Susan & David Example

Transcription

1 Cash Flow Analysis for Susan & David Example Asset Advisors Example, LLC A Registered Investment Advisor 2430 NW Professional Drive Corvallis, OR IMPORTANT: The illustrations or other information generated by this report regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.

2 Table of Contents Cash Flow/Debts Cover 1 Disclaimer 2 Cash Flow Planning (text) - A1 3 Cash Flow Management (text) - B1 4 Cash Flow Needed vs Available Graph - B2 5 Sources of Funds Graph - B3 6 Annual Expenses Graph - B4 7 Cash Flow Chart (text) - B5 8 Current Year Cash Flow - B6 9 Future Year Cash Flow - B6a 10 Cash Flow Illustration - B7 11 Annual Expense Illustration - B8 12 Earned Income - B9 13 Pension and SS - B10 14 Other Income/Expense Detail - B11 15 Other Income/Expense - B12 16 Miscellaneous Cash Flow Items - B12a 17 Financial Goals - B13 18 Education Funding - B14 19 Education Funding Sources - B14a 20 Saving For College (text) - B14b 21 Residence Sale - B15 22 Life Insurance Summary - B16 23 Other Ins Premiums - B17 24 Loans 1 - B18 25 Loans 3 - B18b 26 Loans By Owner - B18c 27 Allocation of Cash Flow - B19 28 Page 1

3 Disclaimer This report is intended to provide you with an analysis of your major financial goals. It is based on the data and assumptions you have provided or instructed us to make. Consequently, the outcome of the analysis will be dependent upon the accuracy of your data and reasonableness of your assumptions. Assumed rates of return may also either be assigned by your Adviser, or if utilizing Asset Allocation, be based on the historical returns of the benchmark indexes for the asset class. Please review all assumptions before reviewing the rest of the report to ensure the accuracy and reasonableness of the assumptions. Inaccurate or unreasonable assumptions may materially impact the results of the plan. It is important to note that actual results may differ due to any number of events. Some events are within your control, such as your spending habits, while other events, such as market performance, interest rates and tax policies, are not. To the extent that any of the referenced assets represent current account holdings there is no guarantee that these rates will be achieved. In addition, we have made no attempt to review your property and liability insurance policies (auto and homeowners, for example). We strongly recommend that in conjunction with this financial plan, you consult with your property and liability agent to review your current coverage to ensure it continues to be appropriate. In doing so, you may wish to review the dollar amount of your coverage, the deductibles, the liability coverage (including an umbrella policy), and the premium amounts. While assumptions are based on historical index data, past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Assumed rates of return are hypothetical which do not reflect the deduction of fees and charges inherent to investing in securities are not representative of any specific securities. Your results will vary. Growth assumptions for business assets and stock options are speculative and should be discussed and agreed upon by you and your financial advisor. Assumed rates of return and standard deviation assumptions used in the Monte Carlo analysis are based on historical asset class return data. LPL Financial does not provide tax or legal advice. The information contained in this report should be used for informational purposes only. The appropriate professionals should be consulted on all legal and accounting matters prior to or in conjunction with implementation of the plan. Page 2

4 Cash Flow Planning A1 This financial analysis has been prepared with the objective of illustrating your present and future cash flows, integrated with your assets and income taxes. Cash Flow Planning Cash flow planning is designed to account for all sources of income and expense, and to illustrate the impact that any surpluses or shortages might have on the ability of your assets to last through your life expectancy. This method of planning is sometimes referred to as an "optimized" approach. What do we mean by "Optimized" planning? Cash Flow Each year your income sources are compared to your annual expenses. Any surplus of spendable income is automatically added to your savings and investments starting in the first year. If there is a shortage of spendable income, the amount needed to make up the shortage is withdrawn from your asset accounts. This approach is intended to reflect what would happen if you are managing your funds in an optimal manner. Assets Every year your savings and investment accounts will have potential interest, dividends, capital gains or appreciation. The cash flow analysis makes the assumption that, unless otherwise indicated, the entire rate of return is reinvested into the account. This approach optimizes the potential growth of each asset account. Taxes are not charged to the earnings on the account, but instead are added to your personal expenses. Taxes Since income and FICA (Social Security) taxes can represent a substantial part of your annual expenses, the "optimized" planning approach carefully computes your tax burden every year. The analysis uses the actual IRS tax rate tables including annual adjustments for "indexing" the rate breakpoints and standard deductions. For high income taxpayers, itemized deductions and exemptions are phased out. Separate tax treatment is provided for dividends, capital gains, alternate minimum tax, the taxable portion of social security income and other areas where special treatment is required. The result is that, instead of showing a "guesstimate" of your annual taxes, the analysis provides a more accurate yearly indication of future potential taxes. Page 3

