Financial Needs Analysis in the event of death (FNA)

Transcription

1 Financial Needs Analysis in the event of death (FNA) Scénario #1 Prepared for: Mr. Maurice Engarde Ms. Marie Engarde March 30, 2010 François Forget Stratégie financière Impact inc. Directeur administratif 485, rue McGill bureau 400 Montréal, Quebec Phone: (514) Fax: (514)

2 Prepared for: Mr. Maurice Engarde Ms. Marie Engarde Strategic Validation Creativity to enhance your wellbeing This document, prepared by Planist Ltd., is the result of a reliable and effective strategic validation applied to your personal situation. It was prepared with information gathered by your advisor. Clients have their own objectives in regard to personal finances and each client is unique. This is why Planist has developed a series of strategic validations to meet individual requirements. The financial needs analysis is designed specifically for those interested in the financial wellbeing of their close ones in the event of premature death. In the following analysis, three different aspects are studied: short term needs (liabilities), long term needs (standard of living replacement) and finally, lump sum for future projects. The validation offers great calculation flexibility: rate of return on investment, inflation rate, standard of living replacement duration with or without depletion of capital. Depending on the results of the analysis, your advisor will be in a position to recommend efficient strategies to secure your present situation in order for you to reach financial protection for your heirs. Since your financial security comprises a number of interrelated elements, such as taxation, s avings management, risk management and estate planning, Planist strongly recommends that you obtain a complete picture of your financial position by requesting a comprehensive and integrated financial strategy simulation. Planist will then seek out the best possible advice to meet your needs. We hope you find this document interesting! François Forget Stratégie financière Impact inc. Directeur administratif Attention: The results of this strategic validation are based on the information provided by the financial advisor. Planist Ltd. ensures that any tax advice provided is lawful and that the mathematical calculations used to illustrate this strategy are accurate, but it is not in a position to verify the specific data appearing in this document. Copyright Planist Ltd Page 2

3 Mr. Maurice Engarde and Ms. Marie Engarde Financial Needs Analysis in the event of death Assumptions Maurice Marie Age Duration of standard of living retention for the survivor (number of years) Inflation rate 2.0% 2.0% Effective income tax rate 28.9% 24.7% Value / rate of return on savings $0 0.0% $0 0.0% Value / rate of return on RRSP $0 0.0% $0 0.0% Pension plans value / rate of return $0 0.0% $0 0.0% Short term needs 1 Short term Maurice Marie Current debts Mortgage $125,000 $125,000 Personal loans $0 $0 Credit margin, credit cards $0 $0 Final expenses $15,000 $15,000 Tax upon death $0 $0 Home-based care/child care $0 $0 Specific bequests $0 $0 Emergency fund $15,000 $15,000 Major short term expenses $0 $0 Other short term cash requirements $0 $0 Total short term debt $155,000 $155,000 2 Liquid assets used for immediate needs Cash (savings, T-bills, Canada saving bonds) $0 $0 CPP/QPP death benefit $2,500 $2,500 Other $2,500 $2,500 Total liquid assets for immediate needs $5,000 $5,000 3 Short term needs $150,000 $150,000 Page 3

4 Mr. Maurice Engarde and Ms. Marie Engarde Financial Needs Analysis in the event of death Long term needs Maurice Marie 4 Annual standard of living for the family or the spouse Annual income $90,000 $60,000 less RRSP contributions -$10,000 -$5,000 less contributions to CPP/QPP, E.I. and union dues -$3,000 -$3,000 Taxable income $77,000 $52,000 less income tax Effective tax rate: 28.9% -$22, % -$12,839 Net income $54,751 $39,161 less non-registered annual savings $0 $0 less annual debt payments -$6,000 -$6,000 Standard of living (after tax) $48,751 $33,161 Percent of deceased s standard of living to retain 72% $35,101 48% $15,917 Spouse's current standard of living (after tax) $33,161 $48,751 Survivor s standard of living (after tax) to retain Effective tax rate: 32.6% $68, % $64,669 5 Duration of survivor's standard of living retention (in years) Sources of additional income for the survivor Personal assets used to sustain the standard of living RRSP, pension plans, savings (long term) $0 $0 Survivor's additional income Rental income $0 $0 Surviving spouse pension $8,951 $8,951 Other taxable income $0 $0 Total additional income $8,951 $8,951 less: income tax Effective tax rate: 32.6% -$2, % -$2,784 Additional income (after tax) $6,036 $6,167 Income (after tax) generated by personal assets $0 $0 Spouse's current standard of living (after tax) $33,161 $48,751 Standard of living (after tax) available to the survivor $39,197 $54,918 Page 4

5 Mr. Maurice Engarde and Ms. Marie Engarde Financial Needs Analysis in the event of death Long term needs Maurice Marie 7 Annual shortfall (4-6) $29,065 $9,751 8 Required financial resources to eliminate shortfall With protection against inflation $557,742 $206,971 Without protection against inflation $461,468 $167,244 9 Major future lump sum expenses (present value) Home renovations $0 $0 Automobile $0 $0 Secondary residence $0 $0 Children's post secondary education $50,000 $50,000 $50,000 $50,000 Summary 10 Additional needs Short term (3) $150,000 $150,000 Long term (8+9) $607,742 $256,971 Total needs $757,742 $406, Available capital Current life insurance $100,000 $100,000 Disposal of assets or other (business assets) $0 $0 Total $100,000 $100, Additional life insurance required With protection against inflation Without protection against inflation $657,742 $306,971 $561,468 $267,244 Page 5

6 Mr. Maurice Engarde Survivor's standard of living simulation $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $ Surviving spouse's age Standard of living to retain (see result of point 4 in the report) Standard of living available (see result of point 6 in the report) Page 6

7 Ms. Marie Engarde Survivor's standard of living simulation $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $ Surviving spouse's age Standard of living to retain (see result of point 4 in the report) Standard of living available (see result of point 6 in the report) Page 7