When Amelia* and her de facto partner separated in 2022, they wanted to do things frugally. They lived together for eight months post-split and opted for a mediation process rather than a battle of the lawyers, “because everyone says that is the cheapest option”.
They also decided not to sell their family home. Instead, they intend to keep paying the mortgage together and hold on to it as an investment property.
They know it’s not the classic divorce scenario, but given the current economic climate it feels like the right move.
Amelia and her ex are not alone in trying to save on separating. As the cost-of-living crisis bites, family lawyers and financial planners are seeing more couples attempting to divorce on the cheap (“cheap” being a relative term here, as even a fairly standard divorce can cost between $10k and $20k).
Of course, the more you have to divide, the more costly and time consuming a divorce will be. If there are no child custody arrangements to negotiate and no assets to split, a divorce can be as simple as paying the filing fee to end the marriage with a divorce certificate – a comparably affordable $1,060.
But even when big assets are involved, “clients are a lot more cost conscious than they used to be,” says Fidan Shevket, a divorce lawyer in Sydney.
Shevket says arrangements like Amelia’s are becoming more popular, with housing affordability a big factor.
‘There’s all this Plan A, Plan B, Plan C stuff’
To avoid selling the family home and then face “either the rental crisis or a huge mortgage because interest rates are so high”, many couples are opting to defer all or part of their settlement in favour of holding on to joint property, Shevket says.
Christina Salvo, a family law mediator agrees the days of a clean financial break are over for many couples. “They’ll say, Plan A is that we’re going to retain a property for X years,” she says. “And by that time, if one party is unable to refinance, then the other party might take over the loan. There’s all this Plan A, Plan B, Plan C stuff that we’ve never had before.”
“We’re getting more and more people saying, ‘we want to separate but we can’t afford to separate.’”
Amelia says the court wasn’t thrilled with their decision not to sell their shared home.
“It’s always the court’s preference that you split everything up and have some final certainty to the arrangement – they don’t like it when former couples are tied to each other financially,” she says. “But we think that we can stay amicable enough that we can make smart financial decisions as opposed to getting a court order to divide all the assets.”
Birdnesting through a housing crisis
Amelia and her ex’s eight months of post-separation cohabitation isn’t uncommon either. “I have noticed people staying under the one roof for longer than they would previously,” says Jodylee Bartal, a family law attorney from Melbourne. “It’s cost motivated and it’s availability motivated.”
But sometimes, it’s strategic as well. She says some people fear “negotiations might slow down” if “they move out, and the other person’s comfortable in the same environment they’ve always enjoyed”.
Some couples even continue sharing a home as an ongoing solution, opting for what’s known as “birdnesting” or a “nesting arrangement”, where children continue to live in the family home while their parents take turns moving in and out.
“Lawyers like me say it’s a terrible idea,” says Shevket. Staying with family or in a cheap rental when they’re not at the main house means parents “don’t have any real privacy”.
“You’re always having to pack your junk up or live in your car because you don’t want your spouse to see your paperwork. It’s really unsettling for you – great for the kids – but … I would never recommend anyone do it for longer than a year.”
There’s another option for “families that have broken up but are not enemies” – and have a big block of land.
“Similar to nesting, the parent who doesn’t have the kids will move out to the granny flat,” Shevket says.
“I’ve seen ones where the mum stays in the house with the kids and we banish the dad to the granny flat … typically he’ll come up for family dinner, to spend time with the kids and help with their homework. Then he goes back to the granny flat to sleep.”
Kitchen table resolutions and collaborative divorce
It is possible to make a clean financial break (and move out), while still saving together.
Shevket says it’s quite common for younger couples with fewer assets to come to what’s known as a “kitchen table” resolution – where they sit down, agree how they will split their finances and then only bring in lawyers to draw up the necessary paperwork.
Because divorce lawyers charge by the hour, this can save thousands.
In addition to the filing fee, it costs between $1,000 and $3,000 to have a lawyer draft a settlement and lodge it with the court.