5 Cash Flow Management B1 The management of your annual cash inflows and outflows is based on the following details. The various report pages will provide more specifics about the annual amounts and results. Cash Flow Surplus In any year when there is a cash flow surplus, this surplus will be reinvested into your savings and investment accounts divided as shown below: Before After age 65 age 65 Taxable accounts (savings, CD, money market) 20% 40% Equity and other (stocks, mutual funds, real estate, etc.) 80% 60% Tax-Free accounts (municipal bonds and funds) 0% 0% Tax-Deferred accounts (annuities, non deductible IRAs, etc.) 0% 0% Cash Flow Shortage If in any year the amount of expenses exceeds the spendable income available, the analysis will draw funds from your savings and investment accounts to make up the shortfall. These funds may result in a taxable event if money is taken from your equity and other accounts which have a cost basis less than the current market value, or if it is necessary to take money from your retirement accounts because all other accounts have been depleted. In case of a shortage, funds are drawn from accounts in the following order - taxable, equity and other, tax free, tax deferred, tax deductible retirement accounts, and finally Roth IRA accounts. In some cases assets may be periodically rebalanced between accounts. Interest and dividends Each year the interest and dividends earned is computed on the various accounts, and these amounts are automatically assumed to be reinvested into the account unless an option is elected to take the amounts in cash and added to your spendable cash flow. On the following reports, the cash option will be indicated by a cash distributions in the "Cash Withdrawal" column. Taxable accounts (savings, CD, money market) Equity and other (stocks, mutual funds, real estate, etc.) Tax-Free accounts (municipal bonds and funds) Tax-Deferred accounts (annuities, non deductible IRAs, etc.) Income Taxes The amount you are required to pay for income taxes can vary every year, depending on the sources and amount of your income, and the adjustments and deductions available. In the analysis we have estimated all the various income and deduction items to determine the taxable income each year, including consideration of ordinary taxable income, capital gains, AMT and other significant items. The taxes are computed using real IRS tax rate tables, including indexing of the tax breakpoints using an assumed index rate of 0.00% per year. The amount of federal and state income tax and FICA (Social Security) tax is added to your annual expenses each year. Page 4

6 Cash Flow B2 The bars in the above graph represent the amounts available from... Earned income (wages & self employment) Pension plans and Social Security Misc - (inheritances, sale of residence, investment account systematic withdrawal plans or interest/dividends taken in cash, scheduled retirement account distributions or required minimum distribution amounts.) The line illustrates the annual expenses including... Personal living expenses Life insurance and other premiums Mortgage and debt repayment Planned deposits to investments and retirement accounts Miscellaneous expense items Taxes If income from various sources exceeds expenses, the excess is reinvested in savings and investment accounts. If expenses are greater than income, it is assumed that funds required to meet such excess expenses will be drawn from savings and investment accounts to make up the shortage. Page 5

7 Sources of Funds B3 Each year your spendable money will come from several different sources, as shown above. When your income needed exceeds the funds available from earnings, pensions and Social Security, then withdrawals are made from your asset accounts or qualified retirement plans. Earned Pen/SS Invest Retire Other Salaries and self employment income. Defined benefit pension plans and the total income from Social Security benefits. Interest or dividends paid in cash or withdrawals from your investment accounts to meet spending requirements. Distributions from your qualified retirement accounts either to meet your spending needs, scheduled distributions, or distributions made to meet the IRS minimum distribution requirements. Other single year or multiple year sources of funds, excess proceeds from sale of your residence, or life insurance death benefits. Page 6

8 Annual Expenses B4 Your annual expenses represent a number of different items, including personal needs, life insurance premiums, debt repayment, additions to savings and investments, other miscellaneous expenditures and taxes of various types. The graph should help you visualize the proportionate amount of your total outlay for each of these types of expenditures, and the changing mix over the future years. Page 7

