Cars and divorce
Julie Kern, CPA, CFP®, CDFA®
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In this issue:
- Cars and divorce
- Settlement Assurance Review
- AFI service
Cars and divorce
In all the articles I’ve written, I’ve never drilled down on the financial issues of cars in divorce. Here, I will. They’re a part of virtually every marriage, and thus must get divided, as community property, when the marriage dissolves.
Helping to tease out the value and downstream financial nuances to your clients is part of my job as a CPA, a CERTIFIED FINANCIAL PLANNER® professional, and a Certified Divorce Financial Analyst® professional.
But first, a crazy story. This one is personal.
It’s not really about a car. But it underscores a big issue amid cars and divorce—and that’s the spite that one spouse often harbors for another… and then uses that beloved vehicle as leverage.
My parents divorced when I was 17, and already out of the house. Later, when I read some of the court transcripts of their case, I came across lots of testimony about—wait for it—a lawn mower. And I kid you not: There was a custody arrangement for the lawn mower, post-divorce.
My mother got custody of the lawn mower. My father had “visitation rights,” whereby he could basically borrow the thing and cut his grass. My mother knew that my father wanted that lawn mower, which is where all this craziness came from. (And don’t even ask me about the barbeque grill, LOL!) Bottom line: They both spent way more, on their attorneys, to create this custody arrangement, than they would have to simply split the value and each buy a new lawn mower.
Which gets back to cars and divorce. First things first: You need to get a value for them. If you have the VIN, the mileage, and the condition, that’s pretty straightforward: You can just look it up on Kelley Blue Book.
But it’s often not so simple. Exotic cars are harder to value. Then there are often lots of associated “toys”: four-by-fours, boats, personal watercraft, trailers, etc. And a vehicle, of any kind, isn’t the easiest asset to equalize unless there’s cash or a vehicle of equal value to offset it, so it often plays against things like a retirement account or equity in the home. Then it quickly gets tricky due to taxes, liquidity, and appreciation vs. depreciation of the asset.
Quick tip in case you were unaware: the Arizona Department of Transportation (ADOT) has a form which I often share with my divorcing clients. It’s a beneficiary form for the title—like a will for a car. This allows for it to transfer, outside of probate, which can be a nice perk if an expensive vehicle becomes part of the settlement.
The ADOT form also gives the owner of the vehicle the flexibility of not titling the vehicle in the name of a trust. A trust can convey “deep pockets,” and, in the event of a car accident, many wealthy clients don’t want to hand over a registration showing the vehicle as registered to a trust to someone who might then think they are a good target for a lawsuit.
Cars are more than assets. There’s often an emotional attachment to them, which makes them sticking points in divorce. I’ll let you handle the legal side of the settlement. But for your clients needing financial advice for cars, divorce, and their life after divorce, chat with me, and let’s put you both in the best position going forward.
Settlement Assurance Review
For every time you’ve been faced with a complex case—such as one with a lump-sum spousal-maintenance payout, or a complicated asset mix with hidden tax implications—and told your client, “You should talk to your tax or financial advisor,” I have a new service for them… and you.
It’s simple. When you and your client are considering a settlement, I can review it from a financial-expert perspective, for a nominal fee, and “bless it” (or not) before you go to court or mediation. The Settlement Assurance Review scrutinizes your client’s divorce settlement terms before finalization, providing:
- Equitability analysis: A detailed evaluation to ensure the proposed settlement terms are fair and well-balanced.
- Tax impact assessment: Identification and explanation of any potential negative tax implications.
- Risk mitigation review: Detection of any hidden financial risks or liabilities that could impact your client’s financial well-being, post-divorce.
During these reviews, I often discover hidden negative tax implications and other undesirable outcomes and risks that would be detrimental to your client. This can significantly reduce your liability exposure, while giving your client added confidence, and making you look even better in the process!
By partnering with us, you can confidently assure your clients that their financial interests are fully protected and their settlements optimized for both fairness and financial clarity.
Contact me and I can help you easily get your clients started with this.
AFI service
Seeing how often improperly-completed AFIs can frustrate attorneys like you, I’ve created an all-new service: I’ll help your divorcing-women clients complete their AFI, within one week of getting the supporting documents (bank and credit-card statements, etc.). And I’ll do it for them for a flat fee of just $495.
So they—and you—will have a good, solid AFI that opposing counsel can’t poke holes in, for a flat fee, in fast time.
Contact me today to get started!
