Calculating the Real Cost of Divorce: A Guide to Budgeting[ssba]
Everybody knows that divorces are expensive. However, when people talk about the cost of a divorce, they aren’t just referring to the monetary expense associated with family court. They’re also talking about living on just one income instead of two, the cost of settling shared debts, and – in many cases – the cost of coming to an agreement with an ex who is determined to fight you. On top of the financial costs are the emotional costs. It is a painful process in many ways.
This probably sounds very intimidating – but knowing up front what the expenses will be makes it much easier to absorb the cost of divorce. Also, there are several ways to avoid some of these expenses altogether, making for a much more affordable divorce process.
How to Mitigate the Cost of Divorce
According to the Financial Post, a divorce in Canada can cost upwards of $12,000 – and that’s just the legal fees. However, an uncontested divorce generally runs around $1,000-$2,500. If you’re trying to achieve a more affordable divorce, there are several steps you can take to minimize your expenses.
The most effective way to lower the cost of divorce is to avoid going to trial. The family court system allows many opportunities to settle out of court, so do your best to come to terms with your spouse before you get to the point of going to trial. It’s a wise choice to take this course of action whenever possible, especially when you consider that the judge can require you to pay all or part of your spouse’s legal fees, as well as your own, if the court finds that you have been unreasonable during the negotiations.
The true key to affordable divorce is collaboration. The collaborative divorce process is cost-effective and focused on the future. Each of you will have a lawyer to assist you to come to a final settlement, rather than fighting each other. In addition, you will work with a Family Professional on the parenting and emotional pieces and a Financial Professional regarding the money issues. These neutral professionals substantially decrease your legal fees and help you develop a better solution. As part of the collaborative process, you and your spouse must commit to coming to an agreement without going to family court. You will work together to make decisions that are fair to both of you and keep the needs of any children paramount.
What to Expect from Your Lawyer
At the initial meeting with your lawyer, you will share the specifics of your situation. At this point, your lawyer should be able to give you a rough idea of what the process will look like and approximately what the cost will be. They’ll also take your current financial state into account, since if you don’t have much in the way of assets, a long fight in court wouldn’t make sense.
You should tell your lawyer your priorities and concerns, as well as those of your spouse if you know what they are. Are you concerned about custody and access to your children? Are you worried about potentially losing some of your pension? Make sure your lawyer knows what you want to prioritize. Write down the information that you want to share with your lawyer so that you don’t forget anything, and take notes during your initial meeting.
The tricky part is nailing down a separation agreement. This is what determines what happens with issues such as shared property, debts, custody of your children, support and division of your investments. This is where you have the opportunity to try for a more affordable divorce process. The quicker you and your ex can come to an agreement on the important issues, the less you’ll have to pay the mediators and legal team.
Once the separation agreement is finalized, the divorce process is straightforward. An application for divorce is filed with the court at the cost of $447. This fee is payable to the federal Department of Justice in two portions: $167 at the time of application and $280 when you file the final documents. As long as the divorce is uncontested, a clearance certificate will be issued and you’ll be free to file your final divorce papers with no further court fees.
Budgeting for the Cost of Divorce
In addition to the legal fees associated with divorce, there are several other factors that will affect your household budget. First of all, remember that you’ll now be living on only one income, which can put a big dent in your available disposable income.
What about the costs associated with the marital home? Both parties will still be responsible for rent or mortgage payments, but generally the person living in the home will pay the utility and homeowner’s insurance bills. Additionally, whoever stays in the house may be responsible for paying occupation rent to the spouse who moves out. This is usually calculated at 50% of fair market rent. This area is not “black and white” and depends on your circumstances. It is an area to be negotiated.
The combination of additional costs and reduced income can make budgeting extremely difficult. Take a sharp, honest look at your finances and make whatever adjustments are necessary to be able to live within your new means. If necessary, talk to a credit counsellor for advice on how to manage it. Don’t count on future settlements, since nothing is guaranteed – only work with what you have right now. For example, don’t enter into a purchase for a new home until you have everything settled with your spouse. If you need financing, the bank probably won’t let you get a mortgage until you have resolved all the divorce-related issues so go slowly.
The “Other” Costs of Divorce
The cost of divorce isn’t only financial. It’s expensive from an emotional perspective as well, and not just for yourself. Whatever you’re going through emotionally, it’s a sure bet that the people around you are feeling the same things.
Often, the kids end up paying the biggest cost of divorce, since they are the witnesses to the bitterness between you and your ex. Keep them out of the crossfire as much as possible to reduce the emotional toll on the children.
Friends and other family members can also find themselves stuck in the middle, whether intentionally or not. To avoid increasing the emotional cost any further, consider speaking to a therapist as an outlet for your feelings. You’ll need to talk to someone, and it’s best to stick to a neutral third party rather than relying on your family and friends.
Above all, focus on what’s really important to you and don’t fight your spouse for the sake of fighting. The more quickly you can come to an agreement, the more affordable the divorce will be, both financially and emotionally.
Galbraith Family Law Will Help You Settle Your Divorce
At Galbraith Family Law, we understand that you want to keep the financial and emotional costs of your divorce as low as possible. We will help you consider all your process options so you can chose the right one for you. We will work with you to come up with a separation agreement that both you and your spouse can accept. To set up a consultation, call our Newmarket office at (289) 319-0635 or our Barrie office at (705) 727-4242. You can also send a message through the contact form on our website.