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Hi. I need help in answersing Question 1 part a,b,c,d on pages 10-15. It is a case study based scenarion where the infomration about the case is given on pages 7-9. It is more of theoratical based answer. It does not involve any calcualtion. Thanks. unit_4_estate_planning___analysis_v2.3.pdf Unformatted Attachment Preview Unit 4 - Analysis: Estate Planning Unit 4 - Analysis: Estate Planning v2.3 2020-02-06 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP TABLE OF CONTENTS 01 Introduction 2 02 Unit 4 Assignment - ANALYSIS: ESTATE PLANNING 6 03 Resources 34 1 UNIT 4 - ANALYSIS: ESTATE PLANNING 01 CFP® PEP Introduction Assignments are culminating activities based on a realistic client scenario and will assess your knowledge and skills in applying concepts in Financial Planning, Professional Responsibility, and Human Behaviour. In order to receive full marks, it is expected that: (1) you have completed the relevant learning material; and (2) you demonstrate that you are able to APPLY what you have learned to the specifics of the Naomi Golden case study. Question weightings are provided throughout this assignment (indicated as a “\%” of the total assignment mark). This document includes the information you will need to complete the assignment: case details, assignment questions, and resources and tools. This is the document where you will enter your answers to the assignment questions, and what you will upload for submission to FP CanadaTM upon completion. 2 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Important! Ensure you complete and submit all assignments by the required due date. If an assignment is not received by the required due date, it will be marked as “Incomplete” and you will receive a grade of “0” for your late submission. Academic Misconduct: By registering in a course or program with the FP Canada Institute, you have reviewed and accepted the academic misconduct policies outlined in the student handbook. Examples of academic misconduct include the submission of an assignment or assessment as your own work when it has been produced in whole or part by or in collaboration with other individuals, or submitting the words, ideas, or data of another person as if they are one’s own. You may study as a group, but assignments and assessments must be completed independently. The FP Canada Institute employs AI technology and other sources to identify suspected academic misconduct. If a student is suspected of having participated in or contributed to academic misconduct, the results of the assignment/assessment will not be released until the misconduct review process is complete. IMPORTANT! The field below is REQUIRED. • • Please ensure your full name is entered in the field below prior to final submission. This will support accurate and timely processing of your document. NAME: 3 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Managing Your Time and Instructor Support For this assignment you should anticipate spending approximately 5 hours to complete. Should you require guidance, or need assistance with any of the assignment questions, please feel free to use the “Ask the Instructor” discussion forum. You can also take advantage of our live dial in “Office Hours” support sessions with a live Instructor. Check the FP Canada InstituteTM Learning Platform Instructors Office Hours web page for dates, times and access information. Your Task for this Assignment Unit 4 - Analysis: Estate Planning For this assignment, you will: 1. Open the Unit 4 - Analysis: Estate Planning PDF document you saved to your desktop using the Adobe Reader software. Important! Right click and select Save As to save the PDF document to your desktop. Do not enter your assignment responses when the document is open in the browser as your changes will not be saved. 2. Read the information pertinent to the case and enter your responses to the questions in this document 3. Once you have reviewed the document and are satisfied with your responses (including spelling and grammar), Upload and Submit the Unit 4 - Analysis: Estate Planning document to the Learning Platform. You may only submit your assignment once. As soon as it has been submitted, you will be granted access to the Unit 5 - Recommendations and Plan: Estate Planning. Remember! This is a continuation of Unit 3 - Section 2 Discovery: Estate Planning. • If you selected the area of Estate Planning in Unit 3, continue to assess Naomi’s current estate situation and evaluating estate planning strategies to help address her goals and needs. • If you did not previously choose Estate Planning, return to the Assignments page and select the correct assignment for Retirement Planning or Financial Management. 