Charity Diven

Microeconomics 2010
ePortfolio Essay

We belong to a varied society that exhibits many different types of unions. The most
recent statistics (2011) show that 59% of the population is married, 24% of the population has
never married, and 10% of the population is divorced. The decision to get a divorce is a tough,
complicated one, in which the costs usually far outweigh the benefits. Costs of divorce have the
most impact on finances and psychological well-being of children, both in the short-term and
long-term.
The average out-of-pocket cost to get a divorce is $15,000-$30,000 for each person. This
short-term cost consists mostly of legal fees. Attorneys rates range from $75 an hour and up,
with some lawyers in large firms charging $450 per hour. Individuals with simple divorces, who
can maintain effective communication and mutually agree upon the overall terms of the divorce
can significantly minimize their legal fees. Some may choose to utilize online divorce services or
access legal documents from the state government website. Using an online service or filling out
paperwork yourself costs approximately $250-$500. Do-it-yourself methods of divorce are
utilized the least and are not recommended for divorces that have assets to protect and divide.
Getting a cheap divorce may save costs of legal fees, but in the long-term there may be
consequences that impact negotiations of division of property, retirement benefits and spousal
support (alimony). Often, spending more money in the short term will save money in the longterm.
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Some divorcing couples choose to minimize costs through mediation. A mediator is hired
to resolve issues and help in negotiations. Each person still hires an attorney, but the purpose of
the mediator is to help parties reach the agreement and avoid litigation. Typically, mediation
speeds up the divorce process and settlement can be reached in as little as a few hours. This
option is mostly utilized by couples who have some disagreements but remain largely amicable
and civil with one another. Some states require couples to mediate at least one time before a trial
can be scheduled. Utah is a state with the mediation requirement. Considering the added cost of
paying a mediator, the average cost of divorces settled through mediation is cheaper than
contested divorces at $5,000 per person.
The most financially devastating route to divorce is a contested divorce. When couples
have been unsuccessful at resolving issues, the next step is divorce court. Preparation for trial
adds billable hours and depending on the number of issues, trials can take several days. A twoday divorce trial can cost nearly $20,000 in legal fees alone.
In addition to attorney and court fees, there may be costs to sell joint property, rent deposits or
closing fees when renting or buying new residences, hiring movers, procuring financial lawyers
or forensic accountants to evaluate business ownership or valuation, and psychological
counseling for either party or any marital children.
The short-term cost of divorce can be a huge financial strain and can have long-term
effects. Often credit ratings deteriorate and standards of living decrease. Qualifying for
mortgages, paying new/higher mortgage payments, the costs of home maintenance, and property
taxes can become a huge financial burden. Future costs of educating or training a spouse so that
the spouse can gain employment after divorce should not be forgotten when negotiating a
settlement. Spousal support is rarely awarded but necessary when one spouse has been
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unemployed during the marriage. The employed spouse has his/her career as an asset that
continues to financially benefit. The spouse that did not work and develop a career may not have
as much earning potential, or any at all, and compensation is many times given so that the spouse
has a means to survive after the split. Spousal support payments may be awarded for a period
equal to the duration of the marriage, in order to offset the postponement of education and career.
The employed spouse pays the long-term costs of spousal support for the specified term.
In May, 2014, Time Magazine reported the divorce of Russian oligarch and soccer club
owner, Dmitry Rybolovlev and ex-wife Elena, as the most expensive divorce in history. The
couple met in Russia while in college and were married in 1987. Dmitry had great success in the
fertilizer industry and ranked 78th richest man prior to the divorce. Divorce proceedings started in
2008 and were finalized in 2011. At the end of the divorce, Elena was awarded $4.5 billion
(equating to half of Dmitrys fortune) and three marital properties worth over $146 million. The
financial hit to Dmitry because of the divorce settlement bumped Dmitry to 147th richest man.
Long-term costs associated with the care of the children of the marriage will include
education and may include psychotherapy. Continued emotional counselling for children may be
necessary in order to help them deal with depression and anxiety caused by the divorce. Children
may have trouble adjusting to new schools, making new friends, moving to another home or city,
or stress from both parents working instead of one staying at home. Because of divorce, many
children live in parentless homes or the mother becomes the custodial parent. Outcomes for
children in fatherless homes are grim. Statistics show 63% youth suicide, 90% are homeless or
runaway, 71% drop out of high school, 50% become teen mothers/fathers and 85% exhibit
behavioral problems. Not accounting for the previous statistics, costs of education and raising
children increase substantially as the children get older. There is not much cost for preschool or
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elementary education, but fees associated with school increase in middle school and high school
years, and increase exponentially when the child goes to college. Divorce often places financial
responsibility on parents individually, to the detriment of the children.
Regardless of the circumstances, divorce is never easy for any party, most especially the
children. The attitudes and maturity levels of the parents have a significant impact on the length
of, and the cost of the divorce proceedings. In the end, the economics of the family are
negatively affected, even if both spouses come away with enough money to live on. Assets are
split or sold, and accounts are liquidated, moved, or at least divided between the parties. These
actions cause a reset of sorts, whether on the large or smaller scale. Retirement plans are many
times in need of restructuring after the conclusion of a marriage. The creation of two viable
families from one is a complicated process and none come away financially unscathed.

Sources:
http://www.divorcemag.com/articles/us-divorce-statistics
Count the costs before you split. USA Today Magazine, 01617389, Apr98, Vol. 126, Issue 2635,
link:
http://web.b.ebscohost.com.libprox1.slcc.edu/ehost/detail/detail?sid=7bec5977-6999-4f1c8f9ca4b2b2289722%40sessionmgr120&vid=29&hid=102&bdata=JnNpdGU9ZWhvc3QtbGl2Z
Q%3d%3d#
http://www.info.legalzoom.com/average-cost-divorce-20102.html
http://divorcesupport.about.com/od/financialissues/f/costofdivorce.htm
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