Capstone: Financial Plan And Presentation
Scope of the engagement: The Kemps have asked you to develop a comprehensive financial plan that will help them meet their goals and help them improve their financial position. The Kemps want you to prepare a statement of net worth and review their various insurance policies for proper coverage. They expressed an interest in acquiring long-term care insurance and they want you to recommend the type of policy they should purchase. They also want you to review their investment portfolio and recommend an asset allocation strategy that maximizes investment performance, is diversified, and matches their risk tolerance level. The couple is very concerned about how the additional income from the installment agreement will be taxed. They would like you invest the 20% down payment and future installment payments. Their only liquidity need is $40,000 for a new car (this is net of any trade-in). Their current marginal tax bracket is at the highest federal rate. In addition, the couple has asked you to review and recommend estate and gift tax minimization strategies. Lastly, the Kemps are not concerned about saving for retirement. However, they would like you to evaluate how they can grow the 401(k) tax-free and distribute the maximum amount left in the account to their two children upon death. Goals: John and Mary have worked with you to prioritize their goals in the following order. 1) Reduce any estate and gift tax liability and insure all estate planning documents are in order. 2) Review insurance contracts and discuss the implications of purchasing a long-term care policy. 3) Establish a college funding plan for the three grandchildren. 4) Reduce personal income taxes. 5) Based on their risk tolerance level, recommend a diversified portfolio that meets the Kemp’s investment needs and expectations.
Assumptions
| Assumptions that can be changed for the case: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As the instructor, make entries on the yellow cells of this tab. The information in the yellow cells will automatically calculate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| and flow to the remaining tabs. Therefore, the remaining cells are locked down. The Password to unlock the student’s assumption tab is D13b5b9 and all other tabs is Ab7#9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Date of Balance Sheet and Investment Portfolio | As of December 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time Period for Statement of Cash Flows | For the Period January 1 – December 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk-free Rate | 2.75% | (Enter a number between 0.95% – 5.25%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Market Risk Premium | 7.50% | (Enter a number between 4.00% – 9.25%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Market Standard Deviation | 12.25% | (Enter a number between 9.00% – 13.00%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflation Rate | 3.00% | (Enter a number between 2.00% – 5.00%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings Account | 945,000 | (Enter a number $0 – $1,000,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Card Debt | 14,708 | (Enter a number $0 – $20,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Estate as Beneficiary for Life Insurance | no | Type “Yes” or “No” | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Portfolio Inputs that can be changed: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock A’s Beta | 1.1 | (Enter a beta between 0.5 – 2.10) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock A’s Expected Dividend Growth Rate | 3.25% | (Enter a growth rate between 2.75% – 3.25%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock A’s Cost Basis | 200,000 | (Enter a cost basis rate between $75,000 – $200,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bond Inputs that can be changed: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury Security A – 2 years to maturity | $300,000 | (Enter a beta between $100,000 – $400,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate Security B – 4.5 years to maturity | $200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Bond Portfolio | $500,000 | Par & | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Coupon 1 | Coupon 2 | Coupon 3 | Coupon 4 | FMV | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury Security A – 2 years to maturity | 1.5000% | (Enter a coupon rate between 2.00% – 3.00%) | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current Yield for Treasury Security A | 1.6500% | (This will create a discount bond calculation) | 1.0083 | 1.0166 | 1.0250 | 1.0334 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Par & | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Coupon 1 | Coupon 2 | Coupon 3 | Coupon 4 | Coupon 5 | Coupon 6 | Coupon 7 | Coupon 8 | Coupon 9 | Coupon 10 | Coupon 11 | Coupon 12 | Coupon 13 | Coupon 14 | Coupon 15 | Coupon 16 | Coupon 17 | Coupon 18 | Coupon 19 | Coupon 20 | Coupon 21 | Coupon 22 | Coupon 23 | Coupon 24 | FMV | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury Security B – 12 years to maturity | 3.5000% | (Enter a coupon rate between 4.00% – 4.50%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current Yield for Treasury Security B | 3.8500% | (This will create a discount bond calculation) | 1.0193 | 1.0389 | 1.0589 | 1.0793 | 1.1000 | 1.1212 | 1.1428 | 1.1648 | 1.1872 | 1.2101 | 1.2334 | 1.2571 | 1.2813 | 1.3060 | 1.3311 | 1.3567 | 1.3828 | 1.4095 | 1.4366 | 1.4642 | 1.4924 | 1.5212 | 1.5504 | 1.5803 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Par & | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Coupon 1 | Coupon 2 | Coupon 3 | Coupon 4 | Coupon 5 | Coupon 6 | Coupon 7 | Coupon 8 | Coupon 9 | Coupon 10 | Coupon 11 | Coupon 12 | Coupon 13 | Coupon 14 | Coupon 15 | Coupon 16 | Coupon 17 | Coupon 18 | Coupon 19 | Coupon 20 | Coupon 21 | Coupon 22 | Coupon 23 | Coupon 24 | Coupon 25 | Coupon 26 | Coupon 27 | Coupon 28 | Coupon 29 | Coupon 30 | Coupon 31 | Coupon 32 | Coupon 33 | Coupon 34 | Coupon 35 | Coupon 36 | Coupon 37 | Coupon 38 | Coupon 39 | Coupon 40 | Coupon 41 | Coupon 42 | Coupon 43 | Coupon 44 | Coupon 45 | Coupon 46 | Coupon 47 | Coupon 48 | Coupon 49 | Coupon 50 | Coupon 51 | Coupon 52 | Coupon 53 | Coupon 54 | Coupon 55 | Coupon 56 | FMV | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury Security C – 28 years to maturity | 4.0000% | (Enter a coupon rate between 4.00% – 4.50%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current Yield for Treasury Security C | 4.4000% | (This will create a discount bond calculation) | 1.0220 | 1.0445 | 1.0675 | 1.0909 | 1.1149 | 1.1395 | 1.1645 | 1.1902 | 1.2163 | 1.2431 | 1.2705 | 1.2984 | 1.3270 | 1.3562 | 1.3860 | 1.4165 | 1.4477 | 1.4795 | 1.5121 | 1.5453 | 1.5793 | 1.6141 | 1.6496 | 1.6859 | 1.7229 | 1.7609 | 1.7996 | 1.8392 | 1.8796 | 1.9210 | 1.9633 | 2.0065 | 2.0506 | 2.0957 | 2.1418 | 2.1889 | 2.2371 | 2.2863 | 2.3366 | 2.3880 | 2.4405 | 2.4942 | 2.5491 | 2.6052 | 2.6625 | 2.7211 | 2.7809 | 2.8421 | 2.9047 | 2.9686 | 3.0339 | 3.1006 | 3.1688 | 3.2385 | 3.3098 | 3.3826 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Par & | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Coupon 1 | Coupon 2 | Coupon 3 | Coupon 4 | Coupon 5 | Coupon 6 | Coupon 7 | Coupon 8 | Coupon 9 | Coupon 10 | Coupon 11 | Coupon 12 | Coupon 13 | Coupon 14 | Coupon 15 | Coupon 16 | Coupon 17 | Coupon 18 | Coupon 19 | FMV | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Florida Revenue Bond – 9.5 years to maturity | 3.1250% | (Enter a coupon rate between 4.00% – 4.50%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current Yield for Florida Revenue Bond | 3.6500% | (This will create a discount bond calculation) | 1.0183 | 1.0368 | 1.0558 | 1.0750 | 1.0946 | 1.1146 | 1.1350 | 1.1557 | 1.1768 | 1.1982 | 1.2201 | 1.2424 | 1.2650 | 1.2881 | 1.3116 | 1.3356 | 1.3600 | 1.3848 | 1.4100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PMT 1 | PMT 2 | PMT 3 | PMT 4 | PMT 5 | PMT 6 | PMT 7 | PMT 8 | PMT 9 | PMT 10 | PMT 11 | PMT 12 | PMT 13 | PMT 14 | PMT 15 | PMT 16 | PMT 17 | PMT 18 | PMT 19 | PMT 20 | PMT 21 | PMT 22 | PMT 23 | PMT 24 | PMT 25 | PMT 26 | PMT 27 | PMT 28 | PMT 29 | PMT 30 | PMT 31 | PMT 32 | PMT 33 | PMT 34 | PMT 35 | PMT 36 | PMT 37 | PMT 38 | PMT 39 | PMT 40 | PMT 41 | PMT 42 | PMT 43 | PMT 44 | PMT 45 | PMT 46 | PMT 47 | PMT 48 | PMT 49 | PMT 50 | PMT 51 | PMT 52 | PMT 53 | PMT 54 | PMT 55 | PMT 56 | PMT 57 | PMT 58 | PMT 59 | PMT 60 | PMT 61 | PMT 62 | PMT 63 | PMT 64 | PMT 65 | PMT 66 | PMT 67 | PMT 68 | PMT 69 | PMT 70 | PMT 71 | PMT 72 | PMT 73 | PMT 74 | PMT 75 | PMT 76 | PMT 77 | PMT 78 | PMT 79 | PMT 80 | PMT 81 | PMT 82 | PMT 83 | PMT 84 | PMT 85 | PMT 86 | PMT 87 | PMT 88 | PMT 89 | PMT 90 | PMT 91 | PMT 92 | PMT 93 | PMT 94 | PMT 95 | PMT 96 | PMT 97 | PMT 98 | PMT 99 | PMT 100 | PMT 101 | PMT 102 | PMT 103 | PMT 104 | PMT 105 | PMT 106 | PMT 107 | PMT 108 | PMT 109 | PMT 110 | PMT 111 | PMT 112 | PMT 113 | PMT 114 | PMT 115 | PMT 116 | PMT 117 | PMT 118 | PMT 119 | PMT 120 | PMT 121 | PMT 122 | PMT 123 | PMT 124 | PMT 125 | PMT 126 | PMT 127 | PMT 128 | PMT 129 | PMT 130 | PMT 131 | PMT 132 | PMT 133 | PMT 134 | PMT 135 | PMT 136 | PMT 137 | PMT 138 | PMT 139 | PMT 140 | PMT 141 | PMT 142 | PMT 143 | PMT 144 | PMT 145 | PMT 146 | PMT 147 | PMT 148 | PMT 149 | PMT 150 | PMT 151 | PMT 152 | PMT 153 | PMT 154 | PMT 155 | PMT 156 | PMT 157 | PMT 158 | PMT 159 | PMT 160 | PMT 161 | PMT 162 | PMT 163 | PMT 164 | PMT 165 | PMT 166 | PMT 167 | PMT 168 | PMT 169 | PMT 170 | PMT 171 | PMT 172 | PMT 173 | PMT 174 | PMT 175 | PMT 176 | PMT 177 | PMT 178 | PMT 179 | PMT 180 | PMT 181 | PMT 182 | PMT 183 | PMT 184 | PMT 185 | PMT 186 | PMT 187 | PMT 188 | PMT 189 | PMT 190 | PMT 191 | PMT 192 | PMT 193 | PMT 194 | PMT 195 | PMT 196 | PMT 197 | PMT 198 | PMT 199 | PMT 200 | PMT 201 | PMT 202 | PMT 203 | PMT 204 | PMT 205 | PMT 206 | PMT 207 | PMT 208 | PMT 209 | PMT 210 | PMT 211 | PMT 212 | PMT 213 | PMT 214 | PMT 215 | PMT 216 | PMT 217 | PMT 218 | PMT 219 | PMT 220 | PMT 221 | PMT 222 | PMT 223 | PMT 224 | PMT 225 | PMT 226 | PMT 227 | PMT 228 | PMT 229 | PMT 230 | PMT 231 | PMT 232 | PMT 233 | PMT 234 | PMT 235 | PMT 236 | PMT 237 | PMT 238 | PMT 239 | PMT 240 | PMT 241 | PMT 242 | PMT 243 | PMT 244 | PMT 245 | PMT 246 | PMT 247 | PMT 248 | PMT 249 | PMT 250 | PMT 251 | |||||
| Mortgage Interest Rate on Primary Residence | 0.0000% | Payment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Beginning Mortgage Amount | $0 | Interest | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | ||
| Monthly Mortgage Payment | $0.00 | Principal | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | – | ||
| Next 12 Months of Principal | $0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remaining Long-Term Mortgage Principal | $0 | Net Mortgage Outstanding | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| PMT 1 | PMT 2 | PMT 3 | PMT 4 | PMT 5 | PMT 6 | PMT 7 | PMT 8 | PMT 9 | PMT 10 | PMT 11 | PMT 12 | PMT 13 | PMT 14 | PMT 15 | PMT 16 | PMT 17 | PMT 18 | PMT 19 | PMT 20 | PMT 21 | PMT 22 | PMT 23 | PMT 24 | PMT 25 | PMT 26 | PMT 27 | PMT 28 | PMT 29 | PMT 30 | PMT 31 | PMT 32 | PMT 33 | PMT 34 | PMT 35 | PMT 36 | PMT 37 | PMT 38 | PMT 39 | PMT 40 | PMT 41 | PMT 42 | PMT 43 | PMT 44 | PMT 45 | PMT 46 | PMT 47 | PMT 48 | PMT 49 | PMT 50 | PMT 51 | PMT 52 | PMT 53 | PMT 54 | PMT 55 | PMT 56 | PMT 57 | PMT 58 | PMT 59 | PMT 60 | PMT 61 | PMT 62 | PMT 63 | PMT 64 | PMT 65 | PMT 66 | PMT 67 | PMT 68 | PMT 69 | PMT 70 | PMT 71 | PMT 72 | PMT 73 | PMT 74 | PMT 75 | PMT 76 | PMT 77 | PMT 78 | PMT 79 | PMT 80 | PMT 81 | PMT 82 | PMT 83 | PMT 84 | PMT 85 | PMT 86 | PMT 87 | PMT 88 | PMT 89 | PMT 90 | PMT 91 | PMT 92 | PMT 93 | PMT 94 | PMT 95 | PMT 96 | PMT 97 | PMT 98 | PMT 99 | PMT 100 | PMT 101 | PMT 102 | PMT 103 | PMT 104 | PMT 105 | PMT 106 | PMT 107 | PMT 108 | PMT 109 | PMT 110 | PMT 111 | PMT 112 | PMT 113 | PMT 114 | PMT 115 | PMT 116 | PMT 117 | PMT 118 | PMT 119 | PMT 120 | PMT 121 | PMT 122 | PMT 123 | PMT 124 | PMT 125 | PMT 126 | PMT 127 | PMT 128 | PMT 129 | PMT 130 | PMT 131 | PMT 132 | PMT 133 | PMT 134 | PMT 135 | PMT 136 | PMT 137 | PMT 138 | PMT 139 | PMT 140 | PMT 141 | PMT 142 | PMT 143 | PMT 144 | PMT 145 | PMT 146 | PMT 147 | PMT 148 | PMT 149 | PMT 150 | PMT 151 | PMT 152 | PMT 153 | PMT 154 | PMT 155 | PMT 156 | PMT 157 | PMT 158 | PMT 159 | PMT 160 | PMT 161 | PMT 162 | PMT 163 | PMT 164 | PMT 165 | PMT 166 | PMT 167 | PMT 168 | PMT 169 | PMT 170 | PMT 171 | PMT 172 | PMT 173 | PMT 174 | PMT 175 | PMT 176 | PMT 177 | PMT 178 | PMT 179 | PMT 180 | PMT 181 | PMT 182 | PMT 183 | PMT 184 | PMT 185 | PMT 186 | PMT 187 | PMT 188 | PMT 189 | PMT 190 | PMT 191 | PMT 192 | PMT 193 | PMT 194 | PMT 195 | PMT 196 | PMT 197 | PMT 198 | PMT 199 | PMT 200 | PMT 201 | PMT 202 | PMT 203 | PMT 204 | PMT 205 | PMT 206 | PMT 207 | PMT 208 | PMT 209 | PMT 210 | PMT 211 | PMT 212 | PMT 213 | PMT 214 | PMT 215 | PMT 216 | PMT 217 | PMT 218 | PMT 219 | PMT 220 | PMT 221 | PMT 222 | PMT 223 | PMT 224 | PMT 225 | PMT 226 | PMT 227 | PMT 228 | PMT 229 | PMT 230 | PMT 231 | PMT 232 | PMT 233 | PMT 234 | PMT 235 | PMT 236 | PMT 237 | PMT 238 | PMT 239 | PMT 240 | ||||||||||||||||
| Mortgage Interest Rate on Vacation Home | 5.0000% | Payment | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | 627 | |||||||||||||