9 Cash Flow Chart B5 The following flow chart illustrates the logic used in your cash flow report, indicating the methods used to allocate annual surplus and shortages. SURPLUS - If there is a surplus of income after deducting expenses, then the surplus is divided between the Taxable, Equity/Other, Tax-Deferred, and Tax-Free accounts in the percentages shown. SHORTAGE - if there is a cash flow shortage, funds are drawn from the accounts in order starting from the top down. As each account is depleted, then the next account is used. Income >>>>> Earned Income Interest and Dividends Pensions & Social Security Miscellaneous Income Less Expenses Shortage is drawn from accounts in the order shown below Personal Insurance Debt Payments Savings and investment additions Income Taxes >>>>> Surplus is divided as shown below <<<<< Taxable (Until age 65) (After age 65) <<<<< 20% 40% <<<<< Equity & Other <<<<< 80% 60% <<<<< Tax-Free <<<<< <<<<< Tax-Deferred <<<<< <<<<< Qualified Plans * * Mandatory distributions start at age Page 8

10 Current Year Cash Flow INCOME Monthly Annual Percent of Income Salaries & Wages $10,000 $120, B9 Self Employment Income (Sch C) 2,083 25, B9 Interest 239 2, D3 Dividends 216 2, C6a Capital Gains / Losses (Sch D) 213 2, C6a Rental Real Estate 552 6, C 24 Retirement Account Distributions C 13 Total income available $13,366 $160, EXPENDITURES Monthly Annual Percent of Income Federal and State Income Tax $2,167 $26, D3 FICA Taxes 1,059 12, D6 Residence Mortgage 2,400 28, B 18 Credit Cards 100 1, B 18 Life Insurance Premiums 305 3, A7 Homeowners & Other Insurance A8 Auto Insurance A8 Disability Insurance A8 Saving and Investment Additions 261 3, B8 Retirement Account Additions (IRA, 401(k), TSA, etc.) , B8 Reinvestment of Interest, Dividends and Capital Gains 669 8, C4...C8 Education Fund Deposits 145 1, B 14a Charitable Contributions 166 2, D 10 Property Taxes 511 6, D 10 Medical Expenses 416 5, D 10 Food and Household Expenses , A9 Utilities 445 5, A9 Auto Operating and Maintenance 366 4, A9 Holidays 166 2, A9 Domestic Help 250 3, A9 Clothing 300 3, A9 Property Improvements/Upkeep 416 5, A9 Vacations 166 2, A9 Pet Expenses 83 1, A9 Books/Subscriptions A9 Total spending and savings $12,427 $149, Cash flow surplus (Income less Spending) $939 $11,187 Note - Some income items may differ from amounts on the Cash Flow Projection report (depending on the cash/reinvestment options.) B6 Page 9

11 Future Year Cash Flow at Susan's Age 65 INCOME Monthly Annual Percent of Income Interest $206 $2, C4,C5,C7 Dividends 305 3, C6a Capital Gains / Losses (Sch D) 263 3, C6a Rental Real Estate 814 9, C 24 Pension Income 200 2, B 10 Retirement Account Distributions 97 1, C 13 Social Security 2,452 29, B 10 Total income available $4,337 $52, EXPENDITURES Monthly Annual Percent of Income Federal and State Income Tax $830 $9, D6 Residence Mortgage 2,400 28, B 18 Credit Cards 100 1, B 18 Life Insurance Premiums 405 4, B 16 Homeowners & Other Insurance 83 1, B 17 Auto Insurance 99 1, B 17 Reinvestment of Interest, Dividends and Capital Gains 775 9, C4...C8 Education Fund Deposits 100 1, B 14a Charitable Contributions 204 2, D 10 Property Taxes 587 7, D 10 Medical Expenses 586 7, D 10 Other Expense (Stock Options, Educations Costs, etc.) 4,762 57, B 12 Miscellaneous Expense 1,280 15, Food and Household Expenses 800 9, Utilities 570 6, Auto Operating and Maintenance 405 4, Holidays 213 2, Domestic Help 320 3, Clothing 256 3, Property Improvements/Upkeep 533 6, Vacations 320 3, Pet Expenses 106 1, Books/Subscriptions Total spending and savings $15,787 $189, Cash flow surplus (Income less Spending) ($11,450) ($137,480) Note - Some income items may differ from amounts on the Cash Flow Projection report (depending on the cash/reinvestment options.) B6a Page 10