4 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Purpose of the Unit 4 Assignment: In this assignment, you will apply: • Frameworks and guidance introduced in Unit 4 - Financial Planning for assessing Naomi’s current estate situation and evaluating estate planning strategies to help address her goals and needs; • Strategies introduced in Unit 4 - Professional Responsibility for addressing ethical considerations that arise as you begin analyzing information collected during your discovery with Naomi; and • Strategies introduced in Unit 4 - Human Behaviour for overcoming a common challenge in the analysis phase – jumping to conclusions – by building awareness of your potential biases, heuristics, and planner tendencies, and learning the importance of thoroughly validating strategies for Naomi to ensure you have not overlooked any other appropriate or additional options. 5 UNIT 4 - ANALYSIS: ESTATE PLANNING 02 CFP® PEP Unit 4 Assignment - Analysis: Estate Planning 6 UNIT 4 - ANALYSIS: ESTATE PLANNING Part 1: CFP® PEP Assess Current Estate Position Analyze Naomi’s Estate Position Review the notes below from the discovery meeting as they relate to Naomi’s estate goals and current situation. Estate Planning – Discovery Notes Family Profile: • Age 49; Naomi was born in London, Ontario. Her mother, Sarah, is 78 years old and in excellent health. Her dad, Jacob, died 8 years ago at age 74 from lung cancer caused by smoking. • Naomi was married for 23 years to Larry Golden, a cardiac surgeon. She was not married previously or since. She and Larry moved to Houston Texas for 3 years while he completed his surgical residency. She did not work while there – the twins were born and required all her attention. She is not eligible for any foreign pension. • Naomi and Larry separated two and a half years ago and their divorce is now final. The divorce was reasonably cordial. • Daniel and Benjamin are their twin sons, age 21. Daniel is in medical school at McGill University in Montreal and is hoping to become a doctor, like his father. • Benjamin has cerebral palsy as a result of complications during birth. He has moderate to severe mental and physical disabilities. He qualifies for the Disability Tax Credit and government funding (Ontario Disability Support Program). He lives in a group home in Toronto. His basic living expenses and support workers are funded by the province. • Naomi is Benjamin’s legal guardian – she is responsible for his finances and personal care decisions. He has a normal life expectancy but will always require support. He has adapted well to the group home where he has lived for 2 years and seems happy there. • Daniel is very devoted to Benjamin. But Naomi does not want Daniel to be burdened with his brother’s care after she is gone. • Naomi was an executive at YYZ Airlines until she lost her job in a merger-related reorganization four months ago. She had worked there for 27 years, since graduating from university. She found satisfaction in her work and could probably obtain similar employment with another airline but is very disenchanted with the corporate world and would rather do something quite different. • She has spent most of her non-working time caring and advocating for Benjamin. She also loves to cook and is an expert baker. • Naomi is an only child and has strong ties with her mother. She believes Sarah is financially independent and does not expect to have to support her in the future. She is likely to receive an inheritance at some point but does not want to factor that into her plan. Sarah lives in a condo in Niagara-on-the-Lake, about 100 km away from Naomi. 7 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP • Although Larry earns more than she does, she did not request spousal support. Larry pays for Daniel’s education expenses and Naomi has been looking after “extras” for Benjamin. During their marriage, Larry looked after the investments and Naomi handled the day-to-day finances. • Naomi holds Canadian citizenship. The twins were born in Texas during Larry’s medical residency, so she supposes they are dual Canadian/US citizens. Naomi did not work during the three years the family spent in Texas. Estate Planning • Naomi loves both of her sons equally and would like to leave them equal inheritances. • Naomi wants to be remembered as dependable, kind and generous to those close to her. She devotes time and money each year to the Cancer Society in memory of her father but has not been thinking of leaving an amount to the charity when she’s gone. • She would like to leave some funds to the charitable organization that runs Benjamin’s group home, for renovations or equipment. Perhaps $100,000, if possible. • Naomi does not have a Power of Attorney for Property or for Personal Care. • Her existing will names Larry as executor and sole beneficiary and her sons as equal beneficiaries if Larry predeceased her. The will was executed when the boys were minors and Larry’s brother was named as guardian and executor if both she and Larry died. There is no mention of alternate executors. • Naomi thinks Daniel would be the most suitable person to handle things on her behalf if she was incapacitated or died, and also to take over legal