| Beginning Mortgage Amount | $95,000 | Interest | (396) | (395) | (394) | (393) | (392) | (391) | (390) | (389) | (388) | (387) | (386) | (385) | (384) | (383) | (382) | (381) | (380) | (379) | (378) | (377) | (376) | (375) | (374) | (373) | (372) | (371) | (369) | (368) | (367) | (366) | (365) | (364) | (363) | (362) | (361) | (360) | (359) | (357) | (356) | (355) | (354) | (353) | (352) | (351) | (349) | (348) | (347) | (346) | (345) | (344) | (342) | (341) | (340) | (339) | (338) | (336) | (335) | (334) | (333) | (332) | (330) | (329) | (328) | (327) | (325) | (324) | (323) | (322) | (320) | (319) | (318) | (316) | (315) | (314) | (313) | (311) | (310) | (309) | (307) | (306) | (305) | (303) | (302) | (301) | (299) | (298) | (296) | (295) | (294) | (292) | (291) | (290) | (288) | (287) | (285) | (284) | (282) | (281) | (280) | (278) | (277) | (275) | (274) | (272) | (271) | (269) | (268) | (266) | (265) | (263) | (262) | (260) | (259) | (257) | (256) | (254) | (253) | (251) | (249) | (248) | (246) | (245) | (243) | (242) | (240) | (238) | (237) | (235) | (233) | (232) | (230) | (228) | (227) | (225) | (223) | (222) | (220) | (218) | (217) | (215) | (213) | (212) | (210) | (208) | (206) | (205) | (203) | (201) | (199) | (198) | (196) | (194) | (192) | (190) | (188) | (187) | (185) | (183) | (181) | (179) | (177) | (176) | (174) | (172) | (170) | (168) | (166) | (164) | (162) | (160) | (158) | (156) | (154) | (152) | (150) | (148) | (146) | (144) | (142) | (140) | (138) | (136) | (134) | (132) | (130) | (128) | (126) | (124) | (122) | (120) | (118) | (116) | (113) | (111) | (109) | (107) | (105) | (103) | (100) | (98) | (96) | (94) | (92) | (89) | (87) | (85) | (83) | (80) | (78) | (76) | (74) | (71) | (69) | (67) | (64) | (62) | (60) | (57) | (55) | (52) | (50) | (48) | (45) | (43) | (40) | (38) | (35) | (33) | (31) | (28) | (26) | (23) | (21) | (18) | (15) | (13) | (10) | (8) | (5) | (3) | |||||||||||||
| Monthly Mortgage Payment | $626.96 | Principal | 231 | 232 | 233 | 234 | 235 | 236 | 237 | 238 | 239 | 240 | 241 | 242 | 243 | 244 | 245 | 246 | 247 | 248 | 249 | 250 | 251 | 252 | 253 | 254 | 255 | 256 | 258 | 259 | 260 | 261 | 262 | 263 | 264 | 265 | 266 | 267 | 268 | 270 | 271 | 272 | 273 | 274 | 275 | 276 | 278 | 279 | 280 | 281 | 282 | 283 | 285 | 286 | 287 | 288 | 289 | 291 | 292 | 293 | 294 | 295 | 297 | 298 | 299 | 300 | 302 | 303 | 304 | 305 | 307 | 308 | 309 | 310 | 312 | 313 | 314 | 316 | 317 | 318 | 320 | 321 | 322 | 324 | 325 | 326 | 328 | 329 | 330 | 332 | 333 | 335 | 336 | 337 | 339 | 340 | 342 | 343 | 345 | 346 | 347 | 349 | 350 | 352 | 353 | 355 | 356 | 358 | 359 | 361 | 362 | 364 | 365 | 367 | 368 | 370 | 371 | 373 | 374 | 376 | 378 | 379 | 381 | 382 | 384 | 385 | 387 | 389 | 390 | 392 | 394 | 395 | 397 | 398 | 400 | 402 | 403 | 405 | 407 | 409 | 410 | 412 | 414 | 415 | 417 | 419 | 421 | 422 | 424 | 426 | 428 | 429 | 431 | 433 | 435 | 437 | 438 | 440 | 442 | 444 | 446 | 448 | 450 | 451 | 453 | 455 | 457 | 459 | 461 | 463 | 465 | 467 | 469 | 471 | 473 | 475 | 476 | 478 | 480 | 482 | 484 | 487 | 489 | 491 | 493 | 495 | 497 | 499 | 501 | 503 | 505 | 507 | 509 | 511 | 514 | 516 | 518 | 520 | 522 | 524 | 526 | 529 | 531 | 533 | 535 | 538 | 540 | 542 | 544 | 547 | 549 | 551 | 553 | 556 | 558 | 560 | 563 | 565 | 567 | 570 | 572 | 575 | 577 | 579 | 582 | 584 | 587 | 589 | 592 | 594 | 596 | 599 | 601 | 604 | 606 | 609 | 612 | 614 | 617 | 619 | 622 | 624 | |||||||||||||
| Next 12 Months of Principal | 6,711 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remaining Long-Term Mortgage Principal | 12,581 | Net Mortgage Outstanding | 94,769 | 94,537 | 94,304 | 94,070 | 93,835 | 93,599 | 93,362 | 93,124 | 92,885 | 92,645 | 92,404 | 92,162 | 91,919 | 91,675 | 91,430 | 91,184 | 90,937 | 90,689 | 90,440 | 90,190 | 89,939 | 89,686 | 89,433 | 89,179 | 88,924 | 88,667 | 88,410 | 88,151 | 87,891 | 87,631 | 87,369 | 87,106 | 86,842 | 86,577 | 86,310 | 86,043 | 85,775 | 85,505 | 85,234 | 84,963 | 84,690 | 84,416 | 84,140 | 83,864 | 83,586 | 83,308 | 83,028 | 82,747 | 82,465 | 82,181 | 81,897 | 81,611 | 81,324 | 81,036 | 80,747 | 80,456 | 80,165 | 79,872 | 79,578 | 79,282 | 78,986 | 78,688 | 78,389 | 78,088 | 77,787 | 77,484 | 77,180 | 76,874 | 76,568 | 76,260 | 75,951 | 75,640 | 75,328 | 75,015 | 74,701 | 74,385 | 74,068 | 73,750 | 73,430 | 73,109 | 72,787 | 72,463 | 72,138 | 71,812 | 71,484 | 71,155 | 70,824 | 70,492 | 70,159 | 69,825 | 69,488 | 69,151 | 68,812 | 68,472 | 68,130 | 67,787 | 67,443 | 67,097 | 66,749 | 66,401 | 66,050 | 65,699 | 65,345 | 64,991 | 64,634 | 64,277 | 63,918 | 63,557 | 63,195 | 62,831 | 62,466 | 62,099 | 61,731 | 61,361 | 60,990 | 60,617 | 60,243 | 59,867 | 59,490 | 59,110 | 58,730 | 58,348 | 57,964 | 57,578 | 57,191 | 56,803 | 56,412 | 56,020 | 55,627 | 55,232 | 54,835 | 54,436 | 54,036 | 53,634 | 53,231 | 52,826 | 52,419 | 52,010 | 51,600 | 51,188 | 50,774 | 50,359 | 49,942 | 49,523 | 49,102 | 48,680 | 48,256 | 47,830 | 47,402 | 46,973 | 46,542 | 46,109 | 45,674 | 45,237 | 44,799 | 44,358 | 43,916 | 43,472 | 43,026 | 42,579 | 42,129 | 41,678 | 41,225 | 40,769 | 40,312 | 39,853 | 39,392 | 38,930 | 38,465 | 37,998 | 37,529 | 37,059 | 36,586 | 36,112 | 35,635 | 35,157 | 34,676 | 34,194 | 33,709 | 33,223 | 32,734 | 32,244 | 31,751 | 31,257 | 30,760 | 30,261 | 29,760 | 29,257 | 28,752 | 28,245 | 27,736 | 27,224 | 26,711 | 26,195 | 25,677 | 25,157 | 24,635 | 24,111 | 23,584 | 23,056 | 22,525 | 21,992 | 21,456 | 20,919 | 20,379 | 19,837 | 19,293 | 18,746 | 18,197 | 17,646 | 17,093 | 16,537 | 15,979 | 15,419 | 14,856 | 14,291 | 13,723 | 13,154 | 12,581 | 12,007 | 11,430 | 10,851 | 10,269 | 9,685 | 9,098 | 8,509 | 7,918 | 7,324 | 6,727 | 6,128 | 5,527 | 4,923 | 4,316 | 3,707 | 3,096 | 2,482 | 1,865 | 1,246 | 624 | (0) |
Kemp Case Information
| John and Mary Kemp | ||||
| You are a financial planner and you have met with new clients John and Mary Kemp for the first to gather information for the purposes of | ||||
| developing a comprehensive financial plan. You will receive a $1,333 payment from an insurance agent who recommended them to you if | ||||
| become your client and recommend all insurance products through this same agent. | ||||
| John Kemp is 68 years old, and his wife, Mary, is 67. They have two children, Steven, age 38, and Robert, age 36. They also have three | ||||
| grandchildren. Steven has two sons, Michael, age 15, and James, age 10. Robert has a daughter Sara, age 11. Robert’s wife, Sara’s mother, | ||||
| died in an automobile accident approximately 2 years ago. All of the Kemp family members are in excellent health. | ||||
| John had his own business in marketing and was extremely successful. He sold his business on April 1st to a third party for $6,000,000 | ||||
| using an installment note. The terms of the agreement are: 20% down payment, 10-year, 4.5% note that will start paying quarterly installment | ||||
| payments starting on May 1, 2019. | ||||
