Dissolving a marriage agreement is a big decision and one that could impact you financially for many years to come. It is generally accepted that the average divorce in America costs $20,000, with most of the cost due to divorce lawyers' fees. Of course, this number fluctuates in contested divorces as opposed to those that use mediation, where both parties agree on many points surrounding the divorce. This cost estimate can also greatly vary by state.
Avoiding a financial nightmare during a divorce is possible if both parties are willing to work together with their attorneys. Here are a few ways to avoid a high divorce bill and plan for the next chapter in your life.
Consider a "Dissolution of Marriage"
If you choose to have separate attorneys – and most people do – it’s going to cost you money from both sides. In some states, you can file a “dissolution of marriage" form, which requires both divorcing sides to come to an agreement before it reaches the court. Then, the court just signs off on the agreement. This approach can save you thousands because the divorcing parties can come up with the agreement together with just one attorney, and then split the legal costs for that attorney, effectively cutting your costs in half.
Some of the other costs regarding a divorce are court costs, mediation, fees for evaluation of custody issues, and potential real estate costs if there is property involved. All of these fees and costs can add up quickly when the parties divorcing disagree on issues or settlements.
Work Through Differences Quickly to Cut Down Legal Fees
Try to work out differences in time, money, children, alimony, and property disputes as efficiently as possible. The more time you spend disputing, the more you will pay attorneys who charge by the hour. Time can add up quickly when there are two attorneys working on the agreements for both sides to be satisfied at the end of the divorce. This can even take months or years to completely work out.
Keep in mind that an attorney charges an hourly rate after a hefty retainer fee. This typically starts at around $200 per hour and can go up from there. That fee usually includes every communication, email, or phone call you have with them, as well as the ones they have with your spouse's attorney.
Get Organized In Advance
The more organized you are, the quicker your attorney can work through your case (and the less you will pay in hourly fees). It's a good idea to ask your divorce attorney for a checklist so you can collect and organize documents in advance. Items to collect may include:
- IRS Returns
- Employer Pay-stubs
- Insurance Information
- Bank Statements, etc
Also, write down a list of questions you have for your lawyer as they come up each week, and then schedule a call to ask them all at once. Scheduling a phone call once a week is much more efficient and less expensive than calling your attorney every time you have a thought or question.
Get Financial Planning Advice From the Start
Divorce brings with it a new financial reality, and your income and budget will ultimately change as a result. There are many financial questions to consider, beyond the scope of what your lawyer can help you with. Some questions to consider:
- How much income will you now need to support your existing lifestyle?
- Will one party get the house, and if so, can they cover the cost? Or should the house be sold and assets divided?
- How will existing investments be divided?
It is best to work with a Fee-Only Certified Financial Planner from the outset, who can help answer your questions and ensure you think through financial issues before anything is settled.
We are here to help you live life to the fullest by helping you plan for your future today. Please feel free to reach out to us today with your immediate questions or concerns. You can give us a call at 330-836-7000 to schedule an introductory conversation and we'll begin helping you build a solid foundation for the future. You can also schedule an introductory conversation with us here.
Since 2004, TCM Wealth Advisors has been providing Fee-Only Fiduciary Advice to our clients in Northeast Ohio and all across the country.