What to Do Financially When You Divorce

The deadlines and numbers that bind

• A decree does not break a contract with a lender. The CFPB is explicit: a divorce decree "may allocate debts to a specific spouse, but it doesn't change the fact that a creditor can still collect from anyone whose name appears as a borrower" (CFPB). On a joint account each holder is liable for the whole balance. Refinancing or closing is the only real release.
• Employer plans need a QDRO. IRAs must not use one. A qualified domestic relations order divides an ERISA-covered plan and names an alternate payee (DOL QDRO guide). An IRA is divided instead by a transfer incident to divorce under IRC § 408(d)(6), which is not a taxable distribution.
• There is a one-shot penalty exception, and it is easy to lose. A distribution made directly to an alternate payee under a QDRO escapes the 10 percent early-withdrawal penalty (IRC § 72(t)(2)(C)). Roll those funds into your own IRA first and the exception is gone for good. If you need cash from the split, take it at that moment or not at all.
• Filing status is decided on 31 December. Your marital status for the whole tax year is your status on the last day of it (IRS Publication 504). A decree entered on 28 December and one entered on 2 January produce different returns.
• Alimony from a post-2018 divorce is not deductible and not income. The payer cannot deduct it and the recipient does not report it. Pre-2019 agreements keep the old treatment unless a later modification expressly adopts the new rule (IRS Topic 452). Child support is never deductible or taxable, and a partial payment is applied to child support first.
• COBRA gives a divorced spouse 36 months — but only if someone tells the plan. Divorce is a qualifying event, and the covered employee or beneficiary must notify the plan within 60 days. The plan then has 14 days to send an election notice, and you get at least 60 days to elect, at up to 102 percent of the plan's cost (DOL). Missing that first 60-day notice is the most common way people lose coverage they were entitled to.
• Marketplace coverage needs the loss, not just the divorce. HealthCare.gov is blunt about it: "Divorce or legal separation without losing coverage doesn't qualify you for a Special Enrollment Period" (HealthCare.gov).
• A ten-year marriage keeps a Social Security claim on your ex's record. You must have been married at least 10 years before the divorce became final, be unmarried and at least 62. If your ex has not filed yet, you can still claim once you have been divorced two years (20 CFR 404.331). Claiming does not reduce anything your ex receives.
• The Child Tax Credit is $2,200 for 2026. Up to $1,700 of it is refundable (Rev. Proc. 2025-32). The custodial parent claims it by default and can release it with Form 8332 — frequently traded in settlements, and revocable later.

What divorce actually costs

This is where published figures are worst. The cost ranges that circulate — "$15,000 to $30,000 each," "$50,000 to $100,000 for a contested case" — trace to no survey. The best data that exists is a reader survey by Martindale-Nolo, and it is a self-selected sample rather than a population estimate, so treat it as indicative and nothing more. Its findings are also far lower than the numbers usually quoted.

The practical implication is not that divorce is cheap. It is that the cost is driven almost entirely by conflict duration, because nearly all of it is billed hourly. Every issue you settle outside the process removes billable hours from it.

What to do, and when

The three decisions that carry the money

1. The house

Keeping the house is the most common expensive mistake, because it is usually decided emotionally and then defended financially. The test is affordability on one income, not sentiment: run the full carrying cost — mortgage, taxes, insurance, maintenance — against your actual post-divorce income, and check that you can refinance into your own name, since a buyout that leaves your ex on the loan leaves them liable and them able to block you. Selling splits a liquid asset cleanly, and the capital gains exclusion is $250,000 for a single filer or $500,000 on a joint return, subject to the ownership and use tests (IRS Topic 701). Divorce-specific variations on those tests exist; check Publication 523 against your own timeline before relying on them. Our keep the house or sell it comparison runs the arithmetic.

2. The retirement split

Two accounts of the same size are rarely worth the same. A traditional 401(k) balance is pre-tax and will be reduced by income tax on withdrawal; a Roth balance of the same nominal size is worth materially more. Splitting "equally" on face value hands one spouse a quietly smaller settlement. Get the mechanism right as well: employer plans by QDRO, IRAs by transfer incident to divorce. Our guides on splitting a 401(k) without penalties and protecting retirement in divorce go through both.

3. Support, and what it is really worth

There is no national alimony formula; states vary between statutory guidelines and broad judicial discretion, and duration is usually tied to the length of the marriage. Because post-2018 alimony is neither deductible nor taxable, the negotiation is now purely about the gross number rather than about splitting a tax benefit — which changed the maths of settlements reached before 2019 and still catches people comparing notes with friends who divorced earlier. Model scenarios with the alimony estimator before you anchor on a figure.

