Getting Divorced for the Money

I noticed an article on the BBC this morning called Tax credit ‘led to more divorces’ and it got me thinking about what I’m seeing now in my practice. I’m seeing more people cooperating (after all, because of the nature of my practice, the cooperative couples are the ones I see) to divorce to save money.

The BBC article is about one researcher’s conclusion that the UK Working Families Tax Credit caused the divorce rate among one group of British citizens to more than double between 1999 and 2003. Perhaps a splendid example of the law of unintended consequences, the credit plan allowed lower income working women, married to an unemployed or little-employed husband and with young children, to qualify for an extra $200-300 per month in child care expenses by divorcing.

The researcher, Professor Marco Francesconi, from Essex University, is quoted in the article: “It could be around £30, £40 per week extra which the claimant will receive, so at the margin, when you are talking about poor households, you’re talking about significant amounts of money.” The tax plan he describes has now changed to lessen the incentive, so if he’s right, we may see a restoration to “normal” of that divorce rate that more than doubled.

I resonate with Francesconi’s findings, because they match what I’m seeing on an anecdotal basis. At least during the entire tenure of my practice (since 1995), there have always been economic incentives for some couples to divorce, just as there have been economic incentives for some couples to marry. What has changed is our willingness to adapt our behavior to them. There was a time not too long ago when, at least among solid middle class and upper middle class couples, divorce usually carried a sense of shame that deterred people from using it simply for a crass economic benefit. That’s probably still the case today, but less so.

During 2009 I’ve dealt with four couples who have decided to divorce for reasons they told me were strictly financial. One couple decided they could save on taxes by divorcing, one that that they could lessen the impact of an IRS tax lien, and two others concluded the wife could qualify for subsidized housing as a single woman. Now I know my clients well enough to know they don’t always tell me the full story, so there’s a possibility that there are other factors at play in one or more of those decisions. But in my world, four couples in two months telling me they’re divorcing for the money is a trend, and I’m willing to call it such.

And these couples are not alone in their willingness to look at money differently. Within my peer group it has become cool, in a way this 55-year-old cannot remember, to talk about the financial stress one feels. Not just women, but economically successful, marketing-oriented men too are willing to tell their friends that they are worried, and no, things are not really going all that great right now. And, again for the first time in my memory, I’m hearing people talk about how difficult things are and then saying things like “and I’m not at all sure it’s ever going to get any better; that’s the scary part.”

With this new willingness to disclose our financial challenges, is it possible that we have fewer allegiances to principles like marriage is forever? Or like you don’t get divorced just to save a few pennies? My limited anecdotal experience would say yes.

And if your little antennae are up the way mine are, you’re asking what this means outside Lee’s narrow little world of cooperative divorcing couples. For example, is our financial stress causing us to take less seriously our duty to care for the environment? To honor our father and mother? To tell the truth to our banker or to the IRS? To give money to our church or synagogue? I do not and cannot know the answers to these questions. I can and do know that the questions are worth asking and that the answers matter.