10 Ways You Might Save or Lose Money in Divorce
Many people are surprised by their final divorce cost. The median cost of a divorce in the United States is $7,000. Your price could be much higher, especially if you make certain mistakes.
Here are 10 areas of divorce where you could end up spending a lot more or a lot less.
1. Divorce negotiation
Refusing to try mediation or arbitration could end up costing you. Mediation and arbitration are voluntary processes people use to settle their disagreements outside of the courtroom. In the presence of a trained professional, parties work through difficult topics, including child custody and spousal support.
When mediation is successful, the divorcing couple emerges from their meeting with a solution both sides accept.
People who go through divorce mediation cite many benefits, such as an improved ability to communicate, more control over the outcome, and the opportunity to protect their children’s emotional health. Divorce mediation is generally much more affordable than the costs involved in a standard courtroom case.
If you’re snagged on critical parts of your divorce agreement – or you can’t even start a conversation with your ex about the future – consider asking for mediation or arbitration. The time you spend in these private meetings could reduce your lawyer fees and other expenses.
You won’t get everything you want in your divorce. (No one does.) But with mediation, you’ll potentially find common ground that benefits both spouses without the stress and cost of a trial.
2. Division or sale of real estate
For close to 65% of Americans, a primary residence is their largest asset. During your marriage, you likely put your shared funds toward buying and maintaining your home. When you divorce, you must figure out how to split this equitably.
You may need help from the following paid experts:
- Appraisers: Your tax assessments don’t provide the full picture of your home’s value, but an appraiser can do so.
- Real estate agents: If you decide to sell your home, you’ll need someone to provide the listing and handle the legal aspects of the transaction.
- Staging professionals: Selling a home is easier when someone makes it look both occupied and widely appealing.
- Repair workers: If your home needs a new roof, a plumbing replacement, or some other fix before the sale, you’ll need help.
Some people make money on a home sale. You could be a fortunate homeowner and emerge from the transaction with funds to apply toward a new residence. In a difficult housing market, however, you could endure losses that you must cover before the property transfer is finalized.
You can’t control the housing market. You can do your part to make sure the transaction is as profitable as possible. Ask several real estate agents for estimates, and look for one who doesn’t require a high fee. You might also ask about lowering the asking price to reduce your repair obligations, too.
3. Home refinancing
Let’s say one party wants to keep the family’s primary residence but doesn’t have enough money to buy out the other party. What comes next? Refinancing the home loan or getting a new loan from a different lender is a good option, but this step comes with significant fees.
Mortgage refinancing costs range between 2% and 6% of the final loan amount. Those fees include things like a credit check, a home appraisal, recording fees, and underwriting fees. Sometimes, you can negotiate with a lender and save money. In other cases, you must pay the entire cost or find a different way to pay for your home.
You can’t eliminate home refinancing costs, but you can shop for a good deal. Ask several mortgage companies to provide estimates, and read the fine print. You may find a company willing to work with you and keep your costs as low as possible.
4. Moving out of your primary home
Unless you choose to live together after your divorce, at least one of you must find a new home. Moving can help you start a new and independent life, but fees and costs are often involved, and plenty of people don’t anticipate them.
If you hire a moving company, expect a fee of about $8,100. But know that your final costs are closely tied to the following two factors:
- Distance: The farther your new home is from your current home, the more you’ll pay.
- Items: If you’re transporting everything from one place to another, you’ll pay more than shifting just one or two things. Some companies charge more for heavy or bulk items as well.
You can cut costs by staying close to your old home. You’re not required to stay within the same neighborhood, and distance can sometimes make a split easier. But shifting to a different state would cost you significantly more than staying close.
If you must go somewhere far from home, consider leaving replaceable items behind. For example, moving a well-loved couch to another state may not be as cost-efficient as buying a new one once you’ve arrived.
5. Transfer of retirement savings (QDROs)
A retirement account could include thousands of dollars in shared funds which you must split equitably in your divorce. Shifting the funds from a joint account to two separate accounts involves a qualified domestic relations order (or QDRO), and QDROs involve fees.
Some employers include QDRO fees in their benefits packages. Third-party companies like Fidelity can charge between $300 and $1,200. Typically, you’ll also need to pay a lawyer to prepare the form for either your employer or the third party to process and approve.
If you’re splitting a retirement account, consider splitting the associated fees, too. Since you’re both benefiting from the change, it’s reasonable to spread the costs around.
You could also consider trading something valuable (like a boat, car, or the full amount in your shared savings account) instead of splitting your retirement savings. This option could save you both money and time.