12 Cash Flow Illustration B7 Ages Earned Income Scheduled Cash flow sources and Required Minimum Distributions Retire/Roth Accounts * Investment Accounts * Pension/ SocSec Other Income Total Sources Less Living Expense & Taxes Surplus (Shortage) $145,000 $763 $6,628 $152,391 ($141,204) $11, , , ,238 (146,103) 11, , ,301 (168,735) (3,434) , , ,373 (195,645) (16,272) , , ,425 (186,800) 2, ,742 1,030 10, ,942 (147,051) (43,109) ,524 1,095 9, ,918 (156,433) (50,515) ,164 31,829 9,775 42,768 (180,258) (137,490) ,238 32,466 10,262 43,965 (155,882) (111,917) ,317 59,179 82, ,960 (128,334) 14, ,402 60,363 84, ,169 (131,231) 14, ,592 61,570 86, ,544 (137,814) 19, ,194 62, , ,643 (123,937) 73, ,587 64,058 12, ,488 (151,267) (50,779) ,001 65,339 13, ,730 (160,900) (57,170) ,523 66,645 13, ,118 (168,815) (61,697) ,976 67,978 14, ,473 (173,912) (65,439) ,443 69, , ,025 (235,936) 99, ,046 70,724 99,770 (154,814) (55,044) ,587 72, ,726 (167,209) (64,483) ,291 73, ,873 (173,015) (67,142) ,980 75, ,034 (179,008) (69,974) ,742 76, ,296 (185,224) (72,928) ,578 78, ,664 (191,668) (76,004) ,490 79, ,138 (198,290) (79,152) ,356 81, ,597 (205,062) (82,465) ,279 82, ,144 (211,974) (85,830) ,079 84, ,601 (219,048) (89,447) ,907 86, ,120 (197,840) (64,720) ,752 87, ,689 (204,997) (68,308) ,417 89, ,113 (212,383) (72,270) ,058 47,335 99,393 (183,229) (83,836) ,388 48, ,669 (176,210) (74,541) ,638 49, ,885 (188,675) (84,790) B9 C10..C11a C4..C8 B10 B12, B12a B8 * Scheduled distributions, interest or dividends taken in cash or amounts taken to meet the IRS minimum distribution requirements. Page 11

13 Annual Expense Illustration B8 Ages Personal Expenses * Life & Misc. Ins. Premiums Debt Payments Asset Account Deposits Retirement Account Deposits Other Expense & Stock Opt. Itemized Deductions** Income Tax Total Expenses $39,080 $5,835 $30,000 $3,132 $11,296 $13,140 $38,721 $141, ,424 5,897 30,000 3,161 11,649 13,573 41, , ,817 5,961 30,000 3,190 12,861 15,015 14,022 45, , ,260 6,027 30,000 3,220 13,262 34,520 14,489 50, , ,214 7,291 30,000 3,251 14,125 17,912 14,975 55, , ,763 7,362 30,000 2,490 7,419 17,083 15,479 21, , ,367 7,435 30,000 2,522 7,642 17,796 16,003 27, , ,533 7,062 30,000 57,155 16,548 9, , ,433 7,141 30,000 33,052 17,115 8, , ,608 4,908 30,000 12,796 17, , ,862 4,993 29,356 13,052 18, , ,197 5,081 28,800 13,313 18,954 4, , ,616 5,172 5,828 13,579 19,618 10, , ,122 5,266 24,070 13,850 22,714 13, , ,719 5,364 24,070 14,127 23,481 19, , ,409 5,465 24,070 14,410 24,278 23, , ,195 5,570 24,070 14,698 25,106 24, , ,082 5,679 24,070 25,968 97, , ,073 5,791 24,070 26,864 12, , ,172 5,908 24,070 27,796 20, , ,382 6,029 24,070 28,766 21, , ,708 6,154 24,070 29,776 23, , ,154 6,284 24,070 30,826 24, , ,723 6,418 24,070 31,920 26, , ,421 6,558 24,070 33,059 28, , ,252 6,702 24,070 34,244 29, , ,221 6,851 24,070 35,479 31, , ,333 7,006 24,070 36,765 32, , ,593 7, ,105 29, , ,007 7,333 39,501 31, , ,579 7,505 40,955 32, , ,053 5,537 42,471 26, , ,979 5,668 44,051 13, , ,046 5,803 45,698 20, , B16 B18b C4..C8 C10..C11a B12 D10 Note - it is assumed that the various tax reduction act changes are extended past See Income Tax Calculations report for details. * Personal expenses include education fund deposits. ** Itemized deductions do not include mortgage interest, state tax, and medical insurance premiums are adjusted for phaseouts. D6 Page 12

