Some hidden costs when you are getting divorced
Real-life love stories don’t always lead to the proverbial happily ever after. In fact, Stats SA found that four in ten couples get divorced before they reach their tenth wedding anniversary.
It has been reported that divorces are on the increase, with more female (51%) plaintiffs prompting proceedings. A total of 55.6% of divorces have children under 18 involved. With children especially, a divorce can get complicated and – in general – even uncontested divorces can take a huge financial toll.
Lee Hancox, Head: Channel and Segment Marketing at Sanlam, says “If you’re facing the prospect of a divorce, it can be a difficult, emotionally taxing time. Remember, you’re far more resilient than you realise, even though it may not feel that way. Sometimes there’s the temptation to rush into a ‘quickie’ DIY divorce that seems cheaper and faster – perhaps you want to get out of the emotionally stressful scenario as fast as possible. This can be risky. Particularly if you’re not a legal expert, what you may be putting into your divorce agreement could be called into question when you get into a divorce court, or, worst-case scenario, could be to your detriment in the long run. For example, when I got divorced my daughter was one year old. We agreed she’d spend some nights at her father’s, only to find out in court that the judge was not comfortable with overnight visitation as she was so young.
There’s also the risk of one partner being savvier than the other. So, the divorce agreement could be drafted to the benefit of one and the detriment of the other. You may not realise this until it’s too late, with ramifications that could end up costing you far more than if you’d had an attorney and financial planner involved from the start.”
Why the Cost of Divorce Differs
The cost of a divorce varies depending on the circumstances and service providers. Parent24, as a case in point, found that an uncontested divorce (one in which both parties work together to amicably agree on the divorce terms) can cost anything from R7 000 to R10 000. If the divorce is contested and the spouses cannot agree, this goes up exponentially. An attorney’s fees start at around R2 000 an hour, an advocate can cost even more, and court hearings also add up depending on how long a case takes to settle.
Another option is mediation, where an objective third-party individual works with the spouses to temporarily set aside differences to come to a settlement agreement. Mediated and contested divorces can take years to resolve.
An uncontested divorce can be done in a matter of weeks. This is obviously directly proportional to the expense. How you were married – in community of property (everything is split 50/50) or out of community of property with an antenuptial contract – plays a big role in determining how simple divorce proceedings may, or may not be.
Other Expenses Resulting from a Divorce
Aside from the direct costs involved in the divorce proceeding itself, there are many other ‘less obvious’ expenses. While this may differ from person to person, these were some of the expenses I realised had to be factored into my monthly budget:
Running two households.
- Setting up a new home brings about all sorts of expenses, from the deposit and rent to rates and taxes, internet installation and furnishings. If you were renting with a former spouse, you also run the risk of losing your deposit when you move out.
- Taking over your cell phone contracts and other services you may need, which your spouse had been paying for prior to the divorce
- Extra childcare or day-care expenses, in certain cases
- Setting up your own medical aid and possibly moving your child across to your plan. This can be costly as the price of medical aid is much higher for a primary member than when you were a dependant.
- Taking out insurance policies, like short-term insurance for your new home
- Moving your child to a different school, if you’re moving to a new neighbourhood. This can be extremely expensive if you’ve already paid for a full year at one establishment which may have a policy of refusing refunds if a child is moved. You could effectively end up paying double the fees.
- Bond registration costs if you’re purchasing property
- A life insurance policy, specifically to cover maintenance obligations. Not having this could lead to uncomfortable situations. For example, if your ex passes away, maintenance is a preferential claim on the estate, which means your ex-spouse’s beneficiary may be forced to sell assets in order to free up cash to cover this claim.
- Consider making changes to your retirement planning, especially if your ex is entitled to half of your pension
- Think about family and/or trauma counselling – during divorce proceedings, it is a very worthwhile option to pursue
Immediate Actions to Pursue
Hancox outlines some of the immediate actions to pursue, for anyone who is going through a divorce:
- Stop, breathe, and really take your time deciding what’s in your best interest. Consult with your lawyer and financial planner and don’t feel rushed into making decisions, particularly if you’re in an emotional space. Make sure you’re protected, and the settlement is fair to all parties – now and in the future.
- Ensure your divorce settlement makes provision for your child’s education costs, including tertiary education
- Make sure maintenance payments increase in line with inflation. Be cognisant of the fact that maintenance and visitation rights are treated separately. Understand your rights and responsibilities.
- Consider if you need to change jobs to account for your change in income
- Change the beneficiaries on your life insurance policy
- Change your will. Remember, you have three months to do this, otherwise, in terms of section 2B of the Wills Act, it will be deemed that it was your wish that your ex-spouse inherits.
- Redo your estate planning with your financial planner and consider setting up a testamentary trust to ensure the assets you’re leaving to your children are appropriately managed
- Gather a strong support network around you. Take time for yourself and make sure you have a safe space to talk about how you’re feeling.
- Check what you and your ex-spouse have signed surety for in the past. Ensure that any sureties you may have signed are cancelled.
- Seek Professional Financial Help
Hancox strongly advises having a trusted financial planner walk the journey with you, “It’s so important to have an objective expert cut through the emotion and help you come up with a plan that feels doable. It’s also good to know you can rely on someone who really has your – and your children’s – wellbeing at heart.”