Understanding the Financial Impact of Divorce
Written by Caroline Cakebread

Wednesday, November 7th, 2018

It's not something people normally think about when they walk down the aisle, but the reality is that not all marriages are built to last.

Going through a divorce is an emotionally painful process, but it can also have a significant impact on your finances. It's not just about the legal costs – there are a host of other expenses and new financial challenges that emerge during divorce that are important to understand and – if possible – plan for.

The Legal Costs of Divorce

The most recent Canadian Lawyer Legal Fees Survey puts the cost of an uncontested divorce at between $1,400 and $1,600 – in cases like this, you and your spouse agree on the divorce and its terms. But those costs spike considerably in cases where there's disagreement on terms – a contested divorce can cost up to $23,000 depending on whether you go to court and how long you spend there.

The steep difference between the cost of an uncontested and a contested divorce is evidence that working it out together before you head to the lawyer pays off. If possible, you and your spouse should work collaboratively early on to determine the basic terms of your divorce, including division of assets and custody of kids and support.

And if possible, communicate together instead of through a lawyer – if you rely on your lawyer to do so, you'll pay an hourly fee for calls. Consider that the most experienced family law professionals can charge as much as $382 per hour according to the same Canadian Lawyer survey.

Other legal costs you might face include separation agreements ($1,500-$2,000), custody and support agreements ($1,500 - $2,000) and the cost of an agreement dividing property and other assets ($1,300-$1,800).

Non-Legal Costs of Divorce

Separation usually comes with a new household and an entirely new set of bills to cover – rent, food, utilities, etc. Family mediator, Stephen Rosenfield, has estimated that separation can increase a couple's expenses by $20,000 to $30,000 per year due to support for a second household. That includes the loss of shared expenses around things like car insurance and the fact that your kids will likely require two sets of certain items such as furniture.

The Big Picture Impact

A divorce also changes your entire financial life. As a single person saving for retirement, you likely have to save more. If you've been a stay-at-home caregiver, you might also need to consider going back to work part-time or full-time. Divorce can also bring big financial decisions, like whether to sell the family home or whether to sell other joint assets.

Getting professional advice is critical for making sure you're ready to handle the financial challenges that come with divorce – and making sure you have a plan in place can help to reduce the stress.

 

Share now

Learn about Tangerine’s options for spending that put you in charge.

Spend and save at the same time with the Tangerine Money-Back Credit Card.

Related posts

Picking the right rewards credit card
Picking the right rewards credit card
May 29th, 2023 | Pira Kumarasamy
Five Tactics to Help You Cope with Inflation
Five Tactics to Help You Cope with Inflation
April 12th, 2023 | Tangerine
Inflation deflated this family's budget. Here's how they're coping with it
Inflation deflated this family's budget. Here's how they're coping...
December 29th, 2022 | Nicola Brown
Legal Stuff
This article or video (the “Content”), as applicable, is provided by independent third parties that are not affiliated with Tangerine Bank or any of its affiliates. Tangerine Bank and its affiliates neither endorse or approve nor are liable for any third party Content, or investment or financial loss arising from any use of such Content.
The Content is provided for general information and educational purposes only, is not intended to be relied upon as, or provide, personal financial, tax or investment advice and does not take into account the specific objectives, personal, financial, legal or tax situation, or particular circumstances and needs of any specific person. No information contained in the Content constitutes, or should be construed as, a recommendation, offer or solicitation by Tangerine to buy, hold or sell any security, financial product or instrument discussed therein or to follow any particular investment or financial strategy. In making your financial and investment decisions, you will consult with and rely upon your own advisors and will seek your own professional advice regarding the appropriateness of implementing strategies before taking action. Any information, data, opinions, views, advice, recommendations or other content provided by any third party are solely those of such third party and not of Tangerine Bank or its affiliates, and Tangerine Bank and its affiliates accept no liability in respect thereof and do not guarantee the accuracy or reliability of any information in the third party Content. Any information contained in the Content, including information related to interest rates, market conditions, tax rules, and other investment factors, is subject to change without notice, and neither Tangerine Bank nor its affiliates are responsible for updating this information.
Tangerine Investment Funds are managed by Tangerine Investment Management Inc. and are only available by opening an Investment Fund Account with Tangerine Investment Funds Limited. These firms are wholly owned subsidiaries of Tangerine Bank. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.