14 Earned Income Schedule B9 Age Susan Annual Salary Self Employment Age Annual Salary Self Employment Total Earned Income $65, $55,000 $25,000 $145, , ,650 25, , , ,350 26, , , ,100 27, , , ,903 28, , , , , , David Page 13

15 Pension and Social Security Age Susan David Client Pension 2 Client Pension 1 SocSec* Spouse Pension 1 Spouse Pension 2 SocSec * $21,809 Age $2,400 $25,620 Total Pension & Social Security ,400 29,429 31, ,448 30,018 32, , ,497 30,618 59, , ,547 31,230 60, , ,598 31,855 61, , ,650 32,492 62, , ,703 33,142 64, , ,757 33,805 65, , ,812 34,481 66, , ,868 35,170 67, , ,926 35,874 69, , ,984 36,591 70, , ,044 37,323 72, , ,105 38,070 73, , ,167 38,831 75, , ,230 39,608 76, , ,295 40,400 78, , ,361 41,208 79, , ,428 42,032 81, , ,496 42,872 82, , ,566 43,730 84, , ,638 44,605 86, , ,710 45,497 87, , ,785 46,407 89, , , , , , , B10 * Less earned income reduction if applicable Page 14

16 Other Income/Expense Detail B11 Single Year Description Start Age Stop Age (today's $)* Increase Rate (prior) Increase Rate (after) (future $)* Ordinary Taxable Percent Taxable Dollar Multiple Year Description Start Age Stop Age (today's $)* Increase Rate (prior) Increase Rate (after) (future $)* Ordinary Taxable Percent Taxable Dollar Extended travel (10k/yr first 10 yr of ret (10,000) 3.00% 2.00% (12,299) 0.00% 0 Sale of equipment , % 2.00% 71, % 0 * Negative numbers indicate cash outflow, positive numbers represent income. Page 15

17 Other Income (Expense) B12 Other Income and Expense Totals Ages Life Insurance Income Taxable % Expense Taxable % Stock Options Residence sale Education Other goals Other Income Other Expenses Taxable s (1,690) (1,690) ,163 (34,520) 1,163 (34,520) 1, (17,912) (17,912) ,338 (17,083) 1,338 (17,083) (17,796) (17,796) (12,299) (44,856) (57,155) (12,545) (20,507) (33,052) ,706 (12,796) 71,706 (12,796) ,140 (13,052) 73,140 (13,052) ,602 (13,313) 74,602 (13,313) (13,579) 112, ,341 (13,579) (13,850) (13,850) (14,127) (14,127) (14,410) (14,410) (14,698) (14,698) S C B11 B11 B11 B11 C12 B15 B13, B14a 10 Note - c = Susan's life expectancy age. s = David's life expectancy age. *Residence sale = Sale price less sale cost less down payment on new home. Page 16

18 Miscellaneous Cash Flow Items B12a Ages Sched D Capital G/L Sched E Passive G/L Increase (decrease) Fed/State Income AMT Preference Income Rental Real Estate Inc/(Exp) Other Taxable Income Other Non Taxable Income Total Other CashFlow Items $6,628 $6, ,051 7, (13,325) (13,325) ,924 7, ,373 8, ,831 8, ,299 9, ,775 9, ,262 10, ,758 10, ,264 11, ,780 11, ,306 12, ,843 12, ,391 13, ,949 13, ,519 14, , , Page 17

