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THE COST OF DIVORCE
The obvious fact is that most couples fail to budget for divorce like they would for a wedding or funeral. Their expectations about the cost of divorce are based on hearsay, interviews, and generalities. In fact, costs can be managed by clients to a large degree, but not totally so. So when someone says I want the least costly divorce possible – what do they mean and really want? Sometimes, the old adage "you get what you pay for" is not only true but dangerous. Aiming to find the cheapest divorce possible should not be the prime motivating factor for anyone in a contested divorce. The risks of cutting a deal on the "cheap" may have not only short term risks but long term financial consequences that cannot ever be "undone". Property division is a one shot deal for the rest of your life. The "what ifs" are the most painful and avoidable elements in divorce everyone should face head on. To be blunt, you should embrace the opportunity to pay for this knowledge to have peace of mind post divorce. A divorce financial planner is the expert you want and need during divorce to make strategic recommendations in a cost efficient manner in any legal setting.
The least expensive divorce is the do-it-yourself or pro se. This means both parties literally negotiate, settle and arrange for their own divorce. As can be imagined, this works best for short-term marriages with no children, few complications, little assets, and at best, in uncontested situations.
The next least expensive method is mediation. A mediator is a neutral party whose hourly fees and business model vary greatly. The mediation process is defined at the outset and costs are identified. Mediators rely upon the couple to produce almost all of the information, financial discovery, and come up with issues of concern. A mediator facilitates the couple to reach a settlement that best suits both of their needs/desires. Many states require that both parties hire outside review counsel to ensure they have not forfeited their rights unknowingly and to ensure the process is unbiased.
Next is collaborative divorce, which may be collaborative law model with two attorneys, or, an interdisciplinary model with additional professionals involved from start to finish or on an ad hoc basis: with two attorneys, two coaches, one financial specialist, and a child specialist. Collaborative divorce does not promote itself as a low cost process, but instead as a more holistic approach. It is a team dedicated to guiding clients to reach an amicable settlement with both parties interests met to the fullest extent possible. It emphasizes family relationships being intact post divorce. Each divorce professional charges their own hourly rates and may require individual retainers. However, there are no court fees for serving motions or discovery demands; only at the very end do the attorneys file their appearance in court. If for any reason, the couple fails in this process, the entire team is disallowed from representing either spouse, and divorce process starts all over again at full cost to the couple.
The most traditional and costly divorce is litigated. Each spouse hires their own attorney who advocates for them, files court motions, court appearances, papers, and hires other experts. There are court fees, marshal fees, filing fees, etc. Litigating attorneys may be reasonable or outrageous in terms of billable hours. It is what the market bears. Litigating attorneys may work well with the opposing attorney to reach an expeditious settlement or they may choose to "milk" the case for fees. If the case goes to trial, costs become prohibitive with depositions, court preparation time, hiring of additional experts, and actual court time. Litigated cases also are notorious for strategic churning of fees if there are substantial assets available (or income) to one or both parties. Some of these tactics include motions to stay a decision, appeals, motion to rearticulate a judgment, motions for continuances, etc. Attorneys can also fire clients for a number of reasons, including disagreeing with legal advice and unpaid legal fees. It is not uncommon for many clients to have hired more than one, two and even, three attorneys for representation; each time, costs mount with each new hire getting paid to come up to speed on a case in progress.
However, the choice of legal representation is only part of the cost of divorce. Divorce costs are shaped equally by these powerful factors:
Divorce is not a straight line, rational or just process. The evolving legal environment for divorce, i.e. mediation and collaborative, is making a positive difference for many individuals. It is time for the other side of divorce, the financial side, to catch up and allow for divorce financial planning to become an integral part of divorce. The expertise of divorce financial planners is essential during divorce: to help budget for this process; source funds to pay for divorce; educate clients and professionals about complex financial issues; analyze choices with greater expertise and less expensively than lawyers; produce precise analysis for desired outcomes; and provide counseling to clients post divorce. Divorce financial planning must be recognized as a partner in the legal process that provides for resources which favorably impact not only outcomes, but entire families. |
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