Key Takeaways:
- Divorce settlement calculators provide an estimate of what you might receive in a divorce in terms of child support, asset and debt division and spousal support.
- These calculators may or may not be accurate—they provide a rough estimate.
- Although a divorce settlement calculator’s estimate isn’t guaranteed, it may help you set expectations and negotiate your divorce.
Divorce settlement calculators are among many online tools that promise easy answers to complicated questions. Specifically, divorce settlement calculators promise to simplify part of the divorce process by providing an estimated settlement amount. If only it were that simple.
The fact is, many divorce settlement calculators are inaccurate. Still, they can be useful. In this article, we explore what information a divorce settlement calculator uses, how to use a calculator and what to do with the information a calculator provides.
What does a divorce settlement address?
A divorce settlement agreement sets out the terms of a divorce. The agreement typically addresses:
- Child custody
- Child support
- Property division
- Spousal support (also called “spousal maintenance” or “alimony”)
Like most lawsuits, most divorces settle outside court. Once the spouses agree to terms, they put them in writing and sign the agreement.
What happens after a divorce settlement agreement is signed is crucial. To transform a settlement agreement into a court order, you must submit the signed document to a judge for approval.
If you don’t agree with your spouse on any aspects of your divorce, you may ask the court to resolve the remaining issues in a hearing.
How to use a divorce settlement calculator
A divorce settlement calculator is a program that can help you calculate a divorce settlement by providing a rough estimate of your potential:
- Child support payments
- Asset and debt division
- Spousal support
Most calculators are specific to property division, child support or spousal support, rather than calculating all three.
To use these programs, you may need to input information such as:
- The state you live in
- Your income
- Your spouse’s income
- How many children you have
- The approximate value of any assets you own
The calculator takes the values you provide, runs them through an equation based on a state law and generates a rough estimate.
Pro tip:
If an online calculator asks for specific financial information, such as your bank account statements or tax returns, be wary. Double- and triple-check that the site you’re on isn’t a scam by consulting reviews and otherwise investigating its legitimacy.
How accurate are settlement calculators?
While settlement calculators can give you ballpark numbers for a divorce settlement, not all are created equal. So be skeptical of any values they provide. Several factors may modify the final settlement, including variations in state laws and what the spouses are willing to agree to.
Pro tip:
Although a divorce settlement might not strictly follow state law, those laws may affect your negotiation power. For example, Texas rarely authorizes spousal support, while California authorizes it more often. If you were negotiating for spousal support in California, one of your justifications may be that a court would order it if you went to trial. In Texas, where a court isn’t likely to order spousal support, that argument may not be effective.
Overall, only trust calculators published by official government sources to provide accurate information. If you turn to unofficial calculators in the absence of official versions, the information you receive may be useful as a base estimate, but they may be inaccurate and sometimes significantly so. Remember, divorce settlement calculators only give an idea of what is possible; they don’t guarantee anything.
How might you reach a divorce settlement?
Your road to divorce may take several paths, but mediation is an increasingly popular route. The mediator—a neutral third party familiar with your state’s divorce law—facilitates a collaborative environment where you and your spouse work together to find solutions that work for both of you.
How to calculate a divorce settlement: Divorce settlement examples
To help you better understand how different state laws affect what you might walk away with, consider the following divorce settlement examples. For these examples, Annie and Brad are a hypothetical couple, and all numerical values are approximate.
Facts about Annie and Brad’s marriage
When they met, Brad owned assets worth $500,000, while Annie had no wealth to her name. They met freshman year in college, where Annie incurred student loan debt totaling $100,000. Brad incurred no debt.
Annie and Brad married and bought a house together within months of graduating. Both spouses worked for approximately four years, during which time Annie paid off 50 percent of her loan balance. Together, they saved $20,000 per year in a shared account.
Then Brad decided to go to law school for three years. Annie continued to work, covering all of Brad’s expenses. As a result, Annie could no longer afford to make more than the minimum payments on her student loan, and the couple stopped saving money.
Shortly after Brad graduated, he got a high-paying job that required 60-plus-hour workweeks. Annie became pregnant, and the couple agreed she would become a full-time stay-at-home mom. Two years later, Annie gave birth to a second child. The couple was still able to save $20,000 per year.
Another three years passed. Brad earned a promotion to $120,000 per year. Within a few months, Annie discovered he’d been unfaithful throughout their relationship and filed for divorce.
Annie and Brad at the time of divorce
At the time of the divorce, the couple had been married for 12 years and lived in Utah. In terms of debts and assets:
- Annie and Brad jointly own a home worth $800,000 and a savings account worth $180,000
- Annie and Brad jointly owe $200,000 on the property
- Annie owes $50,000 in student debt
- Brad’s premarital assets gained value at a rate of 5 percent per year, so he owns $1,000,000 in separate property
Moving forward, Annie will keep physical custody of the kids while they share legal custody. The kids will spend every other weekend with Brad. The couple agrees she’ll get a job after their younger child begins school, approximately one year after Annie filed for divorce. They expect she’ll get her old job back and earn a salary of $54,000.
