Tips to bring down the cost of a divorce

Divorce can be extremely painful, inconvenient, and costly. In addition to seeking legal advice, and, if needed, emotional support, it’s important to implement steps to contain any financial fallout.

We explore how you can minimise your financial loss during this challenging time.

Tip: If divorce has left you with significant debt, debt consolidation may help.

The hidden costs of divorce

Divorcing couples are often faced with unexpected costs, says Cherise Erasmus, a certified financial planner at Crue Invest.

They may be prepared for well-known costs, such as attorney’s fees, support or maintenance payments for the homemaker and/or children, a deposit on a new home, or paying furniture removers. However, there are many other costs to consider, including the following:

• Paying rates and taxes on your own. If you remain in the family home while your spouse moves out, the cost of running that home will likely remain the same. If you were both income earners, or you were a homemaker, you will need to adapt to paying those bills alone.
• Paying an estate agent. If you choose to sell your family home, you will need to pay an estate agent’s commission.
• Covering new home expenses. If buying a new home, the deposit, repayments, transfer duties and fees will not be the only expenses. Home and contents insurance, and the cost of installing new connections, will need to be covered.
• Catering for child-related costs. You may require additional childcare services, such as babysitting, or extra life cover to honour the terms of a child maintenance agreement.

According to Adele Barnard, senior financial planner and investment specialist at Sanlam, divorce can be even more expensive when the parties air any “dirty laundry”, and contested divorces are particularly long-winded.

“If children are caught in the middle, the children’s court may get involved, too,” she notes.

Tips to reduce the financial impact of a divorce

The following steps can help you to mitigate the many expenses, and secure your financial future in the event of a divorce.

Budget for your divorce

If you know divorce is inevitable, aim to make sufficient financial provision beforehand.

“Get rid of any debt and unnecessary expenses, and build an emergency fund,” Barnard recommends. “Calculate your monthly living expenses and try to amass enough funds to cover six to 12 months.”

She says many women rely too heavily on their husband’s financial knowledge, and do not have their own personal finances in order.

“Always work towards financial independence,” Barnard recommends.

Work with a financial adviser

If you and your spouse share a financial adviser, it may be a good idea to find a new one for yourself. Ask them to prepare a financial plan for you as a newly-single person.

This will involve making a new will, re-evaluating your life cover, and recalibrating your retirement plan, especially as you’ll now be solely responsible for saving towards your retirement.

Barnard adds a warning. “If parties withdraw their pension or provident fund monies to support themselves pending the outcome of the divorce, those monies will be taxed.”

Draw up a post-divorce budget

Erasmus says drawing up a post-divorce budget will help you to estimate what you’re working towards when entering divorce negotiations.

“Itemise the costs of running a household and maintaining a property on your own, as well as any costs relating to your children, such as babysitting, child transportation, or tutoring,” she recommends.

Other costs to consider include medical aid – especially if you’re no longer a member of your spouse’s medical scheme – and gap cover.

Consider where you can trim your budget. However, instead of cancelling policies altogether, rather downgrade insurance and medical aid options. Cancelling policies outright can prove more costly if you fall ill, your house is burgled, or you’re in an accident.

Consider divorce mediation

Mediation is a process in which a neutral third party helps to resolve conflicts. It’s not mandatory in South Africa, except where co-parents can’t agree on a parenting plan, says  Madelene De Jong, a mediator, parenting coordinator, and divorce liquidator at Family Dynamics Mediators.

Both parties see the same mediator, and costs are thus shared. The aim is to reach a mutual agreement between the parties in the shortest possible time.

“In mediation, we try to work out what is best for the restructured family, unlike in the adversarial court process, where each legal representative will fight for what is best for his or her client, potentially escalating conflict.”

Erasmus adds, “Many mediators offer a set fee, which covers a certain number of mediation sessions and the drafting of the divorce agreement, making it easier for divorcing couples to budget.”

Mediation also helps couples to keep to the divorce agreements, according to the South African College of Applied Psychology. This can prevent them from incurring legal costs in the future.

Tip: A personal loan can tide you over while waiting for a divorce settlement.