| The Kemp’s live in a home that they had built in 1983. The home is located in River Edge, NJ and is titled in both spouse’s names as | ||||
| (JTWROS). John inherited a summer home in Burlington, Vermont. His dad had the home built in 1972 for $35,000. He received the home in | ||||
| 1989 when his dad died. The property was worth $150,000 at his father’s death. Since this time, John has made $130,000 of improvements. | ||||
| John owned a marketing company for the majority of his career. For the past 20 years, Mary was a cashier at the local Shop-Rite grocery | ||||
| store and retired last year. John has no earned income and just sold his business this year. In January of this year they both started to | ||||
| collect their Social Security benefits. The monthly Social Security benefits are $1,200 for John and $750 for Mary. They both held 401(k) | ||||
| retirement accounts at their previous jobs. | ||||
| The couple has just returned from a two week vacation in Europe. The current credit card balance on Mary’s card from this trip will be | ||||
| paid in full when the bill is received. | ||||
| John’s dad used to collect stamps as a child. When his dad died in 1989, his mother received a 1918, mint, 24 cent, “inverted Jenny” stamp. | ||||
| His dad purchased the stamp in 1972 for $75,000 and it was worth $500,000 on his death. John’s mother just gifted to him the stamp when | ||||
| the value was $725,000. John believes this is a great investment that will appreciate approximately 8% per year. However, he would like to | ||||
| know what he would owe in taxes if it sold in 10 years from now for $1,550,000. | ||||
| Scope of the engagement: The Kemps have asked you to develop a comprehensive financial plan that will help them meet their goals and | ||||
| help them improve their financial position. The Kemps want you to prepare a statement of net worth and review their various insurance policies | ||||
| for proper coverage. They expressed an interest in acquiring long-term care insurance and they want you to recommend the type of policy | ||||
| they should purchase. They also want you to review their investment portfolio and recommend an asset allocation strategy that maximizes | ||||
| investment performance, is diversified, and matches their risk tolerance level. The couple is very concerned about how the additional income | ||||
| from the installment agreement will be taxed. They would like you invest the 20% down payment and future installment payments. | ||||
| Their only liquidity need is $40,000 for a new car (this is net of any trade-in). Their current marginal tax bracket is at the highest federal rate. | ||||
| In addition, the couple has asked you to review and recommend estate and gift tax minimization strategies. Lastly, the Kemps are not | ||||
| concerned about saving for retirement. However, they would like you to evaluate how they can grow the 401(k) tax-free and distribute the | ||||
| maximum amount left in the account to their two children upon death. | ||||
| Goals: John and Mary have worked with you to prioritize their goals in the following order. | ||||
| 1) Reduce any estate and gift tax liability and insure all estate planning documents are in order. | ||||
| 2) Review insurance contracts and discuss the implications of purchasing a long-term care policy. | ||||
| 3) Establish a college funding plan for the three grandchildren. | ||||
| 4) Reduce personal income taxes. | ||||
| 5) Based on their risk tolerance level, recommend a diversified portfolio that meets the Kemp’s investment needs and expectations. | ||||
| Risk tolerance: The Kemps are very willing to take investment risks. Although the Kemps invest in the stock market using both mutual funds | ||||
| and individual stocks, they do not want you to invest in tobacco stocks as both of their parents died from lung cancer. They have asked you | ||||
| to reconcile the portfolio with their ability and willingness to accept risk, and develop an investment strategy and asset allocation that will | ||||
| achieve their investment goals. | ||||
| Current and Future Economic Information: | ||||
| Risk-free Rate | 3.00% | |||
| Market Risk Premium | 7.00% | |||
| Market Standard Deviation | 11.00% | |||
| Inflation Rate | 2.85% | |||
| Note – Interest rates and inflation look to increase in both the short-term and long-term forecasts. | ||||
| Assets: | FMV | |||
| Cash & Checking Account – Joint Account | 5,000 | |||
| Savings Account – Joint Account | 945,000 | |||
| Certificate of Deposits – John | 180,000 | |||
| Policy #1 John transferred to an ILIT in 2017 | ||||
| Death Benefit of Term Life Policy #1 – John | 4,000,000 | |||
| Policy #2 – Mary’s Policy | ||||
| Death Benefit of Universal Life Policy #2 – Mary | 400,000 | |||
| Cash Value of Universal Life Policy #2 – Mary | 155,000 | |||
| Policy #2 – Interpolated terminal cash reserve value | 175,000 | |||
| Individual Stock Portfolio | 940,000 | (Details Provided in Attached Schedule) | ||
| Mutual Fund Portfolio | 2,907,682 | (Details Provided in Attached Schedule) | ||
| Installment Receivable | – | (10-year note – see terms found above) | ||
| 401(k) Account – John | 1,054,540 | (Details Provided in Investment Portfolios Tab) | ||
| 401(k) Account – Mary | 105,000 | (Details Provided in Investment Portfolios Tab) | ||
| Annuity | 74,000 | (Details Provided in Attached Policy Information) | ||
| Primary Residence – FMV Land | 125,000 | (Owned as Joint Tenants) | ||
| Primary Residence – FMV Building | 775,000 | (Owned as Joint Tenants) | ||
| Cost Basis of Primary Residence | 370,000 | (Owned as Joint Tenants) | ||
| Vacation Home – FMV Land | 200,000 | (Owned by John) | ||
| Vacation Home – FMV Building | 550,000 | (Owned by John) | ||
| Cost Basis of Vacation Home | – | (Owned by John) | ||
| Auto – 2014 Chevy Automobile | 20,000 | (Owned by Mary) | ||
| Auto – 2015 Chevy SUV | 35,000 | (Owned by John) | ||
| Boat – 2016 Sea Ray 24″ Boat & Trailer | 95,000 | (Owned by John) | ||
| Furniture & Personal Property | 150,000 | (Owned as Joint Tenants) | ||
| 1918 Inverted Jenny Stamp | 725,000 | (Owned by John) | ||
| Monthly Mortgage on Primary Residence | – | |||
| Original Mortgage Amount | – | |||
| Interest Rate on Primary Residence Mortgage | 0.00% | |||
| Monthly Mortgage on Vacation Home | 626.96 | (20-yr mortgage with 207 payments completed, 33 payments remaining as of balance sheet date) | ||
| Original Mortgage Amount | 95,000 | |||
| Interest Rate on Vacation Home Mortgage | 5.00% | |||
| Current Credit Card Debt | 14,708 | (Owned by Mary) | ||
| Cost of administration, burial expense and state death taxes for each spouse upon death: | ||||
| Administrative expense | $150,000 | |||
| Burial Expenses | $25,000 | |||
| Wills: | ||||