Even when both sides have lawyers involved, an approach called “collaborative law” can still be used to save fees. In a typical divorce, “you sit in secret with your client and give advice, and it’s all very strategic,” Shevket says.
In collaborative law, a couple and their lawyers enter a contract to negotiate a settlement – with the commitment that they will not resort to litigation. If a case does reach litigation, the lawyer “has failed” and must recuse themselves from the case, Shevket says.
It is “a very open forum,” Shevket says. “You sit there within a roundtable meeting with everyone, you can bring in a divorce coach or financial planner to work out what’s best for this family.”
For now, collaborative law is a bigger movement overseas than it is in Australia, but Salvo offers a service that “contracts couples, not individuals” and charges a fixed fee ranging from $4k to $14k, depending on how many assets the couple have to divide up. She says demand for this service, named “Simple Separation”, has doubled in the last year. Between 25% to 30% of clients choose to pay by instalment too.
A divorcing couple is assigned one mediator and one lawyer, then via online sessions, the pair come to an agreement over how they will divide their assets. This avoids the “exploitative” legal fees that can come from approaching a split as two opposing individuals, Salvo says.
But for this to work, Salvo says a couple needs to be open to negotiation – and not hide any assets from each other. “[If] they’re both committed to the process, even if they don’t like each other, it’ll work well. If one party is fixated on an outcome … it’s not going to work.”
Of course, even when the split is amicable and approached with the best of intentions, things can still go awry. Amelia’s mediation involved a paid third party helping to determine and finalise the division of assets. But once she and her ex began the process, her ex changed his mind about some initial agreements, and several points had to be renegotiated.
“We ended up spending the same amount on lawyers as we did on the actual mediation agreement,” she says. In the end, it cost about $24,000 – more than double what she had initially planned for.
‘Somebody has used Chat GPT … but all the cases were made up’
In a break-up with more complexity, some opt to hire a lawyer who works in what’s known as a “shadow capacity
”.
“So the client does the work themselves and they’ve got a lawyer behind the scenes who ‘shadows’ the case – but they don’t ever reveal they’ve got a lawyer. They act like they’re self-represented and they only go to the lawyer to get advice when they need it,” says Shevket. “That’s a very typical saving-money initiative.”
“And then if there’s a big court date, they get a lawyer to step into the case.”
The approach brings billable hours down, and means one party can’t deliberately drive up the other’s legal fees, a tactic some use to try to burn through their opponent’s budget and force settlement sooner.
Some even try to write up the legal documents themselves – with varying degrees of success. “People are no stranger to using Google,” says Bartal. “Some people will go online and search for template orders or a template agreement, and then just use that for their own purposes without fully understanding how those documents work and what everything means … there’s no such thing as a standard set of orders for this or for that.”
Bartal has also seen examples of people “using things like AI to help prepare court documents”.
“Somebody has used Chat GPT to help them prepare an affidavit. But all the cases referenced in the affidavit, the precedents for what they were saying, were made up – they weren’t actually legal precedent. So those are things to be wary of.”
‘It’s a very good idea if you can get someone to sign a prenup’
Amelia says she would now advise others to make savvy decisions at the start of a romance. She suggests prenuptial agreements (often referred to as “prenups”) and open conversations about financial management could help couples avoid post-separation financial annihilation.
Prenups are not just for billionaires or Hollywood types. Shevket agrees prenups can save money for couples if they end up splitting, but actually getting one written isn’t free. Shevket’s fees start from $9,999 and more complex agreements can cost up to $20k.
In Australia, a prenup is officially known as a “binding financial agreement” and one can be drafted at any point in a relationship. “It’s a very, very good idea if you can get someone to sign a prenup – it means that you don’t need to do a settlement,” Shevket says.
A prenup is essentially an agreed upon map for how a separation would work and ousts the jurisdiction of the court. “It says ‘if ever we break up, we do this: we sell the house, I get my super, whether there’s a payout.’”
While talking money with a partner will help, falling in love with someone who already has it is even better, Amelia says. “The cheapest thing is to marry up.”
*Name has been changed
