How much does a divorce cost? Tips for financially surviving after separation from spouse

The High Cost of Divorce Shouldn’t Trap You in a Bad Marriage

The video featured is from a previous report.

Forty-two percent of first marriages end in divorce, with rates rising for second and third marriages. Nearly one million divorces are filed each year in the United States alone, with the average marriage lasting about eight years.

You need to know how to prepare for divorce, how the process works, and how much it really costs. Next, we’ll reveal two tips for getting a cheap divorce and how to survive financially.

Who gets what in a divorce?

Most states follow common law and segregate assets by owner’s name. So if yours is the only name on the deed or registration, the asset is yours in the event of a divorce.

The problem here is that even assets owned and investments made before marriage are often so intermingled with community ownership that it is difficult to prove that single ownership.

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Community ownership states, which include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, treat nearly all assets and debts as equally owned and divided in a divorce. However, a few exceptions to the rules; even in communally owned states, anything inherited by a single spouse usually belongs to that spouse.

It is important to understand that judges still have a lot of power to allocate assets for some balance, although they generally try to stay close to the general rule. If everything is in your name, even in a common law state, the judge might try to give your spouse some property or award more of it as spousal support.

What happens to debt in a divorce?

Everyone worries about their assets and income during a divorce, but debts can be just as important.

Generally, the court will follow many of these same debt rules. So any debt you had before the wedding is yours. No need to offload those $20,000 in student loans for your worthless art history degree.

How is alimony calculated?

Alimony or spousal support can be important after a divorce.

Many people don’t know that alimony is not mandatory, but can be ordered by the judge, especially if they think the spouse will face “hardship” without support.

There is no set calculation for spousal support, but one calculation I’ve seen a few times looks like this. First, you’re taking 40% of the payor spouse’s net income, so after taxes and deducting child support, we’ll move on. Then minus 50% of the dependent spouse’s income to find alimony.

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For example, if you earn $4,500 a month and pay $700 in child support, your ex earns $2,000 a month. Then $4,500 minus $700 and multiplied by 40% is $1,520, then minus half your ex’s income, or about $520 a month in spousal support.

Unless both spouses agree never to change the settlement, child support can be revised based on changes in income so that it can go up or down.

How is child support calculated?

Child support is one of the biggest financial costs of divorce, but it depends on where you live. Most states calculate child support using the “income splitting” model. Nine states use the “Percent of Income” model and three use the Melson formula.

The revenue sharing model begins by adding up the combined incomes and finding each parent’s share. For example, if one parent earns $6,500 while the other earns $4,000 per month, then $10,500 in total, one earns 38% and the other 62% of the total income.

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Next, the judge will use the state child support chart to find the estimated cost of raising the number of children, and then divide that cost by income shares.

In states using the percentage of income model, child support is based on a percentage of the paying spouse’s income, regardless of the custodial spouse’s income. The percentage can be fixed, say 25% of your income, or it can vary depending on your income. So it can be 20% on your current income, but increase to 25% if you start earning less.

The Melson formula for those of you in Hawaii, Montana and Delaware is based on a combination of factors, including living standards and the needs of children. This will take into account the incomes of both parents so that the payment is similar to the income splitting model.

Legal fees for divorce

Legal fees increase the cost of divorce and force people into bankruptcy. Lawyers will start at a minimum of $1,000 for an uncontested divorce where both spouses agree to split any and all child support payments. That’s a minimum, and a NOLO survey found that the total divorce cost averaged $12,900, with a median of about $7,500.

Only about sixteen cents of that $13,000 average was court costs and fees, with the rest going to attorneys. Yet in that same survey, the national average rate for divorce attorneys was $270 per hour.

So the fact that the average cost of a divorce is much higher, almost $13,000 compared to the median of $7,500, tells you that a lot of divorces cost a lot more.

Tips for Financially Surviving Divorce

If you want the cheapest divorce possible, you need to be unchallenged. Try to find some sort of fair distribution of your assets and debts before involving the lawyers.

Don’t try to pressure your spouse or be unfair here, as this will increase the chances that they will change their mind and challenge it in court. The average cost of an uncontested divorce is only $4,100, according to NOLO, which is a savings of more than eight thousand dollars.

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If you can’t agree on a division of assets and debts, consider using a mediator before hiring a lawyer. Mediators will cost around $100 an hour, but half of divorce survey respondents said they paid $500 for the all-inclusive cost. The mediator will act as an impartial intermediary to help you agree on a distribution of these assets. Then you can go the uncontested route for cheaper attorney fees.

As for surviving a divorce financially, it helps to have a plan before the divorce, how you’ll pay for everything, and what your finances will look like afterwards. This is where an emergency fund comes in handy, in case costs or child support payments are higher than expected.

Even if you don’t pay much child support, your income and expenses will change dramatically. This is where you have to sit down and budget everything. Start from zero to determine how much you earn and spend and how much you will need to save for your retirement.

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The high cost of divorce pushes thousands of people into poverty every year and destroys their savings. You don’t need to be trapped in a bad marriage, though. Understand how much divorce costs before and after filing and be prepared to get your finances back on track.

This article was produced and syndicated by Wealth of Geeks.

Copyright © 2022 by The Associated Press. All rights reserved.

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