| John’s estate will pass to his wife Mary, as primary beneficiary of his will. Mary has executed a will that leaves her estate to John, as | ||||
| primary beneficiary. The second beneficiaries for both spouse’s estates are the children Steven and Robert, per stripes. | ||||
| Homeowners Policy – Primary Residence | ||||
| Type of Policy | HO-3 | |||
| Face Amount | $400,000 | |||
| Premium | $1,825 | |||
| Deductible | $500 | |||
| Liability | $250,000 | |||
| Medical Payments | $50,000 Per Person Per Occurrence | |||
| Anniversary Date | July 15th | |||
| Endorsements | None | |||
| Homeowners Policy – Vacation Home | ||||
| Type of Policy | HO-3 | |||
| Face Amount | $460,000 | |||
| Premium | $3,000 | |||
| Deductible | $500 | |||
| Liability | $175,000 | |||
| Medical Payments | $50,000 Per Person Per Occurrence | |||
| Anniversary Date | July 15th | |||
| Endorsements | None | |||
| Automobile Policy | ||||
| Premium | $3,300 | |||
| Bodily Injury & Property Damage | $200,000 / $600,000 / $15,000 | |||
| Comprehensive Deductible | $350 | |||
| Collision Deductible | $500 | |||
| Anniversary Date | July 15th | |||
| Umbrella Policy | ||||
| Premium | $325 | |||
| Coverage | $1,000,000 | |||
| Anniversary Date | July 15th | |||
| Health Insurance Policy | ||||
| Premium | $2,435 Total yearly premium for John & Mary | |||
| Coverage | Medicare Part B | |||
| Policy #1 was transferred to an ILIT in 2017 | ||||
| Insured | John Kemp | |||
| Owner | John Kemp | |||
| Beneficiary | Mary Kemp | |||
| Contingent Beneficiary | Steven and Robert Kemp – 50% each | |||
| Face Amount | $4,000,000 | |||
| Type of Policy | Term Insurance – Ends June 8, 2023 | |||
| Anniversary Date | June 09, 1992 | |||
| Total Contributions | $375,000 | |||
| Annual Premium | $55,000 | |||
| Life Insurance – Policy #2 | ||||
| Insured | Mary Kemp | |||
| Owner | Mary Kemp | |||
| Beneficiary | John Kemp | |||
| Contingent Beneficiary | Steven and Robert Kemp – 50% each | |||
| Face Amount | $400,000 | |||
| Type of Policy | Universal Life | |||
| Anniversary Date | June 12, 1992 | |||
| Total Contributions | $125,000 | |||
| Annual Premium | $5,000 | |||
| Annuity Policy | ||||
| Type of Policy | Non-Qualified Single Premium Deferred Annuity (SPDA) | |||
| Issue Date | August 15, 2001 | |||
| Owner | John Kemp | |||
| Primary Beneficiary | Mary Kemp | |||
| Contingent Beneficiary | Steven and Robert Kemp – 50% each | |||
| Original Investment into SPDA | $30,000 | |||
| Other Additions | $0 | |||
| Since Inception Basis Withdrawals | $5,000 |
Balance Sheet Tab
| Statement of Financial Position | ||||||
| John and Mary Kemp | ||||||
| Balance Sheet / Statement of Financial Worth | ||||||
| As of December 31, 2019 | ||||||
| Assets(1) | Liabilities & Net Worth(2) | |||||
| Cash and Equivalents | Liabilities (Current) | |||||
| JT | Cash & Checking | $ 5,000 | Credit Card Debt | $ 14,708 | W | |
| JT | Savings Account | 945,000 | Current Portion – Primary Residence | – | JT | |
| H | Certificate of Deposits | 180,000 | Current Portion – Vacation Home | H | ||
| Total Cash and Equivalents | $ 1,130,000 | Total Current Liabilities | $ 14,708 | |||
| Invested Assets | Liabilities (Long-Term) | |||||
| JT | Stock Portfolio | $ 940,000 | Long-Term Portion – Primary Residence | $ – | JT | |
| H | Mutual Fund Portfolio | 2,907,682 | Long-Term Portion – Vacation Home | H | ||
| H | Installment Receivable | – | Total Liabilities Long-Term | $ – | ||
| H | 401(k) Account – John | 1,054,540 | ||||
| W | 401(k) Account – Mary | 105,000 | Total Liabilities | $ 14,708 | ||
| W | Cash Value of Universal Life Insurance #2 | – | ||||
| H | Annuity Policy (3) | 74,000 | ||||
| Total Invested Assets | $ 5,081,222 | |||||
| Personal-Use Assets | ||||||
| JT | Primary Residence (4) | $ 900,000 | ||||
| H | Vacation Home (5) | 750,000 | ||||
| H | Auto – 2017 Chevy SUV | 35,000 | ||||
| W | Auto – 2016 Chevy Automobile | 20,000 | Net Worth | $ 8,871,515 | ||
| JT | Furniture & Personal Property | 150,000 | ||||
| H | 2018 Sea Ray 19″ Boat | 95,000 | ||||
| H | 1918 Inverted Jenny Stamp | 725,000 | ||||
| Total Use Assets | $ 2,675,000 | |||||
| Total Assets | $ 8,886,222 | Total Liabilities & Net Worth | $ 8,886,222 | |||
| Notes to Financial Statements: | ||||||
| (1) = All assets are stated at fair market value | ||||||
| (2) = Liabilities are stated at principal only | ||||||
| (3) = Primary Beneficiary Designation is spouse. Contingent beneficiary is children in equal percentages | ||||||
| (4) = FMV of Land is $125,000. Cost basis is $370,000 | ||||||
| (5) = FMV of Land is $200,000. | ||||||
| 2) | Calculate the current ratio as of 12/31/19 and explain any strengths or weaknesses of this ratio: | |||||
| 3) | Explain any weakness pertaining to the amount of cash and cash equivalents owned: | |||||
| John and Mary want to contribute to fund 529 plans for each grandchild. What is the maximum amount they can contribute in the current | ||||||
| year if they do not want to incur any gift tax and they elect to gift split? Also, what tax forms are required? | ||||||
| 4) | What are the maximum 529 plan contributions that the couple can make this year? | |||||
| 5) | What tax form must be filed and what is the due date? | |||||
| 6) | Identify two advantages and two disadvantages for making these 529 plan contributions. |
Cash Flow Tab
| John and Mary Kemp | |||
| Statement of Cash Flow | |||
| For the Period January 1 – December 31, 2019 | |||
| Cash Inflows | |||
| Social Security Benefits – John | 14,400 | ||
| Social Security Benefits – Mary | 9,000 | ||
| Installment Receivable – John | – | ||
| Investment Income – Interest, Dividends and Capital Gains | 235,615 | ||
| Total Income | $ 259,015 | ||
| Cash Outflows | |||
| Mortgage Payments (Principal & Interest) – Residence | $ – | ||
| Mortgage Payments (Principal & Interest) – Vacation Home | – | ||
| Real Estate Taxes – Residence | 14,335 | ||
| Real Estate Taxes – Vacation Home | 7,225 | ||
| Food | 20,000 | ||
| Utilities, Cable, Etc. | 6,200 | ||
| Auto Excise | 2,555 | ||
| Cell Phone | 2,000 | ||
| Home Maintenance (Lawn, Snow, Etc.) & Repairs | 7,000 | ||
| Charity (Cash) | 13,500 | ||
| Out of Pocket Medical | 7,500 | ||
| Personal Care | 4,400 | ||
| Clothing and Cleaning | 4,100 | ||
| Homeowners Insurance Premiums – Primary Residence | – | ||
| Homeowners Insurance Premiums – Vacation Home | – | ||
| Auto Insurance Premiums | – | ||
| Umbrella Policy Premiums | – | ||
| Premiums on John’s Term Life Insurance Policy #1 | – | ||
| Premiums on Mary’s Universal Life Insurance Policy #2 | – | ||
| Vacation | 35,000 | ||
| Gas, Tolls, Auto Repairs | 3,500 | ||
| Entertainment, Dining Out, Fun Money | 8,500 | ||
| Medicare Part – B Insurance Premiums | 2,435 | ||
| Federal Income Taxes | 135,000 | ||
