Are there any investments that the Lees could consider which would minimize probate and taxes?
The Lee Case Study Megan and Kevin LeeThe Newlyweds Megan and Kevin were married just a few months Show more The Lee Case Study Megan and Kevin LeeThe Newlyweds Megan and Kevin were married just a few months ago and they are happily adjusting to their new lives together. Megan who grew up in Halifax N.S. and Kevin who grew up in Truro N.S. met at Provincial University and dated for most of their university careers. Both had enrolled in a large Computer course and they happened to sit next to each other the first day of class. By the end of the week they each decided the only way to survive the class was to organize a study groupand by the end of the semester they were an item. While neither of them decided to become a computer major Megan did receive her Bachelors degree in psychology and started graduate school two years ago. Kevin received his Masters degree in Business Administration last summer and began his first job with a large consulting firm soon thereafter. He received a $5000 signing bonus that he used to buy stock in BCE. The first few months of marriage have been accompanied by many changes in both Megan and Kevins lives. These include the normal challenges of merging two individual lives into one (e.g. selecting an apartment taking a spouses needs and wants into account when deciding on employment etc.). But as with many couples financial management issues have been particularly challenging. While dating they were each somewhat aware of the others spending patterns and university funding but financial practices were considered individual choices and not really discussed. Now as a married couple they want to merge their finances so both past and future financial management practices are topics of debate. The good news is that Megan and Kevin communicate well with each other. They have always been able to express their opinions even conflicting opinions without letting the conflicts become personal in nature. In addition a financial planning seminar given by an experienced Certified Financial Planner (CFP) was one of the perks offered by Kevins employer for all new employees and their spouses. This combination of instruction and personal communication skills has provided Megan and Kevin with the tools to start tackling their financial planning issues. The bad new is that there are some difficult issues to tackle. They have significant debt some student loans as well as credit card balances. While Kevins father supported him financially for at least half of his university costs Megan provided for most of her own education expenses. In addition after years of schooling Megan and Kevin are experiencing pent up demandthe urge to buy new clothes furniture cars etc.now that Kevin finally has a real job with a good income. Then there are decisions to make about employer benefit plans insurance savings etc. And finally Kevin is concerned about his fathers (Lyle Lees) financial future. His mother died when Kevin was in high school and his father (now age 55) has worked hard to see that all three children were able to finish university. However Kevin is concerned that his father has not been able to provide for his own retirement. Motivated by the financial planning seminar they attended Megan and Kevin have worked the past couple months to gather as much financial information as they could. Since they had little idea about how much they were spending on things like eating out entertainment etc. they have been keeping track of all their expenditures for the last two months. They have now filled out the following forms they received at the seminar as completely as possible. Read the information Megan and Kevin have provided so that you can get acquainted with them. As you first read the case you probably will not understand all the vocabulary or why certain information is even included. Feel free to read ahead in your text or ask about terms that are not clear to you. By the time you reach the end of this course Megan and Kevin as well as their financial lives will be old friends and you will feel very comfortable with what all of this means! PERSONAL FINANCIAL INFORMATION Client Information Spouse Information Name: Kevin Lyle Lee Name: Megan Lynne Lee Birth Date: October 7 1985 Birth Date: July 28 1986 Soc. Ins. No.: 123-238-887 Soc. Ins. No.: 123-543-990 Business Phone: 902/555-5379 Business Phone: 902/555-5697 Residence Address: 1626 Any Street. #425 Halifax N.S. B3B 3B3 Home Phone: 902/555-9836 Wedding Date: August 18 2010 CHILDREN Name Birth Date Social Insurance Number Grade None EDUCATION School Degree Year Received Kevin Provincial University M.B.A. May 2010 Megan Provincial University B.A. Psychology May 2009 Provincial University Ph.D. Social Work May 2013 OCCUPATION Employer Position Years From To Kevin DeVitt Consulting Consultant 2010-present Megan Provincial University Teaching/Research Assistant 2009-present FINANCIAL PLANNING CONSULTANTS Name