How much does a divorce cost in Australia?
Ending a relationship can be hard. In addition to the emotional cost, there’s the real financial cost of separating your life and your assets from your partner. But exactly how much does a divorce cost in Australia? It can vary wildly, from about $300 to over $100,000. The important thing to understand is what costs will apply to you.
The cost of divorce in Australia
So, what do we mean when we say ‘paying for divorce?’The divorce itself, that is, the formal legal ending of your marriage, is relatively inexpensive. It’s technically separate and distinct from your property settlement, application for maintenance or parenting arrangements after your marriage breaks down. But when asking themselves “how much does a divorce cost?” people are typically thinking about all the costs associated with the breakdown of a marriage. There are some set costs that will apply to everyone but there are lots of variable costs depending on the pathway you take.
What will you need to pay for?
Application for divorce
To file for a divorce in Australia, you need to pay $940 to the court. However, you may be eligible for a reduced fee of $310. This is the minimum cost of any divorce.
Property settlement and parenting arrangements
Divorces often include costs related to the division of your property and assets and establishing parenting arrangements when there are children involved. However, you don’t have to wait until you are divorced to work these out – you can start when you separate.
What and how much you pay depends on how you proceed. Here’s a rough guide to your options and costs, but of course, these will vary depending on your circumstances.
If you and your ex-partner can’t agree and you pursue litigation, you will need to budget for engaging a lawyer, court costs and costs associated with the legal process, such as valuations. Your lawyer should be able to give you an estimate of costs involved in your case. The average cost of litigation can be anywhere between $50,000 and $100,000 or more.
Private arbitration can be considerably less, costing about $4,000 to $8,000 a day and offering roughly a 20%-30% saving compared to litigation. Arbitration is a form of dispute resolution where both parties present their case to an independent third person (the arbitrator) and are bound by their decision.
- Alternative Dispute Resolution
Mediation, negotiation and other forms of dispute resolution where both parties come to an agreement about things like parenting arrangements or division of property are also usually quicker and cheaper than going to court. You can expect mediation to cost about $2,500 per person.
Obtaining professional legal advice is always a good idea, even if you aren’t pursuing litigation. A solicitor commonly charges from $350 to $650 per hour. Barristers typically charge between $1,500 and $6,000 a day. You may also have to pay for other costs related to the legal proceedings, such as valuation costs or an accountant for valuing of the asset pool, complicated structures and asset protection schemes.
Frequently asked questions about divorce costs
Divorce and the associated costs can be tricky to navigate. Here are some answers to some common questions.
Do lawyers charge by the hour or per issue?
Lawyers can charge either by the hour or offer a fixed fee for their service. Your lawyer should be able to give you an estimate of costs involved in your case and when payment will be due.
Do I split the costs with my ex-partner?
Some of the costs will be your responsibility and some costs may be shared. For example, paying for a mediator would be a shared cost, whereas you would be required to pay your own legal costs unless a court ruling says otherwise.
If there’s common property, who decides how it’s separated?
This will be determined through your property settlement. You may reach a property settlement by agreement (such as through mediation), arbitration or litigation. You can work out a property settlement prior to getting divorced and you must apply for a property settlement within 1 year from the date your divorce order has taken effect.
Will my divorce settlement be taxed?
There may be some tax consequences when you divorce. Generally, tax issues relating to family law matters include capital gains tax, stamp duty, income tax consequences such as “deemed dividends” and GST. However, there are also some special rules that apply to help you avoid a tax burden when you divorce. For example, if an asset is transferred to you because of a relationship breakdown, you may qualify for the relationship breakdown rollover, meaning the capital gains tax that would normally apply when ownership of an asset changes is deferred and applies to you only when you later dispose of it. It’s important to receive advice that suits your circumstances.
How much does a separation cost?
A separation is the first step to getting a divorce. You must be separated for 12 months before you can apply for a divorce. There aren’t any specific costs associated with separating as there is no legal process involved – you’re separated when you stop living together as a couple. Or you can still be living at home together but have separate lives—this is called ‘separation under the one roof’. When you separate, you may incur costs relating to your property settlement or parenting arrangements (you don’t have to wait until you are divorced).
How to pay for a divorce
With your divorce potentially involving thousands of dollars in legal and other costs, it’s important to have a plan to pay for it, especially as many fees will require cash up front. You don’t want to be caught short or be in a position where you can’t pay for the legal advice you need. Here are three ways to pay for a divorce to consider.
If you have the money available, paying upfront costs with the funds you have makes sense. However, even if you expect to have the funds, the money may be tied up in your property settlement. You may need to seek an interim (short-term) order from the court to be given a lump sum of funds from the property pool prior to the final settlement.
You might be wondering: can I get a personal loan for a divorce? Yes, you can. A personal loan can be a good option if you don’t have a settlement to worry about and you’re confident you can meet the loan terms. Lenders usually offer loan terms between 1 and 7 years, giving you time to repay the money. But remember, you will likely have to pay an upfront fee to establish the loan and you’ll need to start making your monthly repayments straight away. Also make sure you understand what penalty fees may apply (say, if you miss a monthly repayment) and if there’s an early repayment fee (if you repay the loan in full prior to the end of the loan term).
Legal fee loans
A legal loan is a special type of personal loan designed specifically to help you pay for family law matters, so it works a little differently. A form of asset-based lending, you can usually borrow up to 30% of the expected property settlement. You can borrow what you need, when you need it (so you don’t need to draw down the full amount upfront) and you only pay interest on what you use. Plus they don’t require regular repayments – you only need to repay the loan once you’ve received your property settlement.