19 Financial Goals It is important to plan ahead for financial goals like purchasing a home, a business opportunity or other special needs. If you indicated any special goals, the following table shows the amount of money needed for those items. The costs shown below are included in your projection of Other Income and Expense. B13 Funding methods at 8.00% Inflated after tax Description: Age Needed Inflation Rate % Needed Needed Lump Sum Deposit Monthly Deposit Retirement trip % $15,000 $17,865 $14,182 $438 Sail boat % 20,000 26,319 15, In order to achieve a future financial goal, such as a major purchase or investment, you should plan to have funds available at the right time. Two methods are illustrated: pre-funding with a lump sum of money dedicated to the future goal, or pre-funded with an accumulation account where funds are deposited each month. Lump Sum Using this method, a calculation is done to determine what amount of money would need to be set aside now at an after-tax rate of return that would grow to the required amount at the time the funds are needed. The initial lump sum deposit would be held in a separate account and then used to pay for the expense. Monthly Deposits If a lump sum amount is not available to set aside for the future expense, you might consider using a separate account where monthly deposits are contributed to accumulate the funds required. The amount shown above as "Monthly Deposit" would be anticipated to grow at the after-tax rate shown, and when needed would be used to pay for the goal specified. The above funding amounts and rates are used for illustration only and do not represent any particular investment program. Results are not guaranteed. Note: The expenses for these goals are included in the projection of personal expenses. Page 18

20 Educational Funding Requirements Child Per Year Lump Sum* Monthly ** Bonnie $15,100 $53,047 $693 Andy $16,400 $62,415 $1,461 Totals $115,461 $2,154 B14 to be Paid by Parents % ,040 17,040 17, ,704 17,704 17, ,395 18,395 18, ,112 19,112 19, ,283 18,283 18, ,996 18,996 18, ,737 19,737 19, ,507 20,507 20, Funding education costs with a lump sum investment now: Lump sum needed today to fund future costs Funds now available for college expenses. Additional lump sum needed now Monthly funding with level payments through the last year of college: Total level monthly payments to fund costs Payments needed considering $25,500 available now Additional needed with $25,500 and $145 current deposits $115,461 25,500 $89,961 $1,509 1,176 $1,031 Note: If education funds do not earn at the rate illustrated, it would require either a larger amount of initial lump sum investment, larger monthly deposits to the education fund, or education loans to finance the costs. *Lump sum is the dollar amount needed today to fund the expenses assuming a 6.00% after tax or tax free return on education funds. **Monthly deposit needed to fund the expenses from now through the last year of school. Note: The parents' share of education costs is included in personal expenses. Note: Education expenses are assumed to inflate at 3.9%. Page 19

21 Education Funding Sources B14a Ages Year Education Fund Balance (begin year) Annual Additions Annual Annual Growth at Costs 6.00% From Educ Funds Sources of Funds From Assets $25,500 $1,740 $1, ,819 1,740 (17,040) , ,274 1,740 (17,704) 16,014 1, ,740 (18,395) 1,740 16, ,200 (19,112) 1,200 17, ,200 (18,283) 1,200 17, ,200 (18,996) 1,200 17, ,200 (19,737) 1,200 18, (20,507) 20, Note: The parents' share of education costs is included in personal expenses. Note: Education expenses are assumed to inflate at 3.90%. Page 20

