How to get divorced cheaply

 

A divorce can cost you from as little as a few thousand dollars to upwards of $70,000. It can leave you with debts and a sour taste in your mouth, or free, financially sound and ready to start a new life.

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Which it is can be up to you to choose, say the experts. Here are their tips:

Be nice. Bitter, acrimonious divorces will typically cost more money and take longer, says family law barrister Jennifer Perry.

Her advice is simple: “Be nice, even if you have to fake it before you make it.”

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Perry is a lawyer trained in a method called ‘collaborative law’, where parties sit with their lawyers around a table to resolve issues, rather than exchanging letters and emails, or going to court. This solution typically costs from $8,000 to $15,000.

Divorces fit along a spectrum, she says: “You can go from sitting around the dining table saying, ‘This is what we want to do’, and then going to a lawyer and saying, ‘We want to implement this’, to a scorched-earth policy: ‘He/she is the worst person on the face of the planet and I’m going to do everything I can to destroy them’.”

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Usually people fall somewhere in the middle, she says, where a couple of meetings could resolve all the issues cheaply, and result in a more amicable outcome for everyone.

Perry says, the marriage may have broken down, with hurt feelings on both sides, but you should try to avoid the situation where you and your partner are sworn enemies. It will only cost you more in the long run, and will leave your children feeling upset and unsettled for longer.

The goal is to get through the process amicably, so you can run into the ex at a wedding and say hello, instead of wanting to put the cake knife into their carotid artery, says Perry.

Have a fighting fund. Accountant and Money Mentalist, Lynda Moore says being prepared financially will help a lot, especially for women, who generally are slower to recover financially from the cost of a divorce.

No one can divorce in New Zealand without each partner having a lawyer sign the paperwork and explain the consequences, so with even the simplest divorce, you’re going to be in for legal fees.

“You’re very vulnerable when the money’s cut off, which is why I always suggest putting money aside first, in a ‘fighting fund’.”

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Moore says: “In my experience, divorces done in the least time and at the least cost are marriages of short duration and where there are no children, where both partners already have independent incomes and don’t have that fear of how they’re going to survive on that money.

“Where it starts to get complicated is when there are children involved, and where one parent has been stay-at-home.

“Suddenly it’s a question of how am I going to survive financially after we split?”

She says partners can claim spousal maintenance, but there is a cost to that, both in lawyer time and accountant time. It may end in court, which could take months.

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Know what you own. You need to start with knowing what’s in the pot, says Perry, whether it's a car and CD collection; or two homes, a business and some rental properties owned by a web of companies and trusts.

“We need to delve behind the financials a bit and we need some disclosure, some bank statements, and we need some valuations of properties, that kind of thing.

“And if people are then arguing about whether the property’s worth x instead of y, you’ve got different valuers all over the place, and it gets really expensive.

“If you’re off to court, if you’re in a full-blown ‘scorched-earth’, you’re looking at $70,000-plus each in legal fees.

“But if you’re doing it collaboratively, you can employ a joint valuer. Instantly, you’ve halved those costs and your legal fees are much, much cheaper.

Remove the emotion. The sooner you can get the heat and emotion out of what is essentially a financial discussion, the better it is, both emotionally and financially, says Moore.

“The longer it drags on, the more it’s going to cost.”

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Accept that life is going to be different now. Moore says the biggest thing initially she sees is people wanting to hang onto the lifestyle they had, even if they might not be able to afford it any more. An example of that is paying for private schools, or outings and holidays.

“It can have a huge impact on the newly divorced person’s financial position. Sometimes they see their circle of friends and want to be able to do those things – shopping and brunches, but they might be using their capital to do it.”

Keep some retirement savings. KiwiSaver is part of relationship property, and over the years, as accounts grow into the hundreds of thousands of dollars, that’s going to be a huge factor in separating assets, says Moore.

“If you lose half of your KiwiSaver now, it will affect your compound interest giving you a much lower balance at retirement. It might be better to take a lower offer now to keep your retirement savings intact.

Get savvy with money. Both Perry and Moore have met women who aren’t aware of their family’s financial situation.

Says Morre: “It surprises me how many women are dependent on their husbands for finances and have no idea what their finances look like. They need to get savvy with their finances.”

By Brenda Ward

First published 20 December 2017

JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. This story reflects the views of the contributor only. Content comes from sources that JUNO considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only.


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