6. Health insurance
During marriage, you likely shared health insurance costs. American families often get coverage via employment. Families typically determine who has the best benefits package, and they use that plan for everyone. When you split, both parties will need individual coverage, as employers generally don’t offer health insurance to ex-spouses.
American health insurance is incredibly expensive. In 2023, the average health insurance premium for a single person was $8,435 and $23,968 for a family.
If you’re losing coverage due to divorce, you could factor the fees into a potential spousal support payment. If you’re not working and don’t have employer health insurance coverage, this could be the best way to save money.
If you do have coverage through your employer, you may not need immediate help. But read the fine print to make sure you don’t pay more each month than you’re accustomed to.
If you share children, make sure to plan out their health insurance coverage post-divorce. This can be spelled out in your divorce agreement. Most state-provided divorce forms include mandatory fields about this issue, so it’s hard to overlook.
When you’re married, childcare is often easier to balance than when you’re single with children. Married people (sometimes) have the luxury of running the numbers and potentially deciding to have one parent stay home. Divorced parents are far less likely to have this option.
Childcare often takes up a third or more of a family’s monthly budget. Young children who need around-the-clock care are typically more expensive than those who spend time in standard classrooms. However, children with physical or developmental disabilities might need an even more extensive (and costly) form of help.
Childcare expenses are typically included in state-provided child support worksheets. It’s hard to forget these costs exist when there’s a mandatory field for you to fill in. However, parents can make mistakes.
You may assume your parent or friend can care for the child while you’re working. But this assistance is often unpaid, and if it were to fall through, you’d have to go back to court for a modification.
8. Higher taxes
The Internal Revenue Service (IRS) offers incentives to entice married people to file jointly. When you divorce, unfortunately, those perks disappear.
Known tax benefits offered to married people include the following:
- Larger standard deductions
- Higher income thresholds for IRA contributions
- Qualification for multiple tax credits, including some that apply to student loan interest
- Lower capital loss deduction limits
You can’t change the tax code and get the same benefits you had while married. However, you can look for ways to accommodate them.
For example, you might be able to shift to a higher-paying job that offers student loan repayment plans as an employee benefit. Or, you might find a job with an employer-matched 401(k) benefit.
It’s a good idea to meet with a financial planner and discuss your tax situation in advance so you don’t face a penalty for underpayment when you file as a single person.
9. Legal fees
You’re not required to hire a lawyer to process your divorce. Most states offer low-cost DIY divorce options for people who can collaborate and craft plans for their future with their ex. If you and your ex can’t agree, a difficult split could be much different.
A DIY divorce works best when both parties sit down and discuss their assets, debts, and shared children. Difficult topics may require the help of a divorce mediator, but this approach can allow both of you to avoid hiring even more expensive divorce lawyers.
Abusive marriages, large estates, and unresponsive spouses can all block a DIY approach. In these cases, you will need a lawyer … and this sort of professional help can be expensive.
Do your part to collaborate with your spouse. Yes, it can be difficult to talk openly with someone you never want to see again. But your effort could save you a significant amount of money and stress.
10. Additional legal fees
Some divorces are straightforward and complete when the judge signs the paperwork. Others keep people tied together through custody agreements, child support payments, or spousal support arrangements. As your life changes, these orders may change. In certain situations, a lawyer’s help may be required.
Examine options carefully before you sign your final divorce paperwork. Think about how your life might be different in a year or two, and try to make plans that will serve you well over time.
If, some time from now, you must change your plans, talk with your ex first. Some states allow people to file change paperwork without a lawyer. This approach works best when both people agree to the proposed alterations.
Keeping an open and friendly line of communication during and after your divorce makes collaboration both possible and much more likely.
At Hello Divorce, we’re here to help you save money with low-cost online divorce plans, certified mediators who work with you online by the hour, certified divorce financial analysts (CDFAs) who have your best interest at heart, and many other services. We’re proud of the compassionate and user-friendly divorce model we’ve built, and we’re here to answer your questions. Schedule a free 15-minute phone call to learn more.
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Divorce Mediation. NY State Council on Divorce Mediation.
Homeownership Remains Primary Driver of Household Wealth. (February 2021). National Association of Home Builders.
How Much Does It Cost to Refinance a Mortgage? (September 2023). The Mortgage Reports.
How Much Do Movers Really Cost? New Study Reveals All (2023 Trends). (June 2023). This Old House.
Clients Getting Divorced My Encounter Hidden 401(k) Fees. (January 2017). Investment News.
2023 Employer Health Benefits Survey. (October 2023). Kaiser Family Foundation.
The True Cost of High-Quality Childcare Across the United States. (June 2021). Center for American Progress.
Should You and Your Spouse File Taxes Jointly or Separately? (October 2023). Intuit TurboTax.