Reference no: EM131423235 , Length: 12

Specific Requirements

Prepare an almost complete comprehensive financial plan for Betty and Robert Burger. The plan must be prepared in a professional manner and at a minimum include the items listed below in the order as shown:

Part 1 Executive Summary
Part 2 Personal Net-Worth Statement (Balance Sheet) and Analysis
Part 3 Cash Flow Statement and Analysis
Part 4 Education Plan for their children
Part 5 Detailed Insurance Plan
Part 6 Revised Budget
Part 7 Recommendations and Summary

Note: There are other items the Burger family has requested advice about answers. Make sure reasoning accompanies your suggestions.

- What are Robert's options if he wants to sell or be an absentee manager for his business at retirement time? Are there any special tax considerations that may lead him to choose one option over the other?

- What mortgage type and rate should the Burger family take? Do an internet search and get a viable and recognized source to support you suggestion.
- Should Betty sell the car or keep it?
- Are the child support payments tax deductible?
- Are the Burger family's investment well positioned or should they make some changes?
What will their retirement look like using your proposed budget?

Note : Pay detail attention to the highlights parts

Design and Compile a Financial Plan for Betty and RobertBurger

RobertBurger is a47 year old entrepreneur and the sole owner of "Complete Brand Consulting Corporation",an extremely successful small Canadian qualified corporation. He has operated the business successfully for the past 15 years and has a salary of
$93,000 per annum (each year). He feels the business is worth $450,000 if it was sold today and has estimated that the net worth of the business will grow by an average of 6% a year. He would like any ideas you have regarding tax planning and the benefits he could receive if he sold the business at retirement.

Robert has two children from his previous marriage;Williamwho is 5years old and Cathy who is 7. They live with their mother Marie, Robert's estranged first wife.Robert pays Marie $550a month in alimony payments and a monthly total of $1,200 in child support payments. He will cover 50% of the children's 4 years of college/university education which currently costs $8,000 a year, and these costs are estimated to grow at 5% per year. Both children will be starting university/college at age 18 (13 and 11years respectively from now). He would like to know more about ways to fund these costs. He was also told by a friend that child support payments are no longer tax deductible and has asked to review this for him and give him the correct answer.

Betty is 35 and works at State Capital Bank as a Marketing Manager. She earns
$70,000 a year and is a member of her company's defined benefit pension plan. She has been with the bank for five years and is quite comfortable in her position and feels it is quite secure.Bettyand Robert want to start a family over the next couple of years and feel they will need to save $ 6,000 a year for future expenses.

The Burger's purchased their home in in April 2012 for $325,000 and at that time obtained a fixed-rate mortgage of $240,000 at 6.75% (5 year term, monthly pay, 25 year amortization, renewal date: April 10, 2017). They pay $1,648 a month in principal and interest payments and when the mortgage renews at that time the principal owing will be at $220,000.The principal owing on their last statement was$221,134. They have talked to one bank and have been given the following choices for the renewal of their mortgage.

                                                            Monthly

Term               Type                           Rate                Payment         Amortization

1 year              Fixed/closed                3.5%                $1,285             20 years

3 year              Fixed/closed                3.9%                $1,330             20 years

5 year              Fixed/closed                4.25%              $1,370             20 years

5 year              Variable/open              prime - .50%*  $1,203             20 years

* The variable mortgage rate fluctuates with the bank prime rate so that it is always .50% (half a percent) less than the prime rate. The bank prime rate is currently 3.25%. All the above allow 20% of the original balance to be paid on each anniversary date (once a year). Note: For this paper use the rates listed, do not shop for other rates.

A real estate salesperson has told them that their house is now worth $440,000 and should grow in value with the expected rate of inflation of 3%. Forty percent the home's value is considered due to the worth of the land and 60% is the replacement cost of the building structure. Robert and Betty want your opinion on which mortgage is best for them, why you suggest this is the best mortgage for them, and how this would affect their budget.

Betty and Robert have unused RRSP contribution room of $30,000 and $70,000 respectively.Robertwill continue to make the $20,000 contribution (as a lump sum in February) each year and Betty will continue her monthly contributions at the same rate as this year.

Betty gets some great benefits from working at State Capital Bank such as no transaction fees on her bank accounts, lots of benefits (80% dental coverage, family plan included), life insurance equal to one times her salary, and disability insurance to 70% of her take home salary.Robert does not have any health benefits, life or disability insurance.

Betty is a member of a non-contributory defined benefit pension plan that will pay her a pension at age 65 of 1.5% of the average of her last 5 years of salary, times the number of years she works with the bank. Betty plans on retiring at age 55.If she takes her retirement benefits earlier than age 65 she losses 5% per year. She expects her salary to keep pace with inflation estimated to be 2%.

Betty contributes $5,400 each year to her self-directed RRSP and will continue to do so until she retires. She would be happy with a yearly return of 6%. Robert is a risk taker and feels long-term he would like to see a return of 8% on his investments.

