Divorce and the financial impact!

One of the first questions my clients ask me is, how much will the divorce cost me and how long will it take? The truth is there is no one size fits all answer for these two questions, since it really depends on the individuals getting divorced.Some people can settle things peacefully in a few weeks, while others can drag litigation out for years.

Hindsight is 20/20, and I wish I would have known what I know now when I was going through my divorce. So the first and most important thing I advise my clients to get clear on, is to educate themselves about the options that are available to them.

Knowing what their options are will give them a better understanding of what they are getting themselves into and help them be better prepared mentally and emotionally.

So let’s start by exploring five different approaches:

 Do-It-Yourself Divorce

• In a Do-It-Yourself Divorce, there is no involvement from outside professionals. Instead, the couple is solely responsible for carrying out all of the steps to divorce.
• The two spouses work together to identify the relevant legal and financial issues, come to agreement on all issues, draft all required paperwork and file their divorce with the courts

 Internet Divorce

• Internet Divorce is similar to the “Do-It-Yourself” Divorce option in that the couple is responsible for undertaking all of the steps to divorce. But instead of having to pinpoint the relevant legal and financial issues on their own, a website or software program helps by identifying the basic legal and financial issues that most average divorcing couples face.
• The spouses would still need to come to agreement on all issues, but the website leads them through an online interview with a series of pre-defined questions that they would answer.
• Finally, instead of the couple having to draft all required paperwork themselves, the website outputs the paperwork based on the way the interview questions were answered. The couple would then print out that paperwork, sign wherever required and then follow the instructions provided by the website as to how to file with the courts.

 Divorce Mediation

• Divorce Mediation is a cooperative process whereby a neutral third-party (the Mediator) helps and guides the couple through the steps required for divorce.

         The Mediator will:

• Help the couple identify the relevant legal and financial issues that need to be resolved in part by guiding them through a process called Discovery.
• Educate both spouses on the relevant laws and financial issues that pertain to their case so that informed decisions can be made by both spouses.
• Help the spouses create an agreement that is customized to the unique needs of their particular situation and/or the unique needs of their children.
• Guide negotiations between the spouses on issues of disagreement.
• Draft much of the required paperwork including the tenants of the agreement. Some mediators can also help facilitate the administrative filing of the divorce with the courts.

 Lawyer-Driven Divorce

• In a Lawyer-Driven Divorce, one or both spouse hires a lawyer to help them complete the steps required for divorce. But unlike a mediator, who is neutral and works for both spouses, a lawyer can only represent one spouse.
• For this reason, the lawyer’s job is to advocate for the one spouse that hired them with the goal of attaining the most favorable outcome for their client.
• There is no requirement that the other spouse must hire his/her own lawyer, but it’s common that when one spouse retains a lawyer, the other spouse does the same.
• For the sole purpose of describing a Lawyer-Driven Divorce as simplistically as possible, in the following example, Sally is the wife and Bob is the husband.
• We are assuming that each spouse has hired his/her own lawyer. We are also assuming that each spouse is being reasonable and that each lawyer is being reasonable, though it is common for Attorney-Driven divorces to escalate into something less cooperative.

 Collaborative Law Process

• The Collaborative Law Process (also referred to as Collaborative Divorce) is a hybrid between lawyer-driven divorce and divorce mediation.
• Each spouse hires his/her own lawyer trained in the collaborative process to represent them. Both spouses and their lawyers sign a contract called a “participation agreement” that states that they are all committed to using cooperative techniques rather than combative tactics to negotiate the divorce issues.
• If agreement cannot successfully be reached on all relevant divorce issues using the Collaborative Process, the lawyers will be disqualified from representing the spouses as they continue into the litigation process.
• In the Collaborative Process, a series of meetings take place between both spouses and both lawyers and possibly other outside professionals as needed to negotiate and try to come to agreement on the issues.

Let’s take a closer look at the expenses

As listed above there are several options you can choose from. The do it yourself option is obviously the least expensive, while litigating (lawyer approach) would be the most expensive.

Very few cases are resolved through “do it yourself” divorce style. Most divorces either pursue the mediation route or litigation. When possible I would always suggest mediation since it is the more peaceful approach, a lot less costly and YOU are in control. Any case that ends up in court ultimately gives the decision making powers to their attorneys and the judge.