| State Income Taxes | 30,000 | ||
| Total Expenses | $ 303,250 | ||
| Net Disposable Income | $ (44,235) |
Insurance Tab
| John and Mary Kemp | ||||
| Insurance Analysis | ||||
| If the Winooski River floods causing $100,000 of damage to the vacation home, what amount will the homeowners policy cover? | ||||
| 1) | Homeowners Benefit Calculation: | |||
| Assume that John want to annuitize the annuity and is told that he can receive a straight life annuity for $350 a month for life. If the actuarial | ||||
| number of payments is 300, how much of the first $350 amount is taxable and how much is the return of basis? | ||||
| 2) | Tax consequences of receiving the 1st annuity payment of $350: | |||
| Payment Received | $350.00 | |||
| Less: Return of Basis | – 0 | |||
| Taxable Amount | $350.00 | |||
| 3) | The tax consequences of gifting the annuity: | |||
| Because the monthly straight amount is so low, John would like to know the tax consequences and filing requirements if he gifts this to his | ||||
| granddaughter Sara. Assume that Mary will elect to gift spilt. John and Mary want you to explain any generation skipping tax liability or tax | ||||
| consequences to this gift to Sara. For generation skipping transfer tax purposes, what is the taxable amount of the gift? Please note, do | ||||
| not assume this is being gifted when calculating the gross estate. | ||||
| Total | John | Mary | ||
| Total FMV at Time of Gift | $0 | $0 | $0 | |
| Less: Gift Tax Exclusion – John | – | – | – | |
| Less: Gift Tax Exclusion – Mary | – | – | – | |
| Net Taxable gift | $0 | $0 | $0 | |
| 4) | What tax form is required and when is it due and will generation skipping tax (GST) apply? | |||
| You recommend a long-term care policy for both John and Mary. The policy is a comprehensive policy that allows each spouse to share | ||||
| the other spouse’s policy benefits. The benefits will be paid for 3 years or up to $360,000, whichever come first. The annual premiums are $4,750 | ||||
| for John and $4,000 for Mary. Ignoring any AGI limitation, what amount of the premium is allowed as a medical deduction if the couple | ||||
| itemizes their income taxes in 2019? | ||||
| 5) | Allowable Long-Term Care Premium: | John | Mary | Total |
| Total Premium | $0 | $0 | $0 | |
| Less: Allowed Amount | – | 0 | 0 | |
| Disallowable Premium Amount | $0 | $0 | $0 |
Investment Tab
| John and Mary Kemp | ||||||
| Supplemental Investment Information | ||||||
| As of December 31, 2019 | ||||||
| Non-Qualified Accounts | ||||||
| Stock Portfolio (a) | ||||||
| Date | Shares | Cost | FMV as of | |||
| Stock | Acquired | owned | Basis | Today | Beta | |
| A | 03/15/01 | 3,500 | $225,000 | $7,000 | 1.35 | |
| B | 04/26/05 | 7,500 | $125,000 | $183,000 | 0.95 | |
| C | 07/26/06 | 1,000 | $110,000 | $195,000 | 1.48 | |
| D | 08/15/11 | 1,000 | $500,000 | $555,000 | 1.03 | |
| Totals | $960,000 | $940,000 | ||||
| (a) = All dividends and capital gain distributions are received in cash. | ||||||
| Mutual Fund Portfolio | ||||||
| Mutual | Coefficient of | Expected | Cost | FMV as of | ||
| Fund | Determination | Return | Beta | Basis | Today | |
| Balanced | 0.98 | 8.90% | 0.82 | $750,000 | $1,054,540 | |
| Growth | 0.93 | 13.55% | 1.44 | $150,000 | $331,314 | |
| Bond | 0.95 | 9.58% | 0.91 | $350,000 | $421,820 | |
| International | 0.94 | 15.73% | 1.73 | $750,000 | $1,100,008 | |
| Totals | $2,000,000 | $2,907,682 | ||||
| Qualified Accounts | ||||||
| John’s 401(k) Account: | ||||||
| Mutual | Coefficient of | Expected | Pre-Tax | FMV as of | ||
| Fund | Determination | Return | Beta | Contributions | Today | |
| S&P 500 Index | 1.00 | 9.65% | 1 | $605,000 | $1,054,540 | |
| Totals | $605,000 | $1,054,540 | ||||
| Beneficiary is John’s estate. | ||||||
| Mary’s 401(k) Account: | ||||||
| Mutual | Coefficient of | Expected | Pre-Tax | FMV as of | ||
| Fund | Determination | Return | Beta | Contributions | Today | |
| 2020 Fund | 0.98 | 8.90% | 0.82 | $50,000 | $105,000 | |
| Totals | $50,000 | $105,000 | ||||
| Beneficiary is Mary’s estate. | ||||||
| 1) | Investment Policy Statement for John and Mary Kemp | |||||
| Objectives: | ||||||
| Return Objective | A total return approach should be used to pursue the Kemp’s income objectives as well as preservation of capital. | |||||
| Risk Tolerance | The Kemp’s are in the _____________ phase of the lifecycle. They have an _______________ willingness to take on risk. | |||||
| Based on their overall wealth position, they have an ______________ ability to take risk. | ||||||
| Constraints: | ||||||
| Time Horizon | The Kemp’s have a multistage time horizon. The first stage will last for approximately 30 years or more in retirement. | |||||
| The second stage will be to disburse any remaining assets to their children and grandchildren. | ||||||
| Liquidity | The current liquidity need is ______________________. | |||||
| Laws and Regulations | No special legal or regulatory issues are known at the present time. However, the Kemps must review their wills and address any | |||||
| immediate estate tax planning issues. | ||||||
| Taxes | Taxes are an area of concern. The bulk of the income generated by the portfolio will likely be taxed as ordinary income. The | |||||
| couple’s total (federal and state) marginal tax rate is approximately 44%. Taxes are incorporated into their spending budget and | ||||||
| therefore do not have to be taken into account in the discount rate for the portfolio return requirement. | ||||||
| Unique Circumstances | __________________________________________________________________________________________________________ | |||||
| 2) | Calculate the Weighted Beta of Stock Portfolio: | |||||
| Weighted | Weighted | |||||
| Stock | FMV | Average | Beta | Beta | ||
| A | $7,000 | 0.74% | 0 | 0.0000 | ||
| B | $183,000 | 19.47% | 0 | 0.0000 | ||
| C | $195,000 | 20.74% | 0 | 0.0000 | ||
| D | $555,000 | 59.04% | 0 | 0.0000 | ||
| $940,000 | 100.00% | 0.0000 | ||||
| 3) | Calculate the CAPM of the Stock Portfolio: | |||||
| Assume that the stock portfolio and mutual fund portfolio combined had a 10.25% return and a standard deviation of 12.5%. What is the Sharpe Ratio of this | ||||||
| combined portfolio and how does this portfolio compare to the Sharpe Ratio of the market portfolio? | ||||||
| 4) | Calculate the Sharpe Ratio of the Stock Portfolio and the Market: | |||||
| The Sharpe Ratio for the portfolio is: | ||||||
| The Sharpe Ratio for the market is: | ||||||
| Determine if the portfolio over- or underperformed compared to the market portfolio. | ||||||
| 5) | Portfolio Recommendations: |
Tax Tab
| John and Mary Kemp | |||
| Tax Analysis | |||
| John would like to know how the down payment and 1st installment for the sale of his business will be treated for tax purposes. The business was | |||