The Burger family lives well at the moment. Their current expenses are:

                                                Robert                        Betty               Joint

Clothing                      $ 2,000/year                $ 2,400/year

Fitness Club                                                    $    120/month

Hair cuts/grooming     $      30/month             $      90/month

Dining Out& lunches  $  150/week                 $      30/week

Property taxes                                                                                     $ 2,200/year

Property Insurance                                                                              $    480/year

Utilities                                                                                               $    325/month

Telephone                                                                                            $      80/month

Cable TV                                                                                             $    110/month

Groceries                                                                                             $    500/month

Cleaning service                                                                                  $    90/month

Home repairs                                                                                       $    900/year

Vacations                                                                                            $7,000/year

Robert has a new Chrysler 300 (less than a year old)car purchased by his company for $55,000 and used mostly for business. The lease costs $800 a month, insurance is another $1,400 a year and gas cost $90 a week. It has a full bumper-to-bumper warranty so there are no repair charges. He feels its resale value is around $42,000 today. He has $200,000 in liability insurance, full collision and comprehensive insurance coverage.

Betty has a low mileage2000 Honda Civic that is in great condition and runs well. It is painted orange so has a low resale value of $1,100 but it is paid in full. She uses the car sparingly and spends $50 a month on gas. It costs $180 a year for repairs, $48 a year for licensing and another $500 a year for insurance (she has $1,000,000 liability, full collision and comprehensive with a deductible of $500). She really does not want to sell the car but has asked you if she should.

Betty has $350 outstanding on her VISA while Robert has $1,750 outstanding on his VISA (Robert's VISA is a company card).The monthly minimum payment on each card if not paid in full each month is 5% per of the outstanding balance.

TheBurger's tax returns for last year contained the following:

                                                Robert                        Betty

Employment                            $ 93,000                   $70,000

CPP Premium                          2,356                          2,356

EI Premiums                                                               892

RRSP Contributions                 20,000*                    5,400

Charitable Donations               500                            400

Alimony                                   6,600

Taxes                                      26,480                     19,250

*Note; He made his RRSP contribution as a lump sum payment in February of this year. The following most recent statements (from the previous month) were also provided.

                                                                        Robert            Betty               Joint

Credit Union Chequing acct                           $  7,000

State Capital Savings acct                                                      $ 6,200

State Capital Chequing acct                                                                           $ 5,000

CIBC Canadian Balanced Fund-RRSP            3,000

CIBC Canadian Equity Fund-RRSP                 6,500

CIBC Canadian Resources fund-RRSP         12,000            

CIBC Money Market fund-RRSP                    28,000             7,500

State Capital GIC's - RRSP                                                   12,000

Balance owing on Mortgage                                                                         $221,134

Betty wants to retire when she is 55 years old. Robert said he will retire at the same time as Betty. Betty is very healthy and expects to live until the age of 90 as does Robert.

Robert is adamant that he must pay 50% of the children's education costs and both he and Betty feel that is their foremost priority. Retirement is also extremely important. TheBurger's want to know how much money they will need to fund their retirement and how they can budget for this eventuality. Robert, if needed, is prepared to sell the business or to take a salary as an absentee owner but would like your opinion on what the options are available,and especially if there are any taxation considerations if he sold the business.

You,Betty and Robert agree on some assumptions:
- Robertexpects an 8% return on his investments and Betty expects 6%.
- Bettyis in the 35% marginal tax bracket and Robert is the 42%marginal tax bracket.
- The expected rate of inflation should remain relatively constant at 2%.
- Both Betty and Robert would be pleased if you can elaborate on any other additional issues about their financial welfare that you can come up with from the information given.

Specific Requirements

Prepare an almost complete comprehensive financial plan for Betty and RobertBurger. The plan must be prepared in a professional manner and at a minimum include the items listed below in the order as shown:

Part 1 Executive Summary
Part 2 Personal Net-Worth Statement (Balance Sheet) and Analysis
Part 3 Cash Flow Statement and Analysis
Part 4 Education Plan for their children
Part 5 Detailed Insurance Plan
Part 6 Revised Budget
Part 7 Recommendations and Summary

Note: There are other items theBurger family has requested advice about answers.Make sure reasoning accompanies your suggestions.

- What are Robert's options if he wants to sell or be an absentee manager for his business at retirement time? Are there any special tax considerations that may lead him to choose one option over the other?
- What mortgage type and rate should theBurger family take? Do an internet search and get a viable and recognized source to support you suggestion.
- Should Betty sell the car or keep it?
- Are the child support payments tax deductible?
- Are theBurger family's investment well positioned or should they make some changes?
- What will their retirement look like using your proposed budget?

Rules

1. 12-15 pages. Text is to be 12 point type and 1 ½ line spacing.

2. It must include"Sources of Information" (Bibliography). The bibliography and any Appendixes 1 ½ line spacing. MLA Style with showing Calculations and diagram, statistical data, articles whatever can be more appealing and convincing