Credit, coverage and the things people get wrong

Divorce is not reported to the credit bureaus at all. Experian states it directly: your credit report "doesn't state whether you are married, single or divorced, so changing your marital status has no impact on your credit" (Experian). Any damage is downstream and mechanical: a joint account one spouse stops paying, utilisation rising as the same spending lands on one income, or a closed account shortening available credit. Those mechanisms are worth protecting against. Point figures for "the average credit score drop in divorce" are not — we could not find a primary source for any of the numbers in circulation, and we no longer publish one.

Tax rules that change the day the decree lands

Head of household is worth more than single, and the qualifying rules turn on who the child lived with for more than half the year, not on who claims the credit. Property transferred between spouses incident to divorce is generally not a taxable event under IRC § 1041 — but it carries its basis with it, so an asset transferred at "equal value" can hold an unequal tax bill. If a joint return you signed produced a liability you did not know about, innocent spouse relief is generally requested within two years of the first IRS collection notice; if your refund was taken for your spouse's separate debt, Form 8379 is the different remedy people usually mean. Our guide to filing taxes after divorce covers the sequence.

The six expensive mistakes

1. Trusting the decree to release you from a joint debt. It binds your ex to you, not the lender to either of you. Refinance or close.
2. Rolling the QDRO money over and then needing cash. The penalty exception lives on the distribution made directly to you under the order, and nowhere after.
3. Missing the 60-day COBRA notice. Thirty-six months of coverage can be forfeited by nobody telling the plan the divorce happened.
4. Splitting retirement accounts at face value. Pre-tax and Roth dollars of the same size are not the same settlement.
5. Keeping a house you cannot refinance. If the loan stays in both names, neither of you is actually free of it.
6. Leaving the beneficiary designations alone. On a retirement plan the designation generally controls, whatever the will says afterwards.

Divorce tools

Common questions

How much does divorce cost?

The best available survey reports average full-scope attorney fees of $11,300 and a median of $7,000, with 42 percent paying $5,000 or less, and private mediation at $3,000 to $10,000 in total. It is a self-selected reader survey rather than a population estimate. The higher "each spouse" ranges commonly quoted online have no survey behind them. See how much does divorce cost.

Is the house or the retirement account the better thing to keep?

Usually whichever you can actually carry. A house has running costs and is illiquid; a retirement account has neither but cannot be touched without tax or penalty before 59½ other than through the QDRO route described above. Compare them after tax, not at face value.

Do I lose my claim on my ex's Social Security?

Not if the marriage lasted at least 10 years, you are unmarried and at least 62. If your ex has not claimed yet, a two-year wait after the divorce lets you claim anyway, and it takes nothing from them.

What is a gray divorce and is it different financially?

Divorce after 50, and yes, materially. The divorce rate for over-50s doubled between 1990 and 2010 (Brown and Lin, 2012). The GAO's work on households divorcing or separating after 50 found women's income fell 41 percent and men's 23 percent, with assets down roughly 40 percent for both (GAO-12-699). Those figures are specific to the over-50 group and are often quoted as though they applied to all divorces; they do not. See gray divorce after 50.

Go deeper

• The complete financial guide to divorce
• The divorce financial checklist
• How retirement accounts are divided
• COBRA or marketplace coverage after divorce
• Protecting retirement in divorce
• The monthly spending analyzer, what one household of spending looks like once it has to cover two.

Sources

• Centers for Disease Control and Prevention, National Vital Statistics System: marriage and divorce — 672,502 divorces and annulments in 2023 across 45 reporting states and DC.
• U.S. Government Accountability Office, Retirement Security: Women Still Face Challenges, GAO-12-699.
• Brown and Lin, The Gray Divorce Revolution, Journals of Gerontology Series B, 2012.
• National Center for Family and Marriage Research, Median age at first divorce.
• Martindale-Nolo, How much does divorce cost — self-selected reader survey.
• U.S. Department of Labor, QDROs: the division of retirement benefits through qualified domestic relations orders.
• U.S. Department of Labor, An Employee's Guide to Health Benefits Under COBRA.
• Internal Revenue Service, Publication 504, Divorced or Separated Individuals.
• Internal Revenue Service, Topic 452, Alimony and separate maintenance.
• Internal Revenue Service, Topic 701, Sale of your home, and Publication 523.
• Internal Revenue Service, Retirement topics: QDRO.
• Internal Revenue Service, Publication 590-A — transfers incident to divorce.
• Internal Revenue Service, Rev. Proc. 2025-32 — 2026 Child Tax Credit.
• Social Security Administration, 20 CFR 404.331 — divorced spouse benefits.
• Consumer Financial Protection Bureau, Joint account liability.
• HealthCare.gov, Special enrollment periods.