To learn more about the cost and duration of divorce where the division of property and assets is an issue, we recently surveyed our readers. Here’s what we found out.
How Much Does Divorce Cost When Property Division Issues Are Involved?
The divorcing spouses we surveyed spent an average of $18,000 on costs to resolve their divorces when the division of assets (the family home, bank accounts, cars, perhaps a family business) was involved, including $14,700 on attorney’s fees. (Compare these numbers to divorces without property division issues, and the costs and fees go way down. The average total cost of a divorce without property division issues was $8,400, including $6,200 in attorney’s fees.)
Divorces where property was divided cost more than the average for high-net worth couples and for couples who had to go to trial on their issues rather than settle them out of court.
Going to Trial on Property Division
Dividing up assets can be as simple as writing a list to split up furniture, vehicles, and a wine collection, or it can mean going into full-blown trial mode, with teams of financial experts and attorneys. When divorcing couples can’t compromise on property division, a family law judge has to value and divide the couple’s property. About 31% of our readers with property division issues ended up in court.
Divorce cases that go to trial are typically a lot more expensive than those that don't. Attorney’s fees, court fees, and financial expert fees increase fast when you go to court. Based on our results, a divorce with property division that goes to trial cost an average of $22,500, including $19,400 in attorney’s fees.
Settling Property Division Issues
Fortunately, most of our readers (69%) said they were able to settle their property division issues outside of court. These readers spent an average of $12,800, including $11,000 on attorney’s fees (this doesn’t include readers that represented themselves or used mediation without attorneys). According to Lina Guillen, a California divorce attorney, if you are able to settle on a fair division of assets with your spouse, it’s a good idea to have your attorney draft or review a property settlement contract to make sure that it is enforceable and protects your rights.
How Long Does Divorce Take When Property Division Issues Are Involved?
All assets must be inventoried, valued, and divided "equitably" or "equally" – depending on whether you live in a common law or a community property state. All of this takes time. Our survey found that divorces with property division issues took an average of 12.2 months to resolve. Couples who were able to settle their property issues were done in 11.3 months, while those who went to trial had to wait an average of 15.6 months for resolution. In most states, family law courts have long wait times for hearing and trials, and that can make contested divorce take months longer. Note that these average time periods are shorter in states where court rules require divorces to be resolved within a year.
When you’re dealing with property you can’t normally split in half, like the family home, things can get complicated. First, with a home, you’ll need to consider when you bought the house, with whose money, and whether the home gained value during marriage. You'll need to get your house appraised or look at recent, comparable sales in your area and factor in the remaining debt.
Second, you'll need to decide whether one spouse gets to keep the family home and the other spouse moves out or if you'll sell it and "split the baby." With a home, sometimes one spouse can afford to buy the other out. This spouse will generally have to assume the remaining mortgage debt on the home going forward. Or, a couple might agree that the primary caregiver can live in the home until the children are grown, but they’ll need to figure out how to split maintenance costs, the mortgage, property taxes, and property-related tax deductions at the end of each year. This often requires the help of a family law CPA. To avoid these headaches, many divorcing couples choose the third option – sell the home and divide the profits.
A dispute over a home can increase financial expert fees, attorney’s fees, costs, and the time spent on a divorce. And if these disputes end up in front of a judge in a trial, attorney’s fees and other costs will skyrocket.
How a Dispute Over the Family Business Affects Divorce
Divorcing couples with a family business have to answer the following questions:
- Does the business belong to both of us (joint) or just one of us (separate)?
- How much is it worth? This means what the value is today, not what you paid for it.
- Should one person keep it, or should it be sold and the profit divided 50/50 -- or some other way that’s fair?
Who owns the business? Depending on the laws in your state and the facts of your case, figuring out if a family business is joint, separate, or something in between can require a legal opinion. In most states, which of you contributed the most time or money to its success may have a bearing on the answer.
What should happen to the business? Divorcing spouses have to decide whether they want to sell the business, continue owning the business together after the divorce, or let one spouse buy the other out. These issues usually require some advice from a business valuation expert, a CPA, and an attorney who can negotiate on his or her client’s behalf.
What's the business worth? There are several ways you can determine what your business is worth. You can estimate what you could sell your business for, calculate the value of your business assets, or look at how much income your business brings in. No matter what approach you use, you’ll have to review a whole host of items, including profit and loss statements, assets and liabilities, tax returns, the business value, and goodwill. Many divorcing spouses can’t do this alone, so they hire business valuation experts. These experts usually charge hefty fees, which increases the cost of divorce and the time it takes to resolve the issues.
How Dividing a High-Asset Estate Affects a Divorce With Property
“More money, more problems” couldn’t ring truer than in divorce. Usually, the bigger the marital estate (all of the jointly owned assets), the bigger the team it takes to divide it.
High-net-worth couples with numerous brokerage accounts, retirement accounts, savings accounts, cars, real estate portfolios, and venture capital interests will require careful legal and financial analyses from attorneys and other experts who can make sure the spouses' legal rights are protected and the assessed values are correct. Dividing these types of assets will have major tax implications, so it’s crucial to have a knowledgeable CPA on board as well. These specialized financial experts are some of the most expensive around, and their fees often equal or even top attorney’s fees in high-asset divorce cases. And if any of these property issues end up going to trial, the fees, costs, and duration will far exceed that of the average divorce.
Satisfied? It Depends
Based on our results, divorcing couples with property division issues were least satisfied with the outcome of their divorce when they used divorce attorneys who specialize in "collaborative law" and were most satisfied when they consulted with a traditional divorce attorney.