Parts I and II of this series focuses on why people are getting married later, making economic decisions when it comes to marriage and that the emotional aspect of accepting that divorce will temporarily make everyone involved poorer.
In this post I would like to get into some broad figures of what divorce may look like in terms of cost. Having considered all the options in the course of my own divorce, which will be explored below, I got a decent sense of the cost for each.
In addition to the lawyer and the court fees, there are also some big unknowns which are the toughest part of quantifying divorce and will really depend on the type of person you are dealing with. I will go over broadly some of the ways that these unknowns may play out.
I should also probably add the disclaimer that this post and any of my subsequent posts dealing with divorce do not consist of legal advice. I discussed in part II about how getting a lawyer early in the process and listening to their advice is key. Even though in my own personal situation, I did not have to go in front of a judge, I conducted myself (for the most part at least) as if everything I was doing would be presented as evidence in front of a judge. This meant I made sure I papered everything and did my best to keep my emotions in check, especially on any written or recorded communication with my wife at the time.
The Three Types of Divorce
An added disclaimer is that my divorce took place in the State of New York. There may be quirks in the law in your particular state that differ from mine but again, the lawyer is the expert on these matters so refer to one if you have any questions about your own personal circumstance. New York tends to be a litigious state with lawyers more involved in the process of everything under the sun compared other states.
Finally, costs will vary by prices based on geographic location. I am showing New York City prices here. The going rate for lawyers varies even within the city with Manhattan lawyers charging a premium and a lawyer in say, Long Island being a little cheaper. The going rate range is $300 to $400 an hour. You may have to drop these prices by a third or so for other parts of the country where the cost of living is cheaper and lawyers charge a bit less.
That being said, there are three broad categories of divorce that you should understand when you find yourself in this unfortunate situation. Each one is progressively more expensive based on how contentious things are.
Mediation – This is the cheapest option. An attorney who is specialized in the field of divorce mediation is hired and is a neutral party between the two spouses. If you have already agreed with your spouse on many of the basic custody and financial terms of your agreement then this may be the best option. The mediator will draft the separation agreement and this will then be signed by both parties. A divorce agreement matching the terms of the separation agreement will also be drafted and filed with the court.
It is advisable that even with the mediator, each spouse have their own attorney on the side to review the agreement and make sure there is nothing contained therein that goes against your interests.
The cost of this can vary depending on how detailed your divorce agreement is but will range anywhere from $10,000 to $20,000. This includes the cost of your own attorney as well as well as a mediator. If your spouse does not work, you may have to pay their attorney as well which could bump up the cost another $5,000 to $10,000.
If contentious, costs tend to be split on a pro rate basis based on income. For example if one spouse makes 80% of the household income, they will have to pay 80% of all attorney fees. Be mindful of this going in to avoid sticker shock. This is the type of divorce I personally had although it threatened to move into more contentious phases at many points.
Collaborative Divorce – There isn’t much that is “collaborative” about collaborative divorce. In this type of divorce, each party gets their own lawyer and the agreement is drafted by the lawyers battling it out amongst themselves. The result is similar to the outcome of the mediation divorce, mainly a custom made legal document that covers your assets and child custody going forward but the difference is there’s no neutral party.
This process tends to drag out a bit more because the lawyers meet to discuss, battle and then go back to consult their clients and advise them on what to choose to do next in each case. This can take a bit longer and be more expensive than mediation because all those hours of fighting and consultation add up.
The cost of this type of divorce again, will depend on how many contentious items there are for you to discuss but in general could be anywhere from $30,000 to $50,000 total.
Litigation – This is the most contentious, painful, expensive and drawn out type of divorce you can have. It basically is when neither of you can agree on major points and one of you says I would rather just have a judge decide.
You will have to pay for your own attorney as well as court fees for this type of divorce. Motions will be filed for a court date and then you will have to wait. The judge will hear the evidence presented and may make a decision or delay a decision and ask for further information. This is why this process can take so long and be so expensive. The court will end up setting many of the terms of your divorce and much of the decisions will be out of your hands.
Usually this is the least desirable outcome because you essentially lose your negotiating power in the process and put your fate in the hands of the judge. This is usually the outcome of one side being exceedingly immovable in their demands or both sides acting on high emotion. The costs can be upwards of the $50,000 and reach into the $100,000 range or more. In my case, I had to consider this option as there was a period where I thought I may have to fight for sole custody of my child. I knew that my ex wife would have fought me tooth and nail for this so I had to be prepared to go down this route, especially if she chose to not budge on other smaller issues as well. Luckily it did not come to that but I had to prepare myself mentally and emotionally for this as a possibility, which I described in my previous posts.
Other Factors
So far we have only covered the attorney and court costs. Those are essentially a given but the real financial pain starts to come with the other characteristics of divorce.
Alimony – This is a bit more New York specific but alimony can be paid for about half to a third the time you were married. There is alimony that can be paid just during the divorce process, paid after for a spouse to get their job skills up and paid out just to maintain a living standard. The calculation of this is a bit cumbersome but can be found here. A rule of thumb is that it could be 10% to 15% of income for the period you are paying.
A sad, or interesting, caveat of this that I found is that in some states, after you have been married a certain number of years, the state says that alimony is permanent unless the payee is remarried. I met one man who told me he was separated for 8 years after being married for 2 because his wife refused to divorce him. She found out that after 10 years he would have to pay her alimony for life so refused to sign anything until it hit that mark and then she divorced him.
Child Support – Child support is 17% of income for 1 child and 24% for 2 children. There are a number of caveats here where it can get contentious.
The first being who has primary custody of the children and who earns more. In a more traditional situation, the man earns more and does not have primary custody of the children. In this situation, he would end up paying those figures above. This is true even if the other spouse is working. The calculations add up both incomes and net a proportion for what the other spouse makes as well as deducting some taxes and if you pay, alimony, but for ballpark purposes you should assume these figures are around what a breadwinning spouse will pay.
The important caveat here is that the child support is based on gross income but paid with net income. This is a big distinction and means that in reality, in terms of your take home pay, those figures may end up being 25% to 50% of your net pay. This part of the process many tend to find deeply unfair because now one side pays the taxes on the income of the other.
Child support also has a statutory cap on earnings which in New York is around $150,000 adjusted for inflation. This is just a guidance though and lawyers know this. Many times for high earning households one side will fight for a higher cap or no cap at all. This is likely the case for celebrity divorces where there is a large income earner involved. Some may have to pay a settlement fee apart from all the other costs to get the other side to sign which leads me to the next point.
Settlement To many it’s the settlement that is the most difficult and wild card part of a divorce. You can pretty much get a rough ballpark figure of all the other costs but the settlement is essentially whatever the other party demands to get divorced.
I look at the settlement as a bribe just to get one side to sign, it’s probably the craziest facet of divorce and one that really punishes people for divorcing compared to those who break up and were never married. Some divorces have no settlement, others are in the millions of dollars. It all goes back tot he type of person you are dealing with and if there are other strings attached to settlement.
Part of my divorce was a non-disclosure agreement as to the financial terms when I learned that my ex-wife had an online group where she shared secret details of our terms, maybe in a way to show off how she was getting paid, who knows? The good thing is that I found out about this and was able to address it in a court enforceable document to stop such behavior. So I can’t share the terms of my settlement but all I can say that it was linked to other things in my divorce. You give something and you get something.
Conclusion
Surprisingly, I enjoy writing on this topic. I have not set a fixed number of parts to this series so I would like to address other aspects of divorce in further posts. I think the modern trends of divorce, having children later and not getting married at all are fascinating socio-economic issues that I would like to address further. Stay tuned for more in this series.
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