How Expensive Is Getting a Divorce?

A friend tells another friend over coffee, “Well it’s finally over–Frank’s lawyer got the apartment and my lawyer got the two cars and the beach house!”

Many of us wish that were actually funny.  Isn’t it interesting that the filing fee for divorce is less than one hundred dollars, and practically any Attorney can draft the required documents in a few short hours; however, we know this is not the full picture, nor is it the norm.  Ever.  We’ve all heard the horror stories.  But do we have to accept the norm?  No, if you are educated about the process and armed with information, You have Options.  

OK, What Expenses Should I Expect?

What drives the cost of divorce “through the roof” is two things:

(1) The Cost of Dividing Assets: The process of dividing marital assets is of course inescapable in a divorce, and

(2) Attorney’s fees.  These Attorney’s fees can truly spiral, even to the point of the ridiculous (and I say this as a family law Attorney).  Some of these fees are unavoidable, because they are driven by the acts and strategies of the other party or his or her Attorney. Divorce can be made into a “winner take all” battle, and with that approach follows the necessity of defending oneself. Lawyers are trained to be zealous advocates for their clients in an adversarial environment.  The stakes may be high. But, also driving up costs is the fact that many Attorneys utilize only one approach — the ol‘ grind it out ‘til it’s done approach.  It may be all that the Attorney knows, but there is literally no way that that philosophy and mode of operation doesn’t end up costing you thousands of dollars in legal fees.  It is therefore vital . . . VITAL, that you work with a divorce attorney with a different philosophy than the norm to minimize divorce-related legal expenses.  You have Options.  There are strategies that can both increase efficiency and also minimize costs, in other words–faster divorce, less cost. The most common complaints about divorce Attorneys?  Too slow, and too much.

Cost of Dividing Assets:

Let’s look first at the Cost of Dividing Assets: Aside from legal fees, and regardless of whether or not your divorce is contested, there are some costs you’ll have to accept as you move through the process. None of these are pretty:

  • Selling the House: The harsh truth is that either you or your spouse must keep the house, or you’ll have to sell it and divide the equity or loss associated with the sale. If one of you keeps the house, you can offset the loss somewhat through “buying out” the other party with cash or possibly a distribution of other assets — but even so, you’re essentially losing half the value of your home by dividing it with your spouse. If you must sell the house, you’ll be forced to accept whatever price the property will bring today, the current market value — which could be thousands of dollars less than if you could wait and sell it in a better market. Additionally, you’ll be out the realtor fees and other associated expenses, which typically cost thousands of dollars, depending on the value of the home.
  • Dividing Property: Dividing property can be costly. No matter how you look at it, you’re losing a portion of your personal property, which translates to a dollar cost. If it’s furniture, for example, you’ll have to buy replacements for what you have lost, which carries a very real financial value, and you’ll have to pay replacement value, today’s prices, to refurnish your house and become physically functional again.  There’s also emotional value associated with some property — which you may or may not be able to recoup financially.
  • Business Interests: If you and your spouse share interests in a business, you’ll essentially lose whatever interest your spouse had in your business. Alternatively, you may have to spend tens of thousands or hundreds of thousands of dollars buying your spouse’s interest to keep your business interests intact. This is VERY difficult with a long term family-owned business in which both parties have participated.  It is even MORE trying though when one spouse was only peripherally involved in the business, yet still owns a portion of the business in the marital division.
  • Stocks: Stocks that count as marital property must be divided equitably, just like all the other property. Even if you had stocks before getting married, the portion of value they accrued during your marriage may count as marital property. You may need to sell stocks to compensate your spouse for his or her interest, or you may have to give the spouse some of the stocks, which may greatly diminish the value of your portfolio.
  • Mutual Fund Accounts and Retirement Accounts: Investment accounts and retirement accounts that qualify as marital property must also be divided equitably. You may need to surrender some portion of the account to your spouse, or you may have to give him or her cash or other assets to “buy out” their share in these accounts.  Division of retirement accounts and pensions is typically a most difficult concept to understand for those who have directly and personally paid the price to earn it.  This is particularly troubling for military retirees, many of whom have stood in harm’s way to earn their pension. The law in Virginia is that the spouse, who stayed behind when the servicememberdeployed, also contributed at home to the servicemember’s “opportunities,” and is therefore entitled to a portion of the pension.
  • Child and Spousal Support:  For the non-custodial parent, child support is a given in Virginia and is driven by comparison of gross incomes and a few other factors.  It is spelled out numerically in chart form in our Virginia Code.  Spousal support however is much less predictable.  For some, it is also the most unthinkable aspect of divorce: to be required to continue to support a spouse after the divorce is finalized. For others, and it is not always the wife, receiving spousal support is necessary to continue to live somewhat as you were accustomed before the divorce, perhaps a divorce you did not want.  For longer marriages, spousal support may be a significant continuing cost to the providing party, and it can be required for life.
  • Other Big-Picture Expenses: Aside from the items in which you share joint interest, you’ll also face other big-picture expenses, like the cost of setting up a second household, or the unpredictable cost of switching to an individual medical insurance policy for example. Analysts calculate the cost of maintaining two households as at least 1.4 times the cost of maintaining one household.  This added expense begins even before the divorce is final, during the period of separation required in the Commonwealth of Virginia.  