22 Saving For College B14a Recent changes in income tax regulations have provided a variety of opportunities that should make saving for your child's education expenses more palatable. In some cases current education expenses can result in current tax savings, and putting aside money for future costs can be much more tax-friendly than in the pas 529 Plans: Section 529 of the Revenue code has enabled states to establish special college savings funds where parents or grandparents can make deposits to an account to accumulate money for tuition and in some cases other expenses. The terms and benefits of each state vary, but generally include the following features: Tax savings - starting in 2002 the earnings on the accounts will not only be accumulated without federal income tax, but withdrawals will also be tax free so long as they are used for qualified educational expenses. Some states will also allow withdrawals free of state taxation and many states will allow you to take a deduction for some portion of the money deposited but the rules of each state vary. Also, if you withdraw money from a 529 plan and do not use it on qualified educational expenses, you will generally be subject to both federal and state taxation as well as a 10% tax penalty. Control - unlike other accounts sometimes used to accumulate money for the child, you, the donor, stay in control of the assets. You decide when withdrawals are taken and for what purpose. And in most cases you can even reclaim the funds, particularly if the child elects not to attend college. (There may be a penalty for "non-qualified" withdrawals.) Simple - once you select which state plan to use, a simple enrollment form is completed, and deposits may even be made by automatic checking account withdrawals. The account is managed by the state or an investment manager hired by the state. Everyone eligible - generally there are no special eligibility requirements, and the amounts you can contribute in many states are substantial (in some cases as much as $250,000 or more.) Other education plans: The following items are effective with the 2001 tax act: Deduction of higher education expenses up to $4,000 may be deductible (subject to income limitations.) This deduction continues to be renewed by Congress, but may not be available in future years. Coverdell Education Savings Accounts - the nondeductible contribution may be used for "qualified higher education" or "qualified elementary and secondary education expenses", including private institutions. The maximum allowable contribution is $2,000 subject to certain income limitations. The plan is integrated with the HOPE and Lifetime Learning Credit programs. Employer provided assistance - the $5,250 contribution level now extends the exclusion to graduate courses and makes the exclusion for undergraduate and graduate courses permanent. Student Loan Interest Deduction - the availability for this benefit has been broadened and the earnings limits raised. For more information about these plans or to compare your state 529 plan with other states, go on the internet to : Page 21

23 Residence Sale Worksheet B15 Combined amounts for residences schedule for sale. Ages Residence Values* Mortgage Payoff Cost of Sale New Home Down Net Proceeds $307, , , , , , , , , , , , ,350 23, , , , , , , , , , , , , , , , , , , , , , , , , Description Current value Appreciation rate Sale age Value at sale Percent sale cost Total sales cost Mortgage payoff Corvallis home $307, % 70 $389, % $23,361 New Home $400,000 Appreciated cost $507,297 Percent financed 50.00% Mortgage rate 5.00% Number of years 15 Down payment $253,648 New mortgage $253,648 *Replacement residence value is shown at the end of the first year. Page 22

24 Life Insurance Summary Age Group or Term Susan Permanent (Net of Loans) Premiums Cash Values Age Group or Term David Permanent (Net of Loans) Premiums $200,000 $97,500 $1,900 $12, $75,000 $60,000 $1, ,000 97,500 1,900 18, ,000 60,000 1, ,000 97,500 1,900 24, ,000 60,000 1, ,000 97,500 1,900 30, ,000 60,000 1, ,000 97,500 1,900 36, ,000 60,000 2, ,000 97,500 1,900 42, ,000 60,000 2, ,000 97,500 1,900 48, ,000 60,000 2, ,500 1,900 55, ,000 60,000 2, ,500 1,900 56, ,000 60,000 2, ,500 1,900 57, ,500 1,900 58, ,500 1,900 60, ,500 1,900 61, ,500 1,900 62, ,500 1,900 64, ,500 1,900 65, ,500 1,900 66, ,500 1,900 67, ,500 1,900 69, ,500 1,900 70, ,500 1,900 71, ,500 1,900 73, ,500 1,900 74, ,500 1,900 75, ,500 1,900 76, ,500 1,900 78, ,500 1,900 79, ,500 1,900 80, ,500 1,900 82, ,500 1,900 83, ,500 1,900 84, ,500 1,900 85, ,500 1,900 87, ,500 1,900 88, Cash Values $2,850 4,279 5,708 7,136 8,565 9,994 11,423 12,851 14,280 15,709 17,138 18,566 19,995 21,424 22,853 24,281 25,710 27,139 28,568 29,996 31,425 32,854 34,283 35,711 37,140 38,569 39,998 41,426 42,855 44,284 45,713 B16 Page 23

25 Misc. Insurance Premiums Ages Susan Auto Disability Medical LTC David Disability Medical LTC Homeowners Prop & Casualty $430 $450 $500 $ , , , , , , , , , , , , , ,014 1, ,051 1, ,089 1, ,128 1, ,005 1,168 1, ,041 1,210 1, ,079 1,254 1, ,117 1,299 2, ,158 1,346 2, ,199 1,394 2, ,242 1,445 2, ,287 2, ,333 2, ,381 2, Auto B17 Total Misc Premiums 10 $2,165 2,227 2,291 2,357 2,426 2,497 2,570 2,197 2,276 2,358 2,443 2,531 2,622 2,716 2,814 2,915 3,020 3,129 3,241 3,358 3,479 3,604 3,734 3,868 4,008 4,152 4,301 4,456 4,617 4,783 4,955 3,637 3,768 3,903 Page 24

