Pandemic Divorce: Knowing the Financial Implications


According to data from the U.S. Census Bureau, the divorce rate in the country in 2019 was 7.6. This meant that 7.6 out of every 1,000 marriages ended in divorce. It showed a significant decrease from the 9.7 divorce rate in 2009. When the pandemic hit the country in January 2020, marriages faced many difficulties. According to the New York Post, interest in divorce increased by 34 percent just a few months later, from March to June. By 2021, according to Yahoo! Finance, a study showed that divorces triggered by COVID-19 further increased by 21 percent compared to 2020.

Many of the couples who reached the point of deciding to divorce could not cope with being together all the time during lockdowns. Irritants that were previously unnoticed came to the fore. Some had opposing views on health and safety measures against COVID-19. When couples had to work from home, the division of labor for household tasks created problems. Stress over the pandemic made people anxious and edgy, often lashing out at each other or closing off. Relationships that were not on a solid foundation could not withstand the pressure. The husband and wife then each seek a family lawyer specializing in divorce.


Divorce has more than an emotional impact, though. It also has a large financial toll. During the pandemic, this becomes even more difficult to bear. The divorce process by itself can cost a lot. According to CNBC, it is most expensive in California at around $14,235 and New York at about $13,710. It costs $12,955 to $12,560 in Delaware, Massachusetts, Texas, New Jersey, and Connecticut.

Division of Assets

A couple can decide between them or with their lawyer on the division of their properties and other belongings. If they cannot come to an agreement, the court will decide for them. The division will depend on the state they reside in.

In community property states, all property acquired by one or both spouses during the marriage becomes marital property. Property acquired by each one before the marriage or after they separated or divorced is deemed the separate property of that spouse. This includes gifts and inheritance. Upon the divorce, all marital property is split equally between spouses. Each one gets to keep their separate property. California, Washington, Texas, Nevada, Arizona, Louisiana, Idaho, New Mexico, and Wisconsin are community property states.

In Alaska, couples can choose to use the community property system. In Tennessee and Dakota, couples can use a modified version of the community property system.

In all other states, equitable distribution of assets is followed by the courts. This may result in a division that is not strictly equal but is fair. At times, the court may order one spouse to turn over part of their separate property to make the division equitable. The courts can consider the age and health of each spouse, the financial situation of each spouse and each one’s earning capability, the standard of living during the marriage, the length of the marriage, the contribution of each spouse to the marital property, and the value of the marital property. The court may also consider any marital misconduct that led to the divorce or had affected the financial situation of the couple.

Divorcing couples must be aware that the share they receive from the division of assets is taxable. Also, some properties that may have the same monetary value may be taxed differently. This should be included in computations. Sometimes people have to sell off some properties to pay taxes due.

Division of Debts

Debts are also divided in a divorce, although if the loan is in one spouse’s name, such as a credit card, that spouse alone is responsible for the debt. In community property states, if the loan is in both spouses’ names, they are each responsible for paying 50 percent of the debt. In states using the equitable distribution system, the court may decide on the percentage of payments from each spouse.

If one spouse does not pay their share in a joint debt or declares bankruptcy, the other spouse’s credit score will also suffer. In many cases, divorcing couples sell off the house with a mortgage and the car with an outstanding auto loan are sold and split the proceeds. Joint credit cards must be paid off and closed. This leaves a clean slate.

Division of Retirement Funds

If the couple has a significant amount in retirement funds in a shared account or one person’s name alone, this can be divided through a qualified domestic relations order (QDRO). This applies to any private pension plan, a defined benefit plan, employee stock ownership plans (ESOP), a 457 plan, a 403(b) plan, or a 401(k). If the amount withdrawn is transferred to a new retirement account in one spouse’s name, the customary 10 percent fine for early withdrawal will not be charged.

Money that is not transferred into a new retirement fund will be taxed. It is best to put the money into retirement in preparation for the future. Starting to build funds anew after a divorce is usually difficult for most. While there are a lot of financial hurdles to surmount, divorce is also a new lease on life for many.

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