Attorney’s Fees:

When you look at the big picture, most divorces are a lot more expensive than they should be in terms of Attorney’s Fees — unless it is the parties themselves that want to or need to fight about something that is vitally important to them. Certainly, there are things worth litigating about, and worth exerting a maximum effort to save or to obtain. To some, for example, custody of children or protecting a long-built retirement or saving a family business are zero-sum disputes about which there is no middle ground.  They must absolutely be protected, and again, Attorneys are trained to litigate, to fight for their client’s interests.  The down side of course is the high cost in fees.  In a hotly contested divorce that drags out for a long period of time, some sources estimate that divorce can drain up to 75% of the parties’ net worth. Some of that loss is unavoidable; it comes from dividing the assets with the spouse, which we have discussed above, but a portion of the loss is associated with the legal fees usually required in a lengthy, contested divorce battle. Unfortunately, this battlefield philosophy is the norm, and it is the already injured family that loses the most in this philosophy, not the Attorneys.  You need an Attorney with a different philosophy. There are options.

The fact is that not everything in a divorce must be a zero sum game, not everything must be a battle.  If your divorce is inevitable, it is also inevitable that you will have to divide your assets, and your children’s time with you, and your retirement, etc., etc, etc.  If you come into your divorce fairly well-off financially, you may want or need to fight to maintain your assets, OR you may not want to expend all of your assets in a protracted battle that may not reasonably offer a result worth the expenditure.  In other words, perhaps there are aspects of your divorce that are not worth spending the kids’ college funds in order to win. If you are divorcing and are not particularly well-off, there may be absolutely no reason to spend all you have or to go further into debt to finance a hotly contested divorce.  NOTE: There must ALWAYS be a cost-benefit analysis prior discussion to implementing any legal strategy in a divorce action. Absolutely so. Here are some realities:  in an equitable distribution state, like the Commonwealth of Virginia, you may roughly presume that half of the marital assets belong to each spouse.  This is irrespective of which spouse’s name might be on the title or deed, or who purchased it during the marriage, or who “earned” it.  To categorize an asset in a marriage as “separate” (not marital) is very difficult.   Separate property is a narrowly defined category.  There are only a few exceptions to these general equitable distribution “rules.”  It is not possible to spend one’s way out of these general parameters.  YET, many try, and many Attorneys lead the charge for various reasons, some noble and ethical and some perhaps misguided.

There are Options:

Mediation is an option you have to both minimize your costs in terms of legal fees and also to maintain more control over what happens to your property and your children and your life post-divorce.  Mediation is voluntary and confidential.  In Mediation, you control your priorities and may have almost unlimited input into the final result.  Estimates are that Mediation may reduce your costs in divorce legal fees by as much as 80%. National statistics show that over 85% of all mediations end in a resolution, and of that 85%, almost 100% are satisfied with the resulting Agreement.  Compare these results with Court Orders in divorces — there is actually no comparison; usually almost no one is really happy with a Court-ordered result. Mediation is different, and it is effective.

Speaking to your Attorney about minimizing Discovery, or agreeing not to utilize this expensive information gathering mechanism, is another option that will greatly decrease your legal fees.  (Understand that in some circumstances, Discovery is wise and at times the ONLY reasonable option to protect your property rights — just not always.)

Another option is to insist on a Negotiation Settlement Conference as a means of settling all property issues in about one day and outside of the Court process.  Your lawyer can and should work just as hard for you outside the Courthouse, if he or she has formal Negotiation experience, as he or she can inside a Courtroom, and due to the informality of the Negotiation process, and increased opportunities to trade off and adapt “the deal”, perhaps save you literally thousands in legal fees.

There are other options along the divorce path that can limit your exposure to increased legal fees.  At each step, the client must insist on a candid cost-benefit analysis discussion with his or her Attorney.  Fighting in litigation is not the only path, is not always the best path, and maybe is so only rarely; you must identify benefits(what you must have) that are truly worth the cost, short-term and long, and that islist will be different for each client.  A good Attorney will help you here.

A Different Philosophy:

In case you haven’t heard, and contrary to popular belief, Lawyers actually are people too.  Obviously each comes to work each day with a different background, different education, a different belief system, a different agenda perhaps, and surely a particular philosophy.  It has been said that retaining a divorce Lawyer is a lot like getting a date when you are single! You have to take some time; you have to feel right; you have to ask the right questions and get a “sense” of him or her, so to speak.  Before retaining a divorce Attorney, or any Attorney for that matter, it is vital that you ask questions about his or her philosophy. If the Attorney cannot articulate one, you may have to move on.  If the Attorney does not make you feel that he or she “has your back” and believes in what you believe, or does not believe in what you want out of your divorce, to include your tolerance for legal fees, you must move on to a different Lawyer.

Find a Lawyer who believes that all divorce is unfortunate — that it is beyond difficult on both parties, even if one or the other does not feel it now, and certainly difficult on children as well.  The children, AND their college education funds, should be protected first and at all times. Retain an Attorney who believes that divorce, when you are already unsettled and perhaps even vulnerable, should not bankrupt you, one who believes in cost-benefit analysis at EVERY juncture along the path, and who has more than one idea about how to get you where you want to go during the process and post-divorce.  You must have Counsel that is experienced in Negotiation as well as Litigation and who is not opposed in principle to cost-saving Alternate Dispute Resolution possibilities like Mediation.

You need a lawyer with a different philosophy than the tired, old norm that really only works well for the Attorneys. When you are educated about the process and armed with information, You have Options.