How to get divorced cheaply

Today has been dubbed 'divorce day' by lawyers as the number of disillusioned couples deciding to split hits a peak. If this sadly includes you, here's a look at how the two of you might keep the cost of divorce down.

10 January 2022 is 'divorce day'

The first working Monday after the New Year is dubbed 'divorce day' by lawyers as it's the time when the number of breakups soars, meaning big business for solicitors.

It's a pretty depressing affair. Going through a divorce isn't just emotionally draining – it can also weigh heavily on the finances of both parties.

As Emma Hammond, financial planner at Charles Stanley explains: "Getting divorced is a costly process. Solicitors' fees are likely to be high, even if a financial settlement has been negotiated and agreed.

"If agreement has not been reached and the case goes to court, you could likely expect these fees to increase substantially; particularly if children are involved.

"A divorce can materially impact upon all aspects of your life and continue to affect your plans for the foreseeable future.

"Whilst many divorcees may have used a mediator to help them reach a divorce settlement, adding the expertise of a financial planner will undoubtedly aid those negotiations and can help avoid a costly court case."

If you’re considering a divorce, read on to find out how to do so cheaply.

But as a first step, why not take a look at this divorce calculator from Money Helper (formerly Money Advice Service), which will give you a broad idea of how your finances might look once you split up your assets.

Cohabiting and splitting up... what it means for your money

Common divorce mistakes

Given the huge financial implications, it's important you try and minimise the extent of the financial hit you'll take when getting divorced.

Sarah Coles, financial analyst at Hargreaves Lansdown, has identified five common divorce mistakes to avoid:

"1. Not understanding the value of what you have

The divorce process involves dividing your assets, so you need to understand the value of it all. This includes pensions. Couples often offset assets, but it’s important to appreciate the value of what you are giving up and possibly speaking to a financial adviser.

2. Not appreciating all your options when it comes to pensions

There are a few options to consider, so you need to be certain you choose the best one for your circumstances – see ‘Your Pension Options’ for more details.

3. Not rebuilding fast enough

A divorce won’t just split your assets, it can cost a fortune too, so you need to focus on getting back on track after the divorce. You should be paying into emergency savings and rebuilding your pension.

4. Paying more tax

If the divorce is completed in one tax year, when you pass investments between you and your ex, there’s no capital gains tax to pay.

If you go into a new tax year, you may be liable. The rules on this are set to change to give divorcing couples more time, but we don’t yet know when this will kick in.

Older couples are far more likely to have more investments, so are more likely to be subject to CGT. There are steps you can consider, like bringing transfers forward, so you will need to discuss these with your lawyer.

5. Damaging your credit rating

If you still have a mortgage, talk to your ex about it. If you’re both named on the mortgage, then you’re both liable for the full amount, so to protect your financial position you should try to maintain payments in the short term.

If possible, try to agree this between you. If your ex refuses to pay their share, or you’re struggling to pay yours, talk to the mortgage company and see if they will allow you to pay interest-only for a period, or take a break while you sort something out."

Divorce fees: how much it will cost

Unfortunately, divorces can often be complicated, messy – and expensive.

If you are the one seeking the divorce then you are the petitioner and will pay £450 to £950 in solicitor’s fees and £593 in a divorce centre fee, according to Money Helper – making a total of £1,000 to £1,500. 

As this article explains: "If you are the other spouse then you’re the respondent. You will not need to pay a divorce centre fee and your solicitor’s fees should be lower. Making your total £240 to £600."

If you want to get divorced and can't afford the fees, it's worth looking into whether you qualify for Legal Aid, which is offered to low-income households. 

The rest of this article will look at the different options available to you when getting divorced.

'Quickie' divorces

Some companies offer a ‘quickie’ divorce, which aims to make the whole process more affordable and less time-consuming.

You can get a divorce in a few months, but it currently takes around a year in most divorce cases.

Co-op Legal Services offers a £450 fixed-fee divorce, but it only covers ‘uncontested’ ones in England and Wales where a spouse does not ‘defend’ the divorce.

You’ll still need to pay a £593 court fee on top of this.

Make sure you're not getting a 'false economy': read our guide to picking a solicitor

DIY divorce

You can keep the involvement of lawyers to a minimum by going down the DIY route with the divorce itself and coming to an agreement on your finances. 

