Divorce is not only an emotionally trying experience, but it can be a financially devastating one, as well


The financial aspect of divorce is crucial for the parties and the children. When financial experts look at building wealth, marriage may be one of the most important components. While there are many social and psychological impacts of divorce, it is not surprising that finances are by far the biggest worry for most people at the crossroads of divorce.

The reason is that divorce is not only an emotionally trying experience, but it can be a financially devastating one, as well. The average cost of a divorce in the United States now runs about $20,000. From legal fees and alimony payments, to the division of assets and possible tax consequences, the costs can grow even higher.

The expenses of a divorce are unlikely to deter a couple that truly needs to split, but experts say you should still be aware of just how high the bill can get. It some cases, the financial consequences can set you back decades. However, there are so many financial aspects of divorce that must be balanced that if parties aren’t careful, they can end up in a big money mess. Here are a few of the big ones:

1. The Household is going from one household to two households. Before a couple or family divorces, they live in one residence with one set of bills and expenses, paid by however much money the couple/parents bring in. Upon divorce, the same level of income still exists, but now there are two mortgages/rent, two sets of utilities, two sets of grocery bills, two car payments, relocation expenses, first and last month’s rent, and so on. Basically, double or so the expenses on the same income. It is not hard to see how difficult this is in and of itself.

2. Debts. These days, many families are just a paycheck or two away from real trouble with credit cards and other unsecured debts, and if there are significant debts involved in the divorce, a real challenge exists. The court can certainly divide the debts and assign liability to each spouse, but it doesn’t do much good if the net marital estate is significantly reduced or eliminated by the debt. A divorce is a separation of financial livelihoods, and when possible, it is a good idea to use assets in the marital estate to reduce or eliminate debt before dividing assets. The less debt after the divorce the better for both parties, even if on paper one spouse is supposed to be responsible for it. It is a future fight or bankruptcy filing waiting to happen.

3. Child Support. Quite simply, nobody is happy with it. If you have to pay it, it is going to be perceived to be too much, and if you are receiving it, it is perceived to not be enough. Child support is a mathematical calculation based on incomes and other certain allowable expenses, and to some degree it is what it is. But regardless, it another factor affecting the same level of income pre-divorce, and it will never make a party “whole” or maintain a pre-divorce standard of living.

4. Alimony. Although there is no mathematical formula the same holds true as does for child support, it is probably both too much and not enough, and it is still going to have to come out of the same pot of money. Unless the parties are very well off financially to begin with, to expect the same standard of living pre-divorce is usually unrealistic. Although appropriate in some cases of long marriage, large disparities in income, or other factors, maintenance is awarded in a small percentage of cases.

5. Health Insurance. Regardless of your politics on the issue, health insurance is expensive and upon divorce usually a former spouse cannot remain on the other spouse’s health insurance. So, unless both parties can get affordable health insurance, if such a thing exists, then this can be a big financial factor that likely may only have a handful of undesirable solutions.

6. Attorney fees and case costs. On top of all of this, the divorce is a direct expense in terms of attorney fees and costs associated with the case. If the case is contested, then the total cost on the family is the sum of both spouses total investment in the case. Attorney fees are not always awarded, which is all the more reason to try to approach the case in an informed and rational way, and try to keep costs and conflict down. The higher the conflict, the higher the cost every single time.

There are of course, other issues particular to certain cases, but regardless of how extensive the list may be, the bottom line is that divorcing spouses need to be smart and rational about how to separate financially and view their situation in a realistic way. Otherwise, financial disaster in one form or another, certainly awaits.

I believe that whenever mediation is possible, mediation is a better method of dispute resolution than ongoing litigation. If you believe that you and the other party can work cooperatively to come to an agreement over your dispute, then mediation could save you a significant amount of time, stress and expense.

The Clear Benefits of Mediation

You Control the Outcome: In trial, and only knowing of you for a short period, the judge decides on your future. In mediation, you and the other party work cooperatively to reach a settlement that you both find agreeable.

Mediation is Less Expensive: There are no court costs in mediation, and depending on the complexity of your claim you may be able to conduct mediation without a lawyer, which eliminates that legal expense.

Most importantly, mediation is a faster process than a traditional court case, saving time and money so household resources can remain with the families, as well as being less stressful on the parties and their children.

South Florida Mediation Services