guardianship of Benjamin, but she worries about the time commitment required, since Daniel is likely to be very busy with his medical career and (hopefully) a family. Also, it’s not clear where Daniel might end up. He’s at school in Quebec but could move to the US if he had opportunities there. • She also wants to make sure that Benjamin is not a burden to his brother, financially or otherwise. • Naomi is aware of the problem of Benjamin holding an inheritance in his own name, as his eligibility for ODSP would be jeopardized. From parents of other disabled individuals, she has heard of special trusts that could resolve this problem while still allowing Benjamin to receive the “extras” that she now provides. She does not have any concerns about Daniel receiving his inheritance as he is very responsible. • Naomi is apprehensive about the possibility of a new relationship with Gordon and the financial complexity that it may bring. • Naomi has looked into the process of removing Larry from her employer pension as survivor annuitant, which is a simple matter of providing her divorce papers to her pension administrator. By removing Larry from her pension, Naomi’s annual pension entitlement would remain unchanged at $58,800. The commuted value also remains unchanged. • Naomi believes that Larry or Larry’s lawyer holds her will so a copy is not readily available to her. She’d prefer not to chase after this document. 8 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Naomi’s Updated Jobs, Pains, and Gains – Estate Based on all you learned about Naomi during the discovery process, you have updated her Jobs, Pains and Gains as it relates to her estate position as follows: JOBS • Update estate documents to address Naomi’s estate wishes. She loves both of her sons equally and would like to leave them equal inheritances. She would also like to leave some funds to the charitable organization that runs Benjamin’s group home, for renovations or equipment, in the range of $100,000. • Update estate documents to ensure that Daniel is not burdened with looking after Benjamin, financially or otherwise. • Ensure Benjamin is looked after for the remainder of his life, even absent government benefits. PAINS • Concern for her sons, especially Benjamin, in the event of her death. • Embarrassed at her lack of financial knowledge, particularly around investing. • Apprehension around a new relationship with Gordon, and its financial implications. GAINS • Confidence that she’ll be okay in the next phase of her life – in particular, if she goes ahead with the bakery purchase. • Peace of mind in knowing that her estate plan is in order and that her children will be taken care of after her death. Based on the summary notes above from your discovery meeting with Naomi, analyze Naomi’s current estate position by responding to the following four questions. 9 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Question 1a): Assess Naomi’s Will and POAs for Property and Personal Care (10\%) Using the Model for Assessing Client’s Current Position and the learning in Unit 4 - Financial Planning, assess Naomi’s choice of executors and attorneys and identify the main issues and opportunities, if any. • Issues are factors that may negatively impact Naomi’s ability to meet her goals. • Opportunities are ways that Naomi may more efficiently meet her goals (e.g., tax efficiencies she may be able to take advantage of). Use the templates below to organize and enter your responses. Include as many points in your answer that you consider relevant. Assess Naomi’s Will and POAs for Property and for Personal Care Assess whether there have been material changes in the client’s life since their will was put in place (marriage, separation, divorce, deaths or births, moves to a new province or country, etc.) Assess the implications of the client dying intestate (i.e., if they have not executed a valid will). Assess if the will has appropriately designated primary and secondary guardians for the care of the minor and/or disabled children. Assess if the current beneficiary designations and will distribute assets according to the client’s wishes. Assess if the current beneficiary designations and will distribute assets in a manner to minimize probate. Assess if the current beneficiary designations and will distribute assets in a tax-efficient manner. Assess if there are any unfunded responsibilities or bequest upon death (i.e., support payments to children, former spouses, other relatives). 