Here’s how it works: first, you follow the step-by-step guide on the Government website to get a full picture of your circumstances and finances.

You will then both receive impartial advice from an experienced family law barrister to get an idea of what a ‘fair’ division of assets would be.

You can use that information to come to an agreement on how to settle your assets.

Intelligent Divorce argues that a lot of the time what solicitors will charge you for is just them researching your finances, a step you can do on your own, saving money in the process. 

If you just want to get the divorce itself done, there's always the online option, which can cost as little as £37 and save you the faff of consulting a solicitor. 

But whichever route you choose, you'll still have to pay a court fee of £593 for the divorce itself.

You should make sure you've tied up all financial loose ends before you part ways if you're going for the online option.

Many who went for a cheap divorce during the recession were contacted by their ex-partners if one party came into money through an inheritance, a lottery win or other windfall, according to reports.

Victoria Walker, former partner at law firm Simpson Millar, said she dealt with a rising number of cases where a couple with modest assets divorced without making any financial agreements or signing a consent order.

Without a consent order, if one party increases their wealth, the other is legally entitled to it. 

"With no legal expertise to hand, thousands of couples made the fatal error of assuming that all ties were cut once the divorce was finalised,” commented Walker.

"That's sadly not the case and the ghosts of marriage past are now coming back to haunt them in rather costly and unpleasant dramas.”

Over the last few years, there has been a sharp rise in people representing themselves, partly to save on legal fees.

A financial settlement can be made any time before or after the divorce, but if you are at all unsure about what to do, you should seek legal advice.

Alternatively, you could opt for a consent order.

This is a legally binding financial agreement drawn up by the solicitor and signed by you and your ex-spouse once you've both provided financial disclosure and taken legal advice.

It's then reviewed and approved by a judge in a family court. A consent order costs £50.

Walker said she expects a rise in cases from past marriages as more people reach retirement age, and recommends anyone getting married for a second or third time to be completely sure they've cut off financial ties from previous marriages.

Don't fancy the DIY route? Here's what you need to know about how to divorce cheaply.

Getting divorced in your 60s? How to cope financially and emotionally 

Mediation

All divorcing and separating couples are referred to mediation before they are allowed to go to court.

This means an independent mediator will sit down with both parties and try to come to a final agreement on how assets will be divided, and what will happen with any children (or pets!) the couple may have.

While you must attend a Mediation Information and Assessment Meeting, you are not obliged to commit to the process afterwards.

Generally, mediation will take two to four sessions.

There is no standard fee for mediation.

It’s worth remembering that while it will likely be cheaper than heading straight to court, it may be testing emotionally, having to spend hours in a room with your soon-to-be-ex arguing over the fine details of your split.

Divorce and pension splitting: all you need to know

Collaboration

Collaboration works in a similar way to mediation, in that both parties sit down to work out who gets what, outside of the courtroom.

But the difference is that the process can involve far more than just the two parties and an independent mediator.

With collaboration, each party will not only have their lawyers present, but there may be all sorts of other professionals involved too, from accountants and life coaches to children’s counsellors.

The idea is that this way, you reach the fairest outcome, whereas with mediation there is the risk that the ‘dominant’ party may force through a better deal than is merited.

For example, with mediation, an unfaithful husband may hand over more than he should out of guilt, or a housewife unfamiliar with the family’s finances may get a raw deal.

I want a pre-nup!

Whenever there is a high-profile break-up, there is always a discussion of whether there was a pre-nuptial agreement in place.

This is basically where both parties agree how the finances will be handled should they split up.

It tends to be something the very wealthy use to ensure that should they marry a mere mortal like you and me, we can’t make off with all of their cash if it all goes awry.

It’s worth remembering a prenup is legally binding in UK law if it is drawn up by a qualified solicitor, all assets are disclosed and is confirmed as fair as possible by the solicitor.

Both parties need to seek legal advice and agree to the prenup, which needs to be signed at least 21 days before the marriage.

Even before you head down the aisle, it pays to consider what should happen if the marriage doesn’t last as it could save you a fortune in the long run! 

We asked family law experts at law firm Vardags to put together a guide to pre-nuptial agreements and how to get one.