Aside from parenting and children, the number one stress for people going through a separation is understanding and accepting a new financial reality. After 15 years of practicing family law (and yes over 15,000 hours of divorce work), I have selected three often overlooked areas that impact separating spouses financially.
- Spousal and child support. People often believe that if the children are spending roughly equal time at each parent’s house, they do not have to pay child support. This is incorrect. The way child support typically works if parenting is roughly equal is you determine what each parent would pay for child support and set the amounts off against one another. For example, if the mother would owe $1,000 in child support (if the kids lived with the dad) and the father would owe $500 in child support (if the kids lived with the mom), the mother would pay the father $500 if the kids lived equally with the mom and dad. Another misconception is that spouses who kept their finances separate don’t have to pay spousal support. That is also incorrect. Spousal support looks at the income differential between the spouses and based on the roles each spouse played in the relationship determines how much and for how long support should be paid. Even if you kept your finances separate, if there is an income differential (one person makes more than the other), spousal support may be payable. The length of your relationship and whether you have kids will be factors in determining how much and how long spousal support may be paid.
- Cost of the Process. Separating spouses often do not consider that the lawyer and process they choose will have a significant impact on the cost of the process to reach a final outcome. If you choose a lawyer who routinely goes to court and you decide to pursue an outcome through the court, you are looking at paying exponentially more in legal fees than if you use an out of court process, such as Collaborative Divorce, mediation or negotiation. How much more? If a file goes all the way to trial – you can be looking at $200,000 to $500,000 or more for each spouse; whereas most Collaborative Divorce or mediation files from start to finish will cost in the range of $15,000 to $40,000 for each spouse (this is an estimate and actual amounts may be more or less), but either way – it will be a rare day when a file in mediation or Collaborative Divorce will cost each spouse $200,000. Also, once you are in the court process, you usually continue to go back to the courts to resolve every issue and fees continue to escalate, even after a full trial.
- Loss of Productivity. When you are going through a separation, you are not going to be your most productive at work (or really in any walk of your life). Separation, even if amicable, is a complete re-ordering of your life. It took 5 or 10 or 20+ years to build a life together, it is not easy to undo that life. This means that you may not earn a bonus at work during your separation or perhaps your business won’t do as well. Think about that and plan for it in terms of your spending. Perhaps you need to reign in your spending or take a cheaper holiday that year. When going through a separation, you are likely less productive at work and paying for a lawyer and often supporting two households instead of one. That can all add up and cause stress.
Despite the initial financial woes of separating, in my experience once you have a final settlement/outcome, people go on to be as productive or more productive than they were before. All the attention that went into keeping the relationship together or working with a lawyer to reach a settlement is behind you and you are free to be happy and find a new path. If you have any questions about separating from your spouse, we are here to help.
