Business Personal Finance

Wednesday 19 June 2019

For richer or poorer: how you can limit financial blow of divorce

The costs of splitting can be huge but there are ways to stop bills spiralling, writes Louise McBride

'While last Friday's referendum may well have put divorce on the radar of more Irish couples, it can be a very expensive move. There are ways to keep the costs of divorce down though' (stock photo)
'While last Friday's referendum may well have put divorce on the radar of more Irish couples, it can be a very expensive move. There are ways to keep the costs of divorce down though' (stock photo)

The financial fallout of divorce means many couples simply cannot afford to. The legal bills could run into the tens of thousands. The divorce settlement itself could cost one - or both partners - much more than that.

The housing crisis has compounded the problem. One spouse will often agree to move out of the family home as part of a divorce settlement - but then struggle to find an affordable place to live. "The cost of housing in Dublin today is a real challenge for people trying to find a place after they divorce," said Muriel Walls, partner with the family law firm Walls and Toomey.

So while last Friday's referendum may well have put divorce on the radar of more Irish couples, it can be a very expensive move. There are ways to keep the costs of divorce down though. Here's how.

Look at alternatives

If reconciliation is an option, try to save the relationship.

Otherwise, explore if nullity - where a judge rules that a marriage never existed - is an option. If not, consider separation.

Bear in mind that if nullity is not an option and you decide not to divorce - but simply to lead separate lives, you will not be able to remarry. Furthermore, your spouse could still be entitled to claim a share of your estate after you die - though a judge can extinguish a spouse's succession rights when granting a decree of judicial separation.

Limit the legals

Should you wish to hire a solicitor, before approaching one, try to come to an agreement on as much of the elements of a divorce as is possible - particularly if you and your spouse are on good terms. This should speed up the divorce and help keep bills low.

"The more clients are in contact with their solicitor, the more costs there will be," said Ciara Matthews, managing partner of Gallagher Shatter. "Be clear when giving instructions to your solicitor - and provide the necessary documentation [to your solicitor] in good time."

Be honest on money

It can be hard to focus on finances when going through the emotional roller-coaster of divorce, but the ability of each spouse to provide a clear picture of their financial position is often key to keeping costs down. The failure of one or both partners to be upfront about their finances - and to provide all the financial information requested by their solicitor within a reasonable time - is one of the main reasons for delays in proceedings. Such delays usually push up legal costs.

When applying to the courts for a divorce, an affidavit of means - a document which lists an individual's assets, income, debts, pension entitlements and day-to-day expenses - must usually be filed by both partners. This is an important document which helps the courts ensure that any spouses and dependent children are properly catered for after the divorce.

You must usually provide your solicitor with a range of documents to support the information laid out in your affidavit of means - such as a year's bank and credit card statements, and details of any pension and investments.

"Often you are months trying to get the clients to provide that information," said Walls. "So to keep the costs of a divorce down, do your financial disclosure and do it well.

"That should save you several hours of legal time. If you don't give paperwork after you've been asked for it a number of times, you'll probably end up with a court summons - which will add to the costs."

Do it yourself

You don't have to hire a solicitor to get a divorce. You can bring divorce proceedings on your own, thereby saving on legal costs. However, the DIY option will usually only be suitable if you have a good grasp of divorce legislation - and if the couple are in full agreement about how they wish the divorce to proceed. Such full agreement will usually only be in place when a divorce is straightforward - which often isn't the case.

"If a couple have no children - or if the children are adult children, if both partners are working, and if there are no properties [owned by either or both partners] - or if any issues over properties have been resolved, you could do a divorce yourself as long as you put a bit of study and research in," said Roddy Tyrrell, solicitor with lawyer.ie.

"You don't need to hire a DIY divorce company. You need to know what you're doing if taking divorce proceedings yourself though - and if the divorce is in any way complex, steer away from the DIY route completely."

Should you and your spouse have difficulties agreeing on anything, the DIY route is unlikely to work. Remember, if you're reluctant to hire a solicitor because you can't afford one, you may be eligible for legal aid from the Legal Aid Board.

Get a mediator

Mediation is a way for a couple to negotiate the terms of their divorce agreement without going through a solicitor. In doing so, mediation can help a couple to come to a divorce agreement for a fraction of what it would cost with a solicitor.

"Even if you don't agree everything through a mediator, you could agree on certain aspects [of a divorce agreement] - such as the children," said Walls.

The State's Mediation Service - available through the Legal Aid Board - is free and is not means-tested. There are also some community bodies that offer free mediation services.

You can also hire a private mediator. Some private mediators charge by the hour or session; some charge a fixed rate. Expect to pay anything from €100 to €200 upwards per couple, per session for a private mediator. It would not be unusual for a couple to have between five and seven mediation sessions - though this will vary, depending on the couple.

"For mediation to work, everything must be put on the table," said Tyrrell. "There must be full disclosure of finances and no exaggeration. You should approach mediation with an expectation that two people have separate lives to live."

Be realistic

The quicker a divorce agreement can be reached, the less costly it is likely to be - though it's important too to take the time that is necessary for a fair agreement to be reached.

"The courts don't strive to punish one partner and reward another," said Matthews. "If people are very practical and realistic in terms of their approach to a divorce, it can help to keep costs down. If you can adapt a mindset early on where you have an open mind about the divorce, and are willing to be flexible and to look at things from different angles, you can save a lot of the costs of the contentious part of proceedings."

By contrast, costs are likely to run high if either partner unrealistically expects to get the lion's share of a divorce settlement - and gets involved in indefensible arguments before the courts.

This can lead to a situation where either or both partners become entrenched on one, or a number of, issues - which makes it harder to arrive at a settlement quickly, and in turn pushes up costs. Such stalemate can be common in unamicable divorces. Property - and other wealth - is usually at the heart of such stalemate, according to Tyrrell.

"When people become entrenched, there's usually serious money involved," said Tyrrell. "They may have two properties and be fighting about who gets the more valuable home. There might be a difference of €300,000 in equity between one home and another. That's usually what the fight is about."

Difficult as it may be, one of the best ways to limit the financial fallout of divorce is to stop it turning ugly. Ugly divorces will cost more - and leave you and your partner with less money to get on with your own lives after the divorce. So if you can't get stay amicable for the sake of love or children, do so for the sake of money.

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