New Year brings with it splendid new opportunitiesJanuary 4, 2016 10:46
The real cost of divorce
Financial comparison website Souqalmal.com talks about the financial costs of a marital breakdown.
December 23, 2013 4:24 by kippreport
When you separate from your spouse, it is not only your heart that gets broken – your finances also suffer.
According to the Dubai Statistics Centre, separation is on the rise. The number of UAE nationals getting divorced increased by 13 per cent between 2010 and 2011. For expatriate couples, the jump was much higher, with a 31 per cent increase in divorces last year.
But what are the costs involved for those caught up in a marital breakdown?
Your nationality is key
For those going through this emotionally traumatic experience, the priority must be to divorce in as amicable and cost-free manner as possible. The most important factor is the legal jurisdiction the couple wants to turn to. For expats it generally makes sense to turn to the laws of their home countries, particularly for those who want a quick and simple separation.
Expats from the UK, for example, with no joint assets or custody issues over children, can expect to spend a few thousand dirhams. This was the case for Peter, 41, a father of a teenage son, who has lived in the UAE for three years.
He initiated the divorce process in the UK, but because he is a resident in the UAE, he had to hire a lawyer in Dubai to oversee the paperwork and witness his final signature.
“That cost me AED1,000. The bigger costs came in the UK,” he says. “I had to pay for a flight home and then the cost of processing the divorce was £400 (AED2,398). Add to that phone calls and sending documents by recorded mail, and the whole episode cost me approximately AED8,000. Because there was no contest from either party and no need to divvy up any assets, it was all pretty straightforward.”
Protecting your assets
For those with property in the UAE or a small business, the process becomes a little more complicated with more legal costs to separate the assets.
For example, under UAE law a business owned by the couple would be kept by the spouse who officially owns it (ie who has the paperwork in their name). The other partner would then have to prove that he or she had a stake in it.
To do this, the spouse will either need evidence that he/she is a business partner or have a stake in the equity – a process that could lead to higher legal fees.
Protecting your offspring
Then there is the custody of any children and maintenance to consider. While expats from some nations can potentially receive income from a former spouse for the rest of his or her life, in the UAE those rights are less clear. Instead, they may claim only maintenance for the couple’s offspring and support themselves for just three months after the divorce is final.
Under UAE law, a woman can also claim compensation in two other circumstances – if her husband has not supported her for the last year of the marriage and for moral damage from the divorce itself. However, those payments can only be up to 40 per cent of a man’s income for one year.
If an expat man is divorcing a wealthier wife, he may struggle to claim maintenance here in the UAE, because it is not considered traditional for that situation to happen.
Better deal at home?
Some expats looking for a better deal might return home. Kalindra, 34, moved back to the UK with her two sons six months ago, following a separation to ensure she received full maintenance for both her and the children, while she retrains for a second career.
The couple agreed that she would take full custody of the children, but to ensure a smooth process, they had to draw up official documents to recognise their separation agreement.
“Just the legal advice, legal separation of assets and custody of the children cost more than AED10,000. Due to my husband not sending me his paperwork I haven’t even started the divorce. Once that is done, there will be the costs and laborious task of changing my name in everything. However, the most expensive cost is the running of two households.”
Once Kalindra’s divorce is finalised, the costs will continue for her former spouse. Her husband will support her and the children fully, while she takes two years out to retrain for a new career. After that he will only support the children.
Peter also has expenses. He sends home a monthly allowance of AED4,000 to support his son. “He is at university now, so technically I don’t have to pay for him anymore, but morally I feel I should.”
Think ahead and get a pre-nuptial agreement in place
For those who are happily married, experts advise planning ahead for all eventualities. A pre-nuptial (pre-nup) agreement is the best way to protect your assets in the event of divorce and should simply be considered as another insurance policy.
Here, a properly drawn up pre-nuptial agreement is viewed as a contract that supplements the marriage certificate. This means it will be recognised in a UAE court. This is crucial for a spouse who wants to stay in the UAE and ensure they are entitled to the full benefits they might receive at home.
Considerations for a pre-nup include nationality, legal jurisdiction and the countries in which they hold any assets. Pre-nups are drafted to suit a couple’s individual needs – a process that could take between two to six hours, at a cost ranging from AED6,000 to AED10,000. While it might seem as expensive as a divorce, it could save you in the long run – particularly for higher-income families – as it ensures both spouses are fully protected.