Some couples need to hire an attorney to negotiate on their behalf, which does not necessarily mean that you are headed to court. An agreement can be negotiated between the two parties (mostly works in uncontested divorce only), where everyone ultimately walks away satisfied and peacefully. Regardless of taking the do it yourself process or hiring a mediator or attorney, court fees will always incur.  The fees would include the cost to file the divorce or other paperwork that is required to obtain a divorce decree, or any motions to the court. The minimum average divorce filing cost in New York for example are around $400. Add on to that $45 for any motion that is filed. The more issues you are resolving in court, the longer the process and the higher the expenses. Additional funds may be used on the service of legal documents such as summonses, subpoenas, transcripts, and the preparation of court orders. These all vary depending on your individual situation and what will be necessary in order for your attorney to represent you.

Nationwide, the typical fee that people paid their divorce attorneys was $250 per hour. However, some attorneys charge up to $750 per hour. Figure an average of $350 an hour. The fees really depend on what caliber lawyer you are hiring, his/her experience, reputation and the size of the firm they work for. Note that the more complex the case the higher the retainer fee, which is the initial advance payment all attorneys require. Most people spend an average of $25’600 for a divorce process that includes children and about $16’700 for a divorce that does not include children. However, as mentioned above the more complex the litigation the higher the expenses.  I have represented clients who spent up to $150K and more so it really does depend on the case and the willingness of both parties to work towards a resolution.

Let’s take a look at the different issues

• Child custody
• Child support
• Alimony or spousal support
• The division of property
• The division of debts
• Attorney’s fees
• Claims for reimbursement
• Claims for breach of fiduciary duty

Some cases are simple. The parties involved may not have any children, assets or debts. Those should be fairly simple to resolve. Some couples are able to put their emotions aside and are able to calmly and openly discuss how they want to fairly settle their divorce agreement arrangements. On the other hand, there are cases that are more complex. Not only may the parties not agree on the issues of parental decision-making and access, but they may also have assets that are not easily divisible such as art work or a business that would need to be valued (e.g., a house, stock options) or sold. But the nature of the issues themselves is only part of the equation. However, no matter how complex or how many issues a couple has to resolve, they can choose to compromise, cooperate and settle things amicable, keeping the costs down and saving themselves a lot of emotional anguish and pain.

In the end when a couple divorces NO-ONE wins! The sooner the couple can accept that and understand that sometimes things just end, or don’t work out, the easier the negotiation process.

Another unexpected expense that may come up is whether the couple needs experts to get involved and evaluate assets, such as property, jewelry, pensions, art or other valuable items.  The individuals may want or need to consult with an accountant, financial advisor, or other experts for advice.

That being said the next important step once you have decided what is best for you, if you choose to hire an attorney you MUST feel comfortable and secure with him or her. You should feel that your attorney has your best interest in mind and is moving the process along. Do you feel heard, represented fairly? Do you feel protected? Does your attorney respond to your calls and emails?  If something doesn’t feel right it probably isn’t, so if any of these questions come with a “NO” answer you should discuss this with someone who can help you get clear and decide if this attorney is indeed the right match for you. It is CRITICAL that you have a good chemistry and understanding with your attorney for your case to proceed smoothly and for you to feel secure.

Last but not least can we really put a time line on it? I have some clients who were ready to give in on everything and thought that in two weeks everything should be over. The problem is we can only control what we do and how we do it, but there is another party involved here that you are dealing with.  Remember you have no control over their reactions or decisions, so taking the laid back approach is always best.  Based on a survey the average time to complete a divorce from filing to final court judgement took about 11 months.  Cases that went to trial took an average of 17.6 months to resolve, while cases that were able to be resolved with settlements took about 9 months.  Most people regardless of long it takes them to resolve their case will admit that they regret having gone to court.  The moment a case ends up in court a stranger will make decisions for you as well as your children, and no matter how just the system may be they do NOT have your best interest in mind and don’t LOVE your children like you do.

Think long and hard about what road you want to take. When making the decision, don’t base it on other people’s emotional advice, or because you want to get even. Remember court is not a win win for anyone. Explore your options, discuss it with an expert such a therapist or divorce coach. Know that you are 100% sure and at peace with your choice before you start the process.  Best of luck.

If you’re looking for support, sign up for a PRIVATE (and free) consultation to talk about your journey and we’ll discuss if coaching is the right step for you