Now let’s take a look at how Annie and Brad might calculate their settlement value under Utah law. Although this process will look similar in most other states, variations in state laws might make your calculation look a bit different.
Child support
To calculate child support for Brad and Annie’s Utah divorce, we need to add together their combined monthly incomes. If we calculate this based on Annie’s expected income, then the combined monthly income is $14,500 ($120,000 + $54,000 / 12). Based on this combined income, the Utah child support statute dictates total support of $2,112 per month for two children. Each parent’s obligation is proportionate to their portion of the income. Brad’s income represents 69 percent of the parties’ total income, so his child support obligation would be 69 percent of $2,112, or $1,457.28 per month.
Keep in mind that the calculations differ in each state. Some states use methods similar to the Utah example but may spit out different numbers based on how much support that state believes children should receive. Others may base child support solely on the income of the paying spouse rather than on both parties’ incomes.
Pro tip:
Most states expect parents to also share the costs of medical and daycare expenses for their children. Some states include these numbers in the child support calculation, while others require parents to pay the expenses on top of child support. Be sure to take these expenses into account when discussing a child support settlement.
Spousal support
Although some states provide a specific formula for calculating spousal support, most identify general factors for courts to consider. Let’s see how Annie and Brad might calculate an alimony settlement.
Since alimony typically takes into account the parties’ needs based on the standard of living during the marriage, we need to know what Annie’s and Brad’s reasonable monthly expenses are. For simplicity, let’s assume they each have a reasonable monthly need of $7,000.
After paying child support, Brad will have $8,542.72 per month ($10,000 income minus $1,457.28 child support). After receiving child support, Annie will have $5,957.28 per month ($4,500 income plus $1,457.28 child support). That means Brad will have an extra $1,542.72 per month, and Annie will be short $1,042.72 per month.
Since Brad has more money than necessary to meet his own needs, he can afford to make up for Annie’s shortfall. Therefore, the spousal support settlement will likely be $1,042.72 per month (the amount of Annie’s unmet need.
Pro tip:
While we didn’t distinguish between net and gross income in our example, states may take different approaches in which number to use. Check whether your state calculates alimony using net or gross income when you crunch the numbers.
Property division
The most likely property division in Brad and Annie’s case is that they will keep their own premarital property and debts and divide any marital property and debts equally.
It’s common for the custodial parent to want to keep the house so the children don’t have to move. Since Brad and Annie have $600,000 equity in their home, Annie would have to buy out Brad’s $300,000 share if she wants to stay in the house. She could offset this with her $90,000 share of the parties’ savings and refinance the home to buy out the rest of Brad’s equity. Or the parties could sell the house and split the equity along with their savings.
The default would be for Annie to take on the remaining $50,000 of her own student loans and for Brad to keep his $1,000,000 in separate property. However, Annie might argue that she should receive a greater share of the marital assets because she supported Brad through law school, contributing to his greater earning capacity at the expense of paying down her own student loans and adding to the parties’ marital savings.
Pro tip:
Although 50/50 property division is the default in many states, most states also permit courts to make deviations to ensure an equitable division of property. If special circumstances in your case may make a different division appropriate, bring them up in divorce negotiations.
Is a divorce settlement taxable?
Tax is another consideration that may affect the accuracy of a divorce settlement estimate. Generally, gifts between spouses aren’t taxable. Amounts that trade hands between former spouses within a year of divorce typically aren’t either.
Many settlements involve retirement benefits that neither spouse will receive for years. To ensure those amounts aren’t subject to extra tax, you typically request a qualified domestic relations order (QRDO) from a court. QRDOs are court-enforceable divisions of retirement benefits.
Lastly, alimony isn’t taxable to the receiving spouse unless your divorce was finalized before 2019.
How an attorney may help
Using a divorce settlement calculator may help you understand what might happen if you get divorced, but context is key. Since most divorces are settled outside of court, a divorce settlement calculator, at best, may set expectations. But a calculator can’t factor in the nuances that exist in any real relationship or the role of negotiation. And calculators may use incorrect equations and provide inaccurate results.
To get a more tailored estimate, consider consulting a family lawyer who’s knowledgeable about your state’s laws. They can advise you on what you’d be entitled to in court and negotiate on your behalf.
Sources
https://statutes.capitol.texas.gov; https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=FAM&division=9.&title=&part=3.&chapter=2.&article=; https://le.utah.gov/xcode/Title81/Chapter6/81-6-S304.html?v=C81-6-S304_2024090120240501; https://orscsc.dhs.utah.gov/orscscapp/orscscweb/actions/Csc0002; https://casetext.com/statute/colorado-revised-statutes/title-14-domestic-matters/dissolution-of-marriage-parental-responsibilities/article-10-uniform-dissolution-of-marriage-act/section-14-10-114-spousal-maintenance-advisory-guidelines-legislative-declaration-definitions; https://www.irs.gov;
