Divorce can be an important behavioral strategy to improve fitness. This is particularly relevant for species that are territorial year-round with continuous partnerships, where individuals face constraints on partner choice due to limited vacancies and dispersal opportunities. We tested several hypotheses for divorce in such a species, the cooperatively breeding bird Malurus coronatus. Based on 9 years of detailed information on dispersal and survival of 317 breeding pairs, we tested whether divorce is driven by inbreeding avoidance, by a better partner or territory, or by social variables (number of subordinates and fidelity of partners). We found that divorce is important to escape incest: incestuous pairs were substantially more likely to divorce (64%) than non-incestuous pairs (14%). However, incestuous pair bonds lasted up to a year, highlighting constraints on breeder dispersal. Non-incestuous pairs also divorced, but here the only predictor for divorce was the presence of extrapair offspring in a previous brood. Although reproductive failure did not trigger divorce, and reproductive success did not improve in the year following divorce, females that dispersed after divorce obtained higher quality territories, unlike females that dispersed after their partner died. Thus, divorce may be a strategy to improve long-term benefits associated with better territories. Some divorces appeared to be forced evictions by older females, although direct evidence for this is limited. Taken together, our findings demonstrate the complexity of factors that affect the occurrence of divorce when partner choice is constrained.