Address Phone Financial Planner Peter Wanman CFP Wanman Financial Consultants 555-1256 Attorney None Stock Broker TD Waterhouse 9876 Roby St. Halifax N.S. 555-9876 Bank Officer None Provincial University Credit Union Halifax N.S. 555-6662 Insurance Agent Alice Wonderlan The Axtell Agency 15634 Trail Brush Halifax N.S. 555-6722 FINANCIAL PLANNING DOCUMENTS Location Personal Property Inventory None Wills/Trusts: None Insurance: Life Group policy through DeVitt Consulting Information booklet in desk drawer at home Health Group coverage through DeVitt Consulting Information booklet in desk drawer at home Dental Group coverage through DeVitt Consulting Information booklet in desk drawer at home Disability None Auto Policy in desk drawer at home Home Policy in desk drawer at home Birth Certificates Megans is in desk drawer but cannot find Kevins Marriage/Other Certificates: Marriage In desk drawer at home ASSETS January 1 2011 LOCATION BALANCE RATE OF INTEREST MATURITY CHEQUING Provinicial Univ. Credit Union Provincial Univ. Credit Union1 $ 4809 $ 780 N/A N/A N/A N/A SUPER SAVINGS ACCOUNTS ING Direct1 (opened 2010) ING Direct12(opened2010) $ 2603 $ 3610 3.5% 3.5% N/A N/A SAVINGS ACCT. East National Bank13 (opened 1987) $ 518 0.25% N/A CASH ON HAND Desk drawer at home $ 340 N/A N/A GRRSP DeVitt Consulting See Security Investments $ 2300 SECURITY INVESTMENTS Cost Current Value Security # Shares Date Acquired Per Share Total Per Share Total BCE2 175 8/15/10 $28.00 $ 4900 $31.40 $ 5495 Templeton Growth Fund3 (inherited) 1814.28 1/1/99 $5.51 $ 10000 $13.11 $23785 GRRSPDeVitt Consulting:2 TD Monthly Income Fund 137.30 Monthly purchases from 7/10 to 1/11 Reinvested dividends & capital gains distributions Average $15.5 $2100 $16.75 $2300 REAL PROPERTY Year Make Model Cost Current Value Automobile: 2010 Nissan Altima $25000 $20000 PERSONAL PROPERTY Market Value Replacement Value Clothing $ 3000 $10500 Furniture & appliances $ 6000 $13000 Stereo TVs cameras etc. $ 3200 $ 6800 Computer printer & software $ 2000 $ 3000 Golf clubs $ 800 $ 2000 Jewelry $ 4000 $ 7500 Miscellaneous household items $ 1500 $ 3000 LIABILITIES January 1 2011 LOANS To Whom Owed Original Amount of Account Property or Service Purchased Interest Rate Current Balance Payment Amount How often Paid Total Number of Payments Date of First Payment Nova Scotia Student Loan $10000 Education (Kevin) 5.15% $10000 $189 monthly 60 1/10/11 Nova Scotia Student Loan $36780 Education (Megan) N/A $36780 N/A N/A N/A N/A Provincial University Credit Union $ 3000 Computer and printer (Megan) 7.0% $ 2442 $ 93 monthly 36 6/1/10 Nissan Finance $17500 Automobile (Kevin) 5.0% $15485 $403 monthly 48 8/3/10 CREDIT CARDS Number Annual Fee Interest Rate (annual) Maximum Line of Credit Outstanding Balance Minimum Monthly Payment Grace Period Calculation Method CitiBank MasterCard (Kevin) 5419 2556 0000 1627 $0 18.0% $4000 $3805 2% of balance or $20 whichever is greater yes Av. Daily Bal. Provincial Univ. Credit Union Visa (Kevin) 4520 4600 2100 3539 $ 0 18.0% $5000 $2808 2% of balance or $50 whichever is greater Yes1 Av. Daily Bal. Provincial Univ. Credit Union Visa (Megan) 4520 0317 2552 3645 $ 0 18.0% $3000 $1800 2% of balance or $50 whichever is greater Yes1 Av. Daily Bal.2 American Express (Kevin) 3735 192039 97105 $130 $ 0 Total balance Sears (Joint) 0 52566 90182 0 $ 0 21.0% $5000 $1667 2% of balance or $10 whichever is greater Yes1 Av. Daily Bal.2 SuperSave Dept. Store (Joint) 321 01463 1495 $ 0 21.5% $3000 $2967 2% of balance or $50 whichever is greater Yes1 Av. Daily Bal.2 **Kevin and Megan have decided they will pay all new charges in full starting January 2011. LINE OF CREDIT Number Annual Fee Interest Rate Maximum Line of Credit Outstanding Balance Minimum Monthly Payment Grace Period Calculation Method Provincial Univ. Credit Union (Joint) 186-621-841 $ 0 11.0% $10000 $ 0 2% of balance or $50 whichever is greater no Av. Daily Bal.2 INCOMEJanuary 1 to December 31 2010 Salary (Kevin) $ 42000 Bonuses $ 0 Salary (Megan) $ 19000 Bonuses $ 0 Consulting income (Megan) $ 5000 Interest $ 200 Dividends $ 975 Capital gains distributions $ 3197 Monthly salary after deductions: Kevin Megan Gross salary $ 3500 $ 2000 Income tax withholding 637 165 CPP 155 64 EI 63 31 Net salary $ 2645 $ 1740 Note: Megan will receive the consulting income monthly $417. EXPENSESJanuary 1 to December 31 2010 Cash Flow Monthly Cash Flow Annually Rent $850 $10200 Utilities (included in rent) 0 0 Telephone ($35) and cable TV ($45) 80 960 Groceries 300 3600 Food away from home 170 2040 Auto loan payments 403 4836 Auto maintenance (gas repairs licenses etc.) 165 1980 Medical/dental expenses (not covered by insurance) 50 600 Clothing 225 2700 Contributions to GRRSP 175 2100 Auto insurance 75 900 Income tax withholding 802 9624 CPP 219 2628 EI 94 1128 Appliance furniture and equipment purchases 1500 Personal care 50 600 Entertainment 200 2400 Vacations 1000 Education expenses (books and supplies) 150 1800 Charitable contributions 25 300 Gifts ($35/mo….