26 Loans - Mortgage, Auto, Credit Card Ages Residence Mortgage Balance Interest Principal Balance Auto Interest Principal Balance Credit Card Interest B18 Principal $272,000 $11,545 $17,255 $6,640 $894 $ ,745 10,775 18,025 6, ,720 9,971 18,829 5, ,891 9,132 19,668 5, ,223 8,255 20,545 5, ,678 7,339 21,461 4, ,216 6,382 22,418 3, ,798 5,382 23,418 3, ,380 4,338 24,462 2, ,918 3,247 25,553 1, , ,365 2,108 26, , , , , ,648 12,419 11, ,997 11,823 12, ,750 11,196 12, ,876 10,537 13, ,343 9,845 14, ,118 9,117 14, ,165 8,352 15, ,446 7,548 16, ,924 6,702 17, ,556 5,814 18, ,300 4,880 19, ,109 3,898 20, ,937 2,866 21, ,732 1,781 22, , , Page 25

27 Loans - RE, Other, Totals Ages Investment Real Estate Balance Interest Principal Balance Other Liabilities Interest Principal Loan Balances Total of all liabilities Interest Principal B18b Annual payments $278,640 $12,439 $17,561 $30, ,079 11,625 18,375 30, ,703 10,769 19,231 30, ,473 9,871 20,129 30, ,344 8,926 21,074 30, ,270 7,933 22,067 30, ,203 6,887 23,113 30, ,090 5,786 24,214 30, ,876 4,625 25,375 30, ,501 3,400 26,600 30, ,901 2,128 27,228 29, , ,882 28, , ,791 5, ,648 12,419 11,651 24, ,997 11,823 12,247 24, ,750 11,196 12,874 24, ,876 10,537 13,533 24, ,343 9,845 14,225 24, ,118 9,117 14,953 24, ,165 8,352 15,718 24, ,446 7,548 16,522 24, ,924 6,702 17,368 24, ,556 5,814 18,256 24, ,300 4,880 19,191 24, ,109 3,898 20,172 24, ,937 2,866 21,205 24, ,732 1,781 22,290 24, , ,430 24, A6 Page 26

28 Loans By Owner Ages Loan Balances (by owner) Loan Payments (by owner) Total Trust & Total Balances Susan David Joint C. Prop. Other Payments Susan David Joint $278,640 $6,640 $272,000 $30,000 $1, ,079 6, ,745 30,000 1, ,703 5, ,720 30,000 1, ,473 5, ,891 30,000 1, ,344 5, ,223 30,000 1, ,270 4, ,678 30,000 1, ,203 3, ,216 30,000 1, ,090 3, ,798 30,000 1, ,876 2, ,380 30,000 1, ,501 1,583 85,918 30,000 1, , ,365 29, ,673 33,673 28, ,791 5,791 5, , , , , , , , , , , , , , , , , , , , , , , ,109 87, ,937 66, ,732 45, ,443 23, C. Prop. $28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 5,828 B18c Trust & Other Page 27

29 Allocation of Cash Flow Surplus or (Shortage) B19 Ages Taxable % Equity/Other Tax-Free Tax-Deferred Retirement Accounts Roth Accounts % % % $2, $8, , , na (3,434) na na na na (16,272) na na na , na (38,276) na (4,833) na na na na (50,515) na na na na (137,490) na na na na (111,917) na na , , , , , , , , na (50,793) na (225) na na na na (57,113) na na na na (61,701) na na na na (65,443) na na , , na (40,155) na (14,900) na na na na (64,489) na na na na (67,148) na na na na (69,981) na na na na (72,935) na na na na (76,012) na na na na (79,160) na na na na (82,474) na na na na (85,839) na na na na (89,455) na na na na (64,730) na na na na (68,319) na na na na (72,280) na na na na (77,782) na (6,399) na na na na (74,541) na na na na (71,894) na (12,147) C4 C5 C7 C8 C10..C10e C11, C11a 10 Page 28