| sold to a third party for $6,000,000 on April 1, 2019. The terms of the agreement are: 20% down payment, 10-year, 4.5% note that will start | |||
| payment quarterly on May 1, 2019. The tax basis is $1,450,000. | |||
| 1) | Calculate the tax treatment realized on the down payment: | ||
| Down Payment | $0 | ||
| Less: Return of Basis | – | ||
| Realized & Recognized Long-Term Capital Gain | $0 | ||
| 2) | Calculate the tax treatment realized on the 1st installment payment (round to the nearest dollar): | ||
| Installment Payment | $0 | ||
| Less: Interest Income | – | ||
| Net | $0 | ||
| Less: Return of Basis | – | ||
| Realized & Recognized Long-Term Capital Gain | $0 | ||
| Without changing any calculations above, assume that there is building that John owns that the purchaser of the business does not want to buy | |||
| that was originally purchased for $350,000 and that the land was allocated as $200,000 and the building as $150,000. If sold today, assume the | |||
| accumulated depreciation is $83,726 | |||
| 3) | If the sales price of the building is $1,000,000, what is the Section 1250 gain and the Section 1231 gain that would be reported? | ||
| Sales Proceeds | $1,000,000 | ||
| Less: Adjusted Basis | $0 | ||
| Realized Gain | $1,000,000 | ||
| Section 1250 Gain | |||
| Section 1231 Gain | |||
| 4) | What is the tax rate that the Section 1250 gain be reported at? | ||
| 5) | What is the tax rate that the Section 1231 gain be reported at? | ||
| 6) | Assume that John sells the 1918 inverted Jenny stamp in 10 years for $1,550,000 and there is a 15% commission and they are in the | ||
| highest marginal tax bracket. What is the federal tax liability on this sale? | |||
| 1918 Inverted Jenny Stamp | $1,550,000 | ||
| Less: 15% Commission | $0 | ||
| Adjusted Sales Price | $1,550,000 | ||
| Less: Cost Basis | $0 | ||
| Realized & Recognized Gain | $1,550,000 | ||
| Tax Rate | 0.00% | ||
| Federal Tax Liability | $0 | ||
| 7) | For the 2019 tax year, assuming the following itemized deductions, what amount will be deducted in arriving at taxable income | ||
| on their Form 1040 filing? | |||
| Real estate taxes on principal residence | 14,335 | ||
| Real estate taxes on vacation home | 7,225 | ||
| State income taxes | 30,000 | ||
| Interest on vacation home | 800 | ||
| Charitable (ignore phase-out limitation) | 13,500 | ||
| Total | 65,860 | ||
| What amount is deductible in arriving at taxable income? | – |
Retirement Tab
| John and Mary Kemp | |
| Retirement Analysis | |
| Assume John cashed in his 401(k) when the FMV was $1,054,540. He receives a check and deposits the proceeds a few days later into his IRA | |
| account. What will the value be after 3 years if the account grows at a 3% guaranteed CD rate, ignoring any required minimum distributions that | |
| may apply? | |
| 1) | Future value of John’s IRA account: |
| 2) | How can John and Mary grow the retirement assets tax-free? |
| 3) | Based on the facts in this case, for the year 2019, what is the maximum amount that John and Mary can contribute to an IRA? Also, |
| would you recommend a Roth IRA, a deductible IRA or a non-deductible IRA? | |
| 4) | Based on the facts in this case, for the year 2019, what is the maximum amount that John and Mary can contribute as a qualified |
| charitable distribution (QCD) from their 401(k)? |
Estate Tab
| Statement of Financial Position | ||||||||||||||
| John and Mary Kemp | ||||||||||||||
| Balance Sheet / Statement of Financial Worth | ||||||||||||||
| As of December 31, 2019 | ||||||||||||||
| Assets(1) | Liabilities & Net Worth(2) | |||||||||||||
| Cash and Equivalents | Liabilities (Current) | |||||||||||||
| JT | Cash & Checking | 5,000 | Credit Card Debt | $ 14,708 | W | |||||||||
| JT | Savings Account | 945,000 | Current Portion – Primary Residence | – | JT | |||||||||
| H | Certificate of Deposits | 180,000 | Current Portion – Vacation Home | H | ||||||||||
| Total Cash and Equivalents | $ 1,130,000 | Total Current Liabilities | $ 14,708 | |||||||||||
| Invested Assets | Liabilities (Long-Term) | |||||||||||||
| JT | Stock Portfolio | $ 940,000 | Long-Term Portion – Primary Residence | $ – | JT | |||||||||
| H | Mutual Fund Portfolio | 2,907,682 | Long-Term Portion – Vacation Home | H | ||||||||||
| H | Installment Receivable | – | Total Liabilities Long-Term | $ – | ||||||||||
| H | 401(k) Account | 1,054,540 | ||||||||||||
| W | 401(k) Account | 105,000 | Total Liabilities | $ 14,708 | ||||||||||
| W | Cash Value of Universal Life Insurance #2 | – | ||||||||||||
| H | Annuity Policy (3) | 74,000 | ||||||||||||
| Total Invested Assets | $ 5,081,222 | |||||||||||||
| Personal-Use Assets | ||||||||||||||
| JT | Primary Residence (4) | $ 900,000 | ||||||||||||
| H | Vacation Home (5) | 750,000 | ||||||||||||
| H | Auto – 2016 Chevy SUV | 35,000 | ||||||||||||
| W | Auto – 2015 Chevy Automobile | 20,000 | ||||||||||||
| JT | Furniture & Personal Property | 150,000 | ||||||||||||
| H | 2016 Sea Ray 24″ Boat & Trailer | 95,000 | Net Worth | $ 8,871,515 | ||||||||||
| H | 1918 Inverted Jenny Stamp | 725,000 | ||||||||||||
| Total Use Assets | $ 2,675,000 | |||||||||||||
| Total Assets | $ 8,886,222 | Total Liabilities & Net Worth | $ 8,886,222 | |||||||||||
| Notes to Financial Statements: | ||||||||||||||
| (1) = All assets are stated at fair market value | ||||||||||||||
| (2) = Liabilities are stated at principal only | ||||||||||||||
| (3) = Primary Beneficiary Designation is spouse. Contingent beneficiary is children in equal percentages | ||||||||||||||
| (4) = FMV of Land is $125,000. Cost basis is $370,000 | ||||||||||||||
| (5) = FMV of Land is $200,000. | ||||||||||||||
| 1) | The Gross Estate, Probate Estate, the Marital Deduction and the FMV of Wife’s Inherited Asset Calculations for John: | |||||||||||||
| FMV of Mary’s | ||||||||||||||
| FMV | Gross | Marital | Inherited | |||||||||||
| Property | at DOD | Title | Probate | Estate | Deduction | Assets | ||||||||
| Life Insurance | $ 4,000,000 | H | – | – | – | – | ||||||||
| Cash & Checking | 5,000 | JT | – | 2,500 | 2,500 | 5,000 | ||||||||
| Savings Account | 945,000 | JT | – | 472,500 | 472,500 | 945,000 | ||||||||
| Certificate of Deposits | 180,000 | H | – | 180,000 | 180,000 | 180,000 | ||||||||
| Stock Portfolio | 940,000 | JT | – | 470,000 | 470,000 | – | ||||||||
| Mutual Fund Portfolio | 2,907,682 | H | – | 2,907,682 | 2,907,682 | 2,907,682 | ||||||||
| Installment Receivable | – | H | – | – | – | – | ||||||||
| 401(k) Account | 1,054,540 | H | – | 1,054,540 | 1,054,540 | – | ||||||||
| Annuity Policy | 74,000 | H | – | 74,000 | 74,000 | – | ||||||||
| Primary Residence | 900,000 | JT | – | 450,000 | 450,000 | – | ||||||||
