Billy and Becky Jean

It is November 2021, Billy and Becky Jean meet with you to review their family financial situation. They had a friend that recently passed away in their 50s and this has made them start to think about their own estate plan. They have completed a detailed questionnaire and the following summaries have been prepared:

Personal Information

Client	Age	Health	Occupation
Billy Jean	69	Excellent	Sales Manager
Becky Jean	64	Excellent	Engineer
Owen Jean (Son)	47	Poor	Unemployed
Melanie Jean (Daughter)	40	Excellent	Marketing
Grandchildren	15, 12 & 9

Employment

Billy and Becky are happily married and are actively planning their retirement in 6 months. Billy has spent his career in sales and Becky as an engineer at a manufacturing company.

When Billy and Becky retire in 6 months, they are planning on spending the winters travelling and their summers at their cottage.

Financial Position

The couple has a home worth $1,200,000, which is mortgage free. They purchased it in 1995 for $300,000. They also have a cottage in the Kawarthas worth about $350,000, which they bought for $75,000 cash 25 years ago. Both properties are held in joint tenancy.

Billy has accumulated $900,000 in RRSP assets and he has not named a beneficiary. Becky has $800,000 in RRSP assets and she has named Billy as her beneficiary. Both Billy and Becky have fully maximized their TFSA contributions, contributing $81,500 total. Billys TFSA is valued at $95,000 today and Beckys is valued at $100,000. Neither of them has named a beneficiary or a successor annuitant on their TFSA accounts.

Becky used to actively trade stocks in a non-registered account. She stopped after the market crash in 2000 and realized $100,000 capital loss that she has been carrying forward since then.

Last year, Becky inherited $500,000 from her mothers estate. She was unsure of what to do with this money and decided she wasnt ready to decide because of her grief. She put her inheritance in a non-registered account and invested the money in a money market fund.

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 been treated for substance abuse. Owen has been living with his parents and they have been helping him financially.

Melanie is very successful in her field and is comfortable financially. She has three children who will almost certainly go to college or university. Billy and Becky have stated that they want to help pay for their grandchildrens post-secondary education but have not started saving for them yet.

Life Insurance

Billy and Becky have $500,000 joint-life, last-to-die, term-to-100 policy, which they took out 10 years ago. The estate is named at the beneficiary. Becky and Billy 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

Billy and Becky 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 grandchildrens education as tax efficiently as possible. They would also like to leave some funds to their local hospital.

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 their upcoming retirement and have not gotten them done.

Questions:

1) Identify Billy and Beckys estate planning objectives. (3 marks)

2) Prepare Becky and Billys net worth statement. Please note the adjusted cost base below the name of the asset. (6 marks)

3) If Billy were to die today, how would his estate be distributed? Assume that Billy and Becky live in Ontario. (4 marks)

4) What issues are present with not having a will? Please use your findings from part 3. (2 marks)

5) The Jeans plan on seeing their lawyer to have their wills and POAs completed. Name the five most important clauses you would recommend for their will. Explain. (5 marks)

6) Billy and Becky and flown off to Alaska. There is a tragic accident and both of them pass away.

a) Calculate their probate fees? (4 marks)

b) Calculate their taxes? Assume a MTR of 40% for both of them. (4 marks)

7) Provide the Jeans with four recommendations today to meet their goals and objectives. These recommendations need to based on their current situation (i.e. moving to Alberta is not one). Along with your recommendation explain one benefit and drawback to implementing it. (8 marks)