Reference no: EM133054419
Kyle and Marina Ramon
It is November 2021, Kyle and Marina Ramon would like a review of their family financial situation and estate plan. They have completed a detailed questionnaire and the following summaries have been prepared:
Personal Information
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Client
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Age
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Health
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Occupation
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Kyle Ramon
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64
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Excellent
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Teacher
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Marina Ramon
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61
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Excellent
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Secretary
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Owen Ramon (Son)
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42
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Poor
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Unemployed
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Melanie Ramon (Daughter)
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40
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Excellent
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Engineer
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Grandchildren
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15, 12, 9
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|
|
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|
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Employment
Kyle works at a teacher for the local school board. He receives a salary of $95,000 per year and has contributed into the Defined Benefit Pension Plan since he began his career. His Pension statement states he will receive a pension of $80,000 per year when he retires at 65.
Marina works as a secretary for 30 years and is retiring on December 31st.
Kyle and Marina are planning on travelling the world when Kyle retires at the end of the school year in June 2022.
Financial Position
The couple has a home worth $1,400,000, which is mortgage free. They purchased it in 1995 for $200,000. They also have a cottage in the Kawartha's worth about $750,000, which they bought for $95,000 cash 25 years ago. Both properties are held in joint tenancy.
Kyle has accumulated $450,000 in RRSP assets and he has Marina named as his beneficiary. Marina has $850,000 in RRSP assets and she has the estate named as her beneficiary. Both Kyle and Marina have fully maximized their TFSA contributions (ACB of $65,500 and a FMV of $85,000 each), and they each have $41,000 in their joint bank account. Neither of them has named beneficiaries on their TFSA accounts.
They have a joint non-registered account of $350,000 invested with an Adjusted Cost Base of $225,000.
Children
A major concern is their son, Owen. He has been in and out of trouble with the authorities since high school. He has never held a job for any length of time. He has no marketable skills. He has been treated for substance abuse.
Melanie is very successful in her field and is comfortable financially. She has three children who will almost certainly go to college or university.
Kyle and Marina have stated that they want to pay for their grandchildren's post-secondary education but have not started separate savings accounts for them.
Life Insurance
Kyle and Marina have $1,000,000 joint-life, last-to-die, term-to-100 policy, which they took out 10 years ago when Kyle became concerned about the tax liability on his estate. The estate is named at the beneficiary of the life insurance.
Marina and Kyle want to ensure that the assets they have worked hard for are passed on to their heirs. They want to minimize any taxes owing when they die.
Goals & Objectives
Kyle and Marina realize that the amount of money they have managed to accumulate is more than adequate for their lifetime needs and they want to provide for their children and grandchildren through their estate.
They are aware that they will have to support Owen. They can control how much he gets while they are living but they are concerned that Owen would squander any inheritance and ask how they can structure his legacy to meet his needs for life.
They would like to set aside funds for their grandchildren's education as tax efficiently as possible. They would also like to leave some funds to charity.
Wills & POAs
They had drawn up wills and POAs when their kids were small. They destroyed these documents 5 years ago because they were outdated and did not represent their current wishes. They have been meaning to see their lawyer to get new documents drawn up but have been focused on retirement and have not gotten them done.
Questions:
1) Identify Kyle and Marina's estate planning objectives.
2) If Kyle were to die today, how would his estate be distributed? Assume that Kyle and Marina live in Ontario.
3) What issues are present with not having a will? Please use your findings from part 3.
4) What are some recommendations you would make to Kyle and Marina regarding their estate plan.