| Vacation Home | 750,000 | H | – | 750,000 | 750,000 | 750,000 | ||||||||
| Auto – Chevy SUV | 35,000 | H | – | 35,000 | 35,000 | 35,000 | ||||||||
| Furniture & Personal Property | 150,000 | JT | – | 75,000 | 75,000 | 150,000 | ||||||||
| 2015 Sea Ray 24″ Boat & Trailer | 95,000 | H | – | 95,000 | 95,000 | 95,000 | ||||||||
| 1918 Inverted Jenny Stamp | 725,000 | H | – | – | – | – | ||||||||
| Totals | $ 12,761,222 | – | 6,566,222 | 6,566,222 | 5,067,682 | |||||||||
| 2) | The Adjusted Gross Estate, Tentative Tax Base and Federal Estate Tax Liability Calculations for John: | Taxable | Tax | |||||||||||
| Tax Rate Schedule | Rate | Amount | Liability | |||||||||||
| Gross Estate | $6,566,222 | |||||||||||||
| Less: Administration Expense | – | $0 – $10,000 | 18% | 0 | 0 | |||||||||
| Less: Burial Expense | – | $10,000 – $20,000 | 20% | 0 | 0 | |||||||||
| Less: Casualty Losses | – | $20,000 – $40,000 | 22% | 0 | 0 | |||||||||
| Less: Debts | – | $40,000 – $60,000 | 24% | 0 | 0 | |||||||||
| Adjusted Gross Estate | 6,566,222 | $60,000 – $80,000 | 26% | 0 | 0 | |||||||||
| Less: Marital Deduction | (6,566,222) | $80,000 – $100,000 | 28% | 0 | 0 | |||||||||
| Less: Charitable Deduction | – | $100,000 – $150,000 | 30% | 0 | 0 | |||||||||
| Taxable Estate | – | $150,000 – $250,000 | 32% | 0 | 0 | |||||||||
| Add: Adjusted Taxable Gifts | – | $250,000 – $500,000 | 34% | 0 | 0 | |||||||||
| Tentative Tax Base | $0 | $500,000 – $750,000 | 37% | 0 | 0 | |||||||||
| $750,000 – $1,000,000 | 39% | 0 | 0 | |||||||||||
| Tentative Tax | $0 | $1,000,000 + | 40% | 0 | 0 | |||||||||
| Less: Gift Tax Paid | $0 | |||||||||||||
| Less: Unified Credit | $0 | TOTALS | 0 | 0 | ||||||||||
| Federal Estate Tax Liability | $0 | |||||||||||||
| 3) | Calculate the new basis for the following selected assets for Mary on the assets received from John: | |||||||||||||
| FMV | Wife’s New | |||||||||||||
| at DOD | Basis | |||||||||||||
| Stock Portfolio | – | – | ||||||||||||
| Installment Receivable | – | – | ||||||||||||
| 401(k) Plan | – | – | ||||||||||||
| Annuity Policy | – | – | ||||||||||||
| Primary Residence | – | – | ||||||||||||
| 4) | The Gross Estate, Probate Estate, the Marital Deduction and the FMV of Husband’s Inherited Asset Calculations for Mary: | |||||||||||||
| FMV of John’s | ||||||||||||||
| FMV | Gross | Marital | Inherited | |||||||||||
| Property | at DOD | Title | Probate | Estate | Deduction | Assets | ||||||||
| Life Insurance | $ 400,000 | W | – | – | – | – | ||||||||
| Cash & Checking | 5,000 | JT | – | 2,500 | 2,500 | 5,000 | ||||||||
| Savings Account | 945,000 | JT | – | 472,500 | 472,500 | 945,000 | ||||||||
| Stock Portfolio | 940,000 | JT | – | 470,000 | 470,000 | 940,000 | ||||||||
| 401(k) Account | 105,000 | W | – | 105,000 | 105,000 | – | ||||||||
| Cash Value of Universal Life Insurance #2 | – | W | – | – | – | – | ||||||||
| Primary Residence | 900,000 | JT | – | 450,000 | 450,000 | – | ||||||||
| Auto – Chevy Automobile | 20,000 | W | – | 20,000 | 20,000 | 20,000 | ||||||||
| Furniture & Personal Property | 150,000 | JT | 75,000 | 75,000 | 150,000 | |||||||||
| Gross Estate | $ 3,465,000 | – | 1,595,000 | 1,595,000 | 2,060,000 | |||||||||
| 5) | The Adjusted Gross Estate, Tentative Tax Base and Federal Estate Tax Liability Calculations for Mary: | |||||||||||||
| Gross Estate | $1,595,000 | Taxable | Tax | |||||||||||
| Less: Administration Expense | – | Tax Rate Schedule | Rate | Amount | Liability | |||||||||
| Less: Burial Expense | – | |||||||||||||
| Less: Casualty Losses | – | $0 – $10,000 | 18% | 0 | 0 | |||||||||
| Less: Debts | – | $10,000 – $20,000 | 20% | 0 | 0 | |||||||||
| Adjusted Gross Estate | 1,595,000 | $20,000 – $40,000 | 22% | 0 | 0 | |||||||||
| Less: Marital Deduction | (1,595,000) | $40,000 – $60,000 | 24% | 0 | 0 | |||||||||
| Less: Charitable Deduction | – | $60,000 – $80,000 | 26% | 0 | 0 | |||||||||
| Taxable Estate | – | $80,000 – $100,000 | 28% | 0 | 0 | |||||||||
| Add: Adjusted Taxable Gifts | $100,000 – $150,000 | 30% | 0 | 0 | ||||||||||
| Tentative Tax Base | – | $150,000 – $250,000 | 32% | 0 | 0 | |||||||||
| $250,000 – $500,000 | 34% | 0 | 0 | |||||||||||
| Tentative Tax | – | $500,000 – $750,000 | 37% | 0 | 0 | |||||||||
| Less: Unified Credit | – | $750,000 – $1,000,000 | 39% | 0 | 0 | |||||||||
| Federal Estate Tax Liability | – | $1,000,000 + | 40% | 0 | 0 | |||||||||
| TOTALS | 0 | 0 | ||||||||||||
| 6) | FMV | Husband’s | ||||||||||||
| at DOD | New Basis | |||||||||||||
| Stock Portfolio | – | – | ||||||||||||
| 401(k) Plan | – | – | ||||||||||||
| Primary Residence | – | – | ||||||||||||
| For questions 7 -9, highlight the answer or delete the other three choices. | ||||||||||||||
| 7) | John and Mary would like to fund a trust that would receive an income tax deduction for charitable gifting. They want the trust to provide a fixed payment | |||||||||||||
| for each spouse for the rest of their lives with the remainder passing to charity upon their deaths. Which one of the following gifting techniques would | ||||||||||||||
| accomplish their goals? | ||||||||||||||
| (a) – A charitable gift annuity | ||||||||||||||
| (b) – A charitable lead annuity trust | ||||||||||||||
| (c) – A charitable remainder annuity trust | ||||||||||||||
| (d) – A grantor retained annuity trust | ||||||||||||||
| 8) | After meeting with an estate planning attorney, John has decided to create two testamentary trust through his will. One trust will distribute all income | |||||||||||||
| annually to Mary and give her the right to appoint trust property during her lifetime or by will at death. The other trust, funded with an exemption | ||||||||||||||
| equivalent amount, directs the trustee to pay trust principal and income to Mary for health, education, maintenance or support. Following Mary’s death, | ||||||||||||||
| trust assets will pass to the sons per the terms of the trust. What selection below will accomplish John’s goals? | ||||||||||||||
| (a) – A QTIP trust and a power of appointment trust | ||||||||||||||
| (b) – A bypass trust and a QTIP trust | ||||||||||||||
| (c) – A bypass trust and a power of appointment trust | ||||||||||||||
| (d) – A QTIP trust and an estate marital trust | ||||||||||||||
| 9) | Assume John and Mary have a combined gross estate of over $30 million and are in need of estate tax minimization strategies. Which estate planning | |||||||||||||
| techniques should the couple consider to reduce the taxable amount of their estates? | ||||||||||||||
| (a) – Marital deductions and portability | ||||||||||||||
| (b) – GRITs and preferred stock recapitalization | ||||||||||||||
| (c) – Bypass trusts and estate equalization | ||||||||||||||
| (d) – QDOT trusts and disclaimer provisions in wills |
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