10 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP ISSUES OPPORTUNITIES 11 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Question 1b): Assess Naomi’s Choice of Executors and Attorneys (10\%) Using the Model for Assessing Client’s Current Position and the learning in Unit 4 - Financial Planning, assess Naomi’s choice of executors and attorneys and identify the main issues and opportunities, if any. • Issues are factors that may negatively impact Naomi’s ability to meet her goals. • Opportunities are ways that Naomi may more efficiently meet her goals (e.g., tax efficiencies she may be able to take advantage of). Use the template below to organize and enter your responses. Include as many points in your answer that you consider relevant. Assess Naomi’s Choice of Executors and Attorneys Assess the appropriateness of executor and attorney appointments to determine if they are still the individuals who the client prefers and their ability to act (i.e., based on interest, age and health, expertise and location – proximity to the client and their assets). Assess the client’s confidence in the ability of attorneys/executors to work together effectively. Assess if the client has confidence in the trustworthiness, time, interest and expertise of their attorneys/executors. ISSUES OPPORTUNITIES 12 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Question 1c): Assess Naomi’s Plans for the Transfer of Assets (10\%) Using the Model for Assessing Client’s Current Position and the learning in Unit 4 - Financial Planning, assess Naomi’s plans for the transfer of her assets and identify the main issues and opportunities, if any. • Issues are factors that may negatively impact Naomi’s ability to meet her goals. • Opportunities are ways that Naomi may more efficiently meet her goals (e.g., tax efficiencies she may be able to take advantage of). Use the template below to organize and enter your responses. Include as many points in your answer that you consider relevant. Assess Naomi’s Plans for the Transfer of Assets Assess if there are family dynamics that might impact the orderly distribution of the client’s estate. Assess the readiness of beneficiaries to manage their inheritances (i.e., young adults, minors, spendthrifts). Determine the client’s wishes for the distribution of assets and the underlying premise for these wishes (i.e., specific assets to stated beneficiaries, equal distribution, tax-efficient distribution). Assess whether named beneficiary designations are used in situations where appropriate to meet the client’s wishes. Assess if the manner in which the client has taken legal ownership of assets is consistent with their asset distribution wishes. Assess if there is an opportunity to name a life interest and capital interest for specific assets, such as upon a second marriage where the client may wish to provide a life interest for their spouse and capital interest to their children from the first marriage. 13 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Estimate tax and probate fees upon death and determine if the estate will have sufficient liquidity to meet tax and probate fees upon death. Assess the opportunity for the use of insurance, such as to ensure flexibility to provide distributions according to the client’s wishes, liquidity, payment of taxes, providing for specific bequests and the privacy of bequests. Assess if the client has plans for charitable giving upon death and the fit of this strategy with the client’s goals. ISSUES OPPORTUNITIES 14 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Question 1d): Assess Naomi’s Use of Trusts in her Estate Plan (10\%) Using the Model for Assessing Client’s Current Position and the learning in U4 - Financial Planning, assess Naomi’s use of trusts in her estate plan and identify the main issues and opportunities, if any. • Issues are factors that may negatively impact Naomi’s ability to meet her goals. • Opportunities are ways that Naomi may more efficiently meet her goals (e.g., tax efficiencies she may be able to take advantage of). Use the template below to organize and enter your responses. Include as many points in your answer that you consider relevant. Assess Naomi’s Use of Trusts in Her Estate Plan Assess the opportunity for an inter vivos or testamentary trust to provide for her family prior to and subsequent to death. Assess the opportunity for an absolute discretionary trust (i.e., Henson trust) for the benefit of a disabled beneficiary. Assess the opportunity to set up a qualified disability trust for a disabled beneficiary. ISSUES OPPORTUNITIES 15 UNIT 4 - ANALYSIS: ESTATE PLANNING CFP® PEP Part 2: Considering Ethical Issues Question 2: “External Advice for Naomi” (Part a - 7.5\%, Part b - 7.5\%) Imagine this scenario: Before conducting your thorough analysis of Naomi’s current situation and future goals, you recognize that some of the strategies you are considering for Naomi’s estate plan will require additional expertise that 1) your firm does not provide, and 2) is also beyond the limits of your expertise. However, to expedite your analysis, ensuring you can get to the right strategies quickly, you decide to contact the law firm with whom you have dealt with regularly for similar clients. You were going to refer Naomi to this firm anyway given the firm’s preferred status with your organization. With their support, you can firm up and lock in your proposed strategies for Naomi. a) Based on ... Purchase answer to see full attachment