Divorce expenses can be eye-watering. Even smooth divorces can be costly. However, getting divorced doesn’t need to break the bank. There are many ways to save money on divorce during this time. Understanding how to save money on divorce with practical tips can help you enter a new chapter in your life with financial security.
Key takeaways
Reducing costs during divorce
Through a combination of lifestyle choices and financing options, you can mitigate the cost of family law matters. Here are some ways you can preserve your financial health.
Separation under one roof
The Court understands that it’s often difficult for separated couples to maintain different residences. It’s acceptable for ex-partners to continue to co-habit through a concept called “separation under one roof”. Over 53,000 people registered as separated under one roof with Centrelink in 2022.
This set-up has obvious financial benefits. It can lead to conflict if not handled properly. Here are some tips for making this living arrangement work.
Communication is critical
Communicate clearly about the arrangement. How will sleeping arrangements, mealtimes and domestic chores be handled? How will you organise your co-parenting? Both parties must understand what is expected of them and the other person.
Understand when not to communicate. You want as little involvement in each other’s lives as possible. It may be worth carving out around an hour per week to have a meeting. Reflect on the arrangement. Consider what adjustments could be made. Outside of that time, it’s best to leave each other alone.
Finances
How will assets like bank accounts be used? If you have a joint account, it may be worth closing it and maintaining separate accounts. One party may struggle with essentials like food and clothing. The other spouse could provide financial support.
Some insurance agencies require changing your insurance policies to reflect your new circumstances. The three key policies to consider are your life insurance, health insurance, and home and contents insurance.
Socialising
After a long-term relationship, your friend groups will likely overlap. It’s not wise to socialise together. Consider how each of you will spend time with your friends. Ensure your friends are informed about your situation to the extent appropriate.
Legal requirements
You are advised to inform all relevant government agencies, such as Centrelink. You also have to draft an affidavit explaining your arrangement. The Court will want to know your living situation before the separation and how it has changed. Document when the separation occurred. What were the circumstances? Seek legal advice to ensure the affidavit is correctly worded and includes all necessary information. You can make a significant difference in reducing financial strain by understanding the best ways to save money on divorce in these situations, such as by minimising legal fees and avoiding court disputes.
Risks of separating under one roof
Separation under one roof may seem like a good option. While many couples are choosing this arrangement, it’s risky. This can make it impractical.
It complicates your separation. The Court wants you to live separate lives. Have you separated your finances? Do your parenting arrangements portray a separated couple? The Court may not be convinced. This could extend your separation.
How are your children impacted? You might think you’re civil with your ex-spouse. But children pick up on cues you overlook. A tense atmosphere can have negative emotional impacts on children. It’s often better to give each other space. Moving in with friends or family temporarily could be more viable.
Mediation (lengthy legal battle)
A lengthy legal battle can mean high legal fees during a divorce settlement. Successful mediation reduces divorce costs considerably. Here’s how to get the most out of mediation.
Open dialogue is best
Both parties should be prepared to have an honest discussion. Cover what you want to achieve. Lay out your needs and expectations for the session.
Compromise is a good option
Forming an agreement requires compromise. Listen to each other’s concerns. Identify areas where you’re willing to accommodate changes.
Agreements should be in writing
When you agree on an acceptable arrangement, put it in writing. This agreement can be converted to a consent order. This makes it legally binding.
A property consent order requires a financial statement that documents your financial situation. This includes information on your income and other assets and liabilities, like mortgage payments. You need to disclose your finances fully. Attempting to hide money or other assets has significant penalties.
Proposed parenting consent orders must satisfy the Court that they are in the child’s best interests. Any parenting arrangement must be made with that requirement in mind.
Consent orders are generally recommended for most divorcing couples. They’re a lower-cost option than a binding financial agreement or litigation.
Financial implications
Successful mediation can save separating couples tens of thousands of dollars. Litigation is the last option. Legal assistance, hearing fees, expert witnesses, etc., drive costs to over $100,000. Effective mediation can cost as little as $3000 to $6000. A quality mediator can save your financial future and help your family transition.
Downsizing
You may think that downsizing entails sacrifice. It can actually be a liberating experience, while sparing your finances. Here’s what to consider.
Affordable housing
Think about the living space you need. Living alone can make home maintenance difficult. Larger houses require more energy. Selling the marital home for more modest accommodation means a lower mortgage and more manageable utilities. It has the added benefit of leaving behind painful memories. A new space is a great way to start your new life.
Declutter and feel good about it
Separation is an opportunity to cleanse. We often fill space because it’s there. Some items you may want to keep no matter what. Other items you might be happy to toss. Selling unwanted assets on eBay or Amazon can generate funds. You can also consider donating them to charities or family members.
Consider your children
Keep your children’s best interests in mind. Ensure your new arrangements feel like home to them. Let them have a say in your new space. This can be a bonding experience. Remaining close to your old home can help them stay in touch with friends. This minimises the upheaval of separation.
How JustFund can help
JustFund is a credit provider that offers a new approach to financing legal fees. Our innovative fintech solution has various advantages over traditional personal loan lenders.
Experienced team
JustFund’s team are professional family lawyers and financial experts. When you contact us, your application for funding will be assessed by an experienced family lawyer. This is important. It means we can accurately assess your specific legal needs. We help you maximise the effectiveness of your line of credit.
A traditional lender won’t be familiar, or even care, about your individual legal requirements. They’re only concerned with your ability to repay your loan.
Fair eligibility
JustFund was understanding and helpful when I was at a vulnerable time in my life.
- Yvette D
Traditional lenders care about one thing. They ask, “Will we get our money back?” They want borrowers with good credit scores and a stable income. Borrowers who don’t meet these criteria may receive worse rates on their loans. They may also be rejected outright.
JustFund wants to help those who need financial assistance the most. A divorce is a unique situation. It’s one of the most dramatic upheavals a person can face. It often significantly impacts your financial security, especially for women. Research shows women suffer an average 21 – 30% reduction in income after divorce. You may be fortunate enough to have an emergency fund, but this is often not the case, which makes having access to financing options like those from JustFund crucial for navigating the financial challenges of divorce.
It doesn’t make sense to judge your “worthiness” of receiving financing based on traditional methods. We assess your needs based on the merits of your case. Traditional lenders aren’t equipped to make such determinations. Our team of legal experts can.
One of the many benefits of our approach is that, with a credit line from JustFund, you can access the best legal representation. Some family lawyers may be reluctant to take on a client in financial difficulty. Financial backing from JustFund alleviates this risk.
Tax concessions
Divorcing couples may receive different tax treatment depending on their circumstance, assets, and how they choose to separate
Capital Gains Tax (CGT) rollover
Transferring a property will usually incur a certain amount of CGT. However, if a property is transferred between spouses during a divorce, CGT is deferred or rolled over to when the asset is sold. The rollover only applies if the asset was transferred as part of a legally binding property settlement.
Main residence exemption
If you’re eligible for the main residence exemption, the CGT can be waived entirely or in part. The eligibility criteria are as follows:
The property is on two hectares of land or less.
Both spouses used the property as their main residence before the transfer.
The property was your main residence while you owned part or all of it.
The property wasn’t used for rent or business.
Conclusion
Making sensible lifestyle choices and accessing appropriate financing can help ease the cost of divorce. Sharing a residence during separation may seem awkward, but it can help parties live affordably if handled well. Making an effort to avoid costly litigation through mediation is a major cost saver. Additionally, utilising tailored financing options, like those offered by JustFund, can provide significant financial relief during this challenging time, ensuring that legal and mediation fees are more manageable.
If you need help with finances for your family law matter, apply for a line of credit today.
