The Financial Impact of Divorce

Divorce. The word itself causes many of us to shiver. Not only can it be an emotionally painful and exhausting process, but it can also burn a huge hole in one’s wallet. Divorces can be extremely long, drawn out processes or can proceed quickly depending on the attitude of the parties involved and the requirements of the state in which you live. There is no sure fire way to estimate how much a particular divorce will cost. The easiest answer to this question is “It depends.”

The majority of costs incurred in a divorce are legal fees or attorney’s fees. Of course, attorney’s fees vary greatly depending on the caliber and reputation of the attorney and in what city and state you are located. For example, in the District of Columbia, according to the Laffey Matrix, in 2008-2009, hourly rates for attorneys ranged from $130 for a paralegal or law clerk to $465 for an attorney with 20+ years of experience.

The amount of fees one can “rack up” with an attorney depend on a variety of factors including:

  • Whether your divorce is adversarial or collaborative
  • Whether children are involved and if so, is child support an issue
  • How many marital assets are involved
  • Is there a lot of joint debt
  • Is there a family business involved

All of these questions must be considered and can ultimately affect the amount of time your attorney puts in to the case. The attorney’s character will also influence your bill i.e., is he/she aggressive and willing to stop at nothing to win.

Aside from attorney’s fees, other costs associated with a divorce could include private investigators and/or experts including CPAs, financial planners, business evaluators, insurance brokers, and even therapists. These “experts” can add another $2,000-$7,500 or more, depending on circumstances and services rendered. Your attorney will also charge you for filing paperwork with the courts, which can range from $75 to $350, answering your small questions, and for the time you spent working with junior associates (hopefully at a lower hourly rate) as well as photocopies, etc.

According to, in 2007 an uncontested divorce cost anywhere from $1,000 to $10,000 per couple. The cost of a contested divorce ranged from $5,000 to $25,000. That is not to say, however, that some divorces don’t cost millions. In fact, some couples spend so much on the divorce that there are no assets remaining when the dust settles. Have no fear, for those who are worried about saving money, there are less expensive alternatives. As of late, couples filing for divorce have begun to use mediation, whereby a mediator, acting as an impartial third party, helps couples work through the issues of their divorce to reach a mutually agreeable settlement.  The only cost incurred is that of the mediator and fees paid to have an attorney review agreements drawn up as well as court filing fees.

A study published by David Hoffman in 2008 in the University of Missouri-Columbia School of Law’s Journal of Dispute Resolution showed the drastic difference in cost between mediation and a contested divorce. Hoffman looked at affluent families with a median net worth of about $2 million and found that the combined cost for both parties for legal fees and mediation fees was $15,671. In the litigated cases, however, the data showed a median cost for legal fees of $155,492 while the combined cost for both parties in collaborative cases was $39,445. An even newer trend involves do-it-yourself divorce kits which include all the necessary paperwork required by each state to file for a divorce and cost anywhere from $100 to $200. Experts advise against using such kits when the divorce is not straightforward and involves complicated matters such as children, finances and joint assets.

In the end, it is up to you and your spouse how much your divorce will ultimately cost. You can choose to work together through your attorney’s or settle the matter using a mediator outside the courtroom. Nevertheless, it is not a fun process and certainly you will be expected to spend money, just how much – it all depends!

Topics: Smart Spending

3 Responses to “The Financial Impact of Divorce”

  1. My parents got divorced when I was little. While I don’t remember the details I do remember that my grandparents every week came to visit us and they would bring the groceries. Thinking back now we never needed anything but once they got divorced the financial situation became harder for a while.

    Thank you for the good article.

  2. Borrower

    Divorce brings out the worst of everyone. Regardless of your financial position 1/2 of everything you have is like losing everything. It is an emotional, scary ride creating desperate people that move on instinct and not logic. Survival is the only primary objective.

    Many people could walk away from marriage better off if they stopped funding the attorneys and courthouses and just realized that the quicker the division the better off they will be. Take what you came with and split the rest. My logic is there is nothing more valuable than your sanity, so get it back first – everything else can be replaced.

  3. My divorce was the single most painful episode of my life and during the seperation and ensuing divorce settlement, I couldn’t have cared less about the money side of things.

    I sure cared later though, and for 7 long years I never had credit. That has all changed and this is ancient history now. I wish I had planned my divorce like some smarter people do – I know a guy to who planned the financial aspect of his divorce for 2 years, and that meant getting his wife at the time to get a full time job – shrewd!

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