February 22, 2017

WTOP Interview - Post Divorce: Don't Leave These Loose Financial Ends Undone

There are many issues to finalize after your divorce. Ignoring them could have significant financial consequences.
Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

Transcript of Interview:

Kyle Cooper: When a marriage ends, adding to the stress of the break up are difficult decisions about money and things that you have acquired together. Joining us now to talk through some of the issues is Dawn Doebler; cofounder of ''her wealth'' and senior wealth advisor at Bridgewater wealth in Bethesda'.

Dawn Doebler: What we've seen coming with a lot of divorced women is both during the process and afterwards, they can make the mistake of not following through on many items that can have a significant financial consequence, life insurance is one of them. When you’re receiving alimony or child support through a divorce agreement, you want to make sure that that payment or payments are secured with life insurance. And that’s life insurance on the person who’s making the payments. So, for example, in the case of a husband who’s paying a wife both alimony and support, you want to make sure that you have a life insurance policy on his life. Even after divorce, you want to make sure that that policy stays in force and that the beneficiary remains who it should be whether that is you or your children. It’s very important, because if something happens to that person, then you lose the source of both of those income streams.

Kyle Cooper: Let's talk a little bit about QDRO; will you explain to our listeners what QDRO is?

Dawn Doebler: It’s a term that a lot of people aren’t aware of. A QDRO stands for Qualified Domestic Relations Order and it’s used to divide retirement assets, things such as pensions or work 401(k)s and that’s because those assets are tax-advantaged and they're held in the name of just one person. But if those have been split and transferred to the other spouse, they need to be able to handle that in a manner that doesn’t create tax. So, there’s a document named QDRO and its prepared typically by an attorney. When you are finalizing your divorce agreement, you want to make clear who is paying for the preparation of the QDRO and also who’s paying for the execution of it.

Kyle Cooper: Dawn, let's talk a little bit about college expenses and 529 plans. How are those typically handled when there’s a divorce?

Dawn Doebler: One of the things that we see happens here and I typically recommend in the case of divorce of course depending on the situation is that, you consider splitting the 529 plans. A 529 has one individual beneficiary and one person (an adult) who acts as the custodian of the account. So, what can happen and we’ve seen happen is that the 529 plans may be stay with the father of the children. And then over time for whatever reason, perhaps both parents become responsible for paying for college, but only one of the parents has the funds available to pay for college.

Kyle Cooper: It seems in a divorce there's just hundreds and hundreds of things to think about and figure out. I understand that you have put together a checklist to help people figure this out; can you talk a little bit about that with us?

Dawn Doebler: I want to mention here, actually I am divorced, so I've been through this process and I’ve also been through this process hundreds of times with clients. And what we see is, it’s often challenging to get just to the agreements and it can be a very long process, but equally challenging is post-divorce. You can have an agreement and then there’s a lot of work to execute in that agreement. So, we put together what’s called a ''Post-Divorce Checklist'' it’s on the Bridgewater wealth Her Wealth website, so that it can be downloaded. And it’s a lengthy checklist, some things may need the assistance of the CPA or an attorney or an investment advisor, but there are also a lot of things that women can do on their own.

Kyle Cooper: That's Dawn Doebler, cofounder of Her Wealth and Senior Wealth Advisor at Bridgewater Wealth in Bethesda, MD talking to us tonight on Skype.


Shawn: Now you hear all kinds of deals about leasing cars, how can you negotiate a better deal if you want to lease?

Nina: Okay, well many people don't realize that they can actually negotiate the sticker price on a leased car in the same way that you would do that if you're buying a car. And since when you lease -- when you're, you know, your lease payments basically cover the depreciation, the difference between the sales price and the residual value. So it's definitely in your best interest to try to reduce that sales price as much as possible because then you'll pay you know, smaller dollars over the life of the lease. Make sure you pay attention to the down payment at the lease signing. And so here's an example, you might see an ad that says you know, lease payment is only 1.99 a month and that sounds like a great deal for thirty six months. The catch is, is that it might require a $3,600 down payment. So, if you amortize the down payment, then actually that 1.99 special, becomes 2.99. So, you really have to kind of look at total costs. 

And then lastly, dealerships use the term, money or lease factor, when they're calculating your financing costs and a lease factor is not the same as an interest rate. So, you have to make sure the dealer converts that lease factor into a comparable interest rate so you know what your financing charges are. 

Shawn: At the end of the day, does one method wind up being more expensive more often than the other, or can we tell that?

Nina: You know what, it really depends on how long, if you're going to hold the car for a long time, you're better off buying. But if you know, and if you're not, if you just really enjoy driving and you want to have a new car, then go ahead and lease. I mean, there's pros and cons to both, to be honest with you, it's not one size fits all.

Shawn: Alright Nina, great. Happy Thanksgiving to you. Alright, Nina Mitchell is with The Colony Group, for more go to wtop.com and search Her Wealth.

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Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

Dawn’s experience spans more that 25 years providing wealth management, financial planning and corporate finance solutions for clients. As an MBA, CPA, Certified Financial Planner (CFP®), and a Certified Divorce Financial Analyst (CDFA®), she is uniquely qualified to understand the challenges and financial needs of clients from executives to entrepreneurs, as well as single breadwinner parents. Dawn is a weekly contributor to WTOP radio.