court but can no longer be changed after the divorce is final. If you don’t agree on everything and have to go to court, you may end up with a Judge’s decision that you don’t like but lacked the legal knowledge that could have brought a different result.
2. One party consults/retains (employs) an attorney. If one party does consult or retain an attorney, that attorney can only represent that party, and NOT both parties to the divorce. No attorney can ethically represent both parties. For one side to have legal assistance and the other side to not have it is unwise. I recommend that anyone going through divorce needs to at least consult an attorney in order to know what options they have, what areas they need to be aware can cause problems, etc. Attorney’s hourly rates vary widely, but can usually go between $250 an hour to $500 an hour, and even more if it is a complex case or has heightened intensity issues requiring a lot of legal intervention. I usually estimate one needs to have a minimum of $5,000 for a beginning retainer to hire an attorney – it goes up from this figure. Some attorneys do “unbundled” legal services and may be retained for a specific purpose or task, i.e. representation at a mediation, or review a drafted Agreement, etc. This would require a lesser retainer or an hourly fee. All attorneys should be able to give one an estimate of the fees involved after they have a handle on the issues involved and the level of agreement/disagreement of the other side.
Truly, the amount of money spent in attorney fees beyond an initial administration and drafting of documents in a case depends on how much the parties disagree. If agreement is reached quickly, the matter can be drafted up and filed with the court without any hearings. Preparing for hearings in court and attending them, plus any extensions of the hearings, is a major driver of the cost beyond initial retainers. Financial cost: estimate of $2,000 or above for unbundled services; $5,000 or above for initial retainer to fully represent one party; and, depending on the level of disagreement and lack of compromise, each person could pay a range of $7,500 to $50,000. Plus additional costs mentioned in #1.
Pro: one person getting legal advice could avoid legal pitfalls for that person.
Con: the person not consulting/retaining an attorney may not find out until it is too late what they missed or lost due to lack of legal information regarding their options. Parties lacking representation, or just utilizing unbundled services, may not be fully aware of the information they need to know to make good decisions.
3. Both parties consult an attorney but don’t retain one. If both parties consult an attorney to the extent they learn more about their options and the possibilities with regard to parenting plans and division of property issues, that may be helpful to them in coming to agreements on issues of parenting or property division. However, if they have only done an initial consultation before any financial affidavits are completed, the attorney will have to make a lot of “estimates” regarding the issues and options. Their advice is only as good as the knowledge of the parties’ situation that they are able to receive at the time of their giving advice. Financial: The parties will pay whatever hourly fee is required by the attorneys (see earlier range of $250 an hour or above). Plus additional costs mentioned in #1.
Pro: some helpful legal information may lead to some agreements to help resolve some issues.
Con: there is limited legal advice that can be given in initial stages before discovery and more relevant information is known. When financial affidavits are completed and more “discovery” required by the courts is known to the parties, new or changed legal issues almost always arise that the attorney who was initially consulted could not address because it was not known.
4. Both parties retain attorneys. This is the situation that I suggest to everyone along with my recommendation that they get their initial information quickly to their attorneys and set up mediation. If both attorneys are present during mediation, they most often become part of the solution and can draft up agreements and file them with the court. Then there are no court preparation costs, no hearing costs and no need to leave things to be decided in the hands of a judge. If attorneys are not present at the mediation, they miss the discussion and reasons for compromise, and all too often contribute to later changing of agreements that were thought to be made or partially formed at the mediation. The people most knowledgeable about the parenting or property division issues (the parties) can work through to solutions with legal advice provided to them as they go through the mediation. A mediator can help all parties and attorneys work together to reach solutions as quickly as possible. Financial: if each party retains an attorney and quickly provides all information needed so that Financial Affidavits can be completed, the mediation can take place quickly. If the parties and attorneys are efficient in working together (maybe 10 hours preparation and meeting time prior to mediation) and spend 4 hours on mediation plus some on drafting final documents (maybe another 2), the cost may stay close to the retainer of $5,000 or less. In addition to attorney costs, a mediator may cost from $800 to $1,200 for 4 hours and that amount usually is split between the parties. Plus the additional costs mentioned in #1. This is the most conservative of estimates, so expect an average range of costs to be higher.
Pro: both parties get assistance completing the Financial Affidavits and other disclosure requirements, both get legal advice prior to and during the mediation, and if agreement on the issues is reached during mediation, the final agreement documents can be drafted and filed by the attorneys without the parties having to appear in court. Even if agreement is not reached on all issues, or any issues, the parties have narrowed down what really is in dispute and can be more focused on what is presented to the court when a hearing comes. This should shorten court time involved.
Con: Conservatively estimating, cost is $5,500 or more per person (but one has to balance this against the savings an attorney may provide in the legal advice and guidance given during the process). As pointed out by Laura Seldon in her article cited below: ‘The real cost of divorce can come from not understanding the financial consequences of a settlement. “Hidden taxes, underperforming investments, depreciating assets and a budget that cannot withstand the pressures of inflation will cause people to literally go bankrupt as a result of divorce,” says Rosemary Frank. “The cost of an attorney, or court costs, pale by comparison.”
Additional variables. Different attorneys cost different amounts plus if you have a particularly contentious spouse on the other side, that drives the financial costs up as well. There is no way to assess how much difference financially this makes without an accurate survey of a sufficient number of cases. I do not know of such a study.
In her online article titled “How Much Does the Average Divorce Really Cost?”, Laura Seldon at GalTime.com shares the following:
Breaking Down the Costs:
While there may still be plenty of ads promoting a “Quick and Easy Divorce for $299,” that price is usually for couples who have already agreed on the terms of their divorce and just need a lawyer to sign off. Bruce Cameron of Cameron Law PLLC in Rochester, Minn. says the generally accepted figure is anywhere from $15,000 to $20,000. “Basically it costs as much to get unmarried as it does to get married,” says Cameron. Here are just a few of the fees and costs divorcing couples can expect to pay:
Attorney’s fees (which can vary by state)
– Court costs (also varies by state)
– Costs for parent education classes
– Fees for early neutral evaluations
– Mediation costs
And if there is real estate involved, you can also expect to pay:
– Refinancing costs
– Record deed fees
– Added hourly attorney’s fees
Depending on the circumstances, Cameron says it is possible to get away without spending anything on your divorce, but you could also wind up paying the equivalent of a four-year college degree. Unfortunately, the latter is the more typical result.