Darren Leong, aged 38, lives in a HDB Executive Apartment. Besides the HDB executive apartment, Darren owns the following assets as shown below:

WEALTH GROUNDING - FOUNDATIONAL PART

HDB Executive Apartment

Purchase Price	$280,000
Original Mortgage	$196,000
Current Mortgage Balance	$135,000
Fair Market Value	$735,000

Car

Purchase Price	$128,000
Original Loan	$96,000
Current Loan Balance	$78,000
Fair Market Value	$108,000

Other Assets

Savings Account Balance	$3,000
Fixed Deposit Account	$4,500
Growth Stock Unit Trust – Market Value	$65,000
Personal Property	$9,000
Credit Card Outstanding Balance	$7,000
CPF Ordinary Account Balance	$93.000
CPF Special Account Balance	$26.000

WEALTH PROTECTION - TAX PLANNING

1.  About 8 years ago, Darren bought a $150,000 5-year limited-pay whole life plan. The annual premium for his plan was $19,500 p.a. The Cash Value of his plan is $48,750.

2.  Darren has put in place a Hospital Income Insurance Plan that is designed to pay him a daily cash benefit of $250 up to 180 days per hospitalization and for 1000 days per lifetime. The premium for the Hospital Income Insurance plan is $1,975 p.a.

3. Darren recently bought a Disability Income Insurance policy with a sum assured equal to 70% of his monthly salary, i.e. $5,250 which is 70% of ($5,000 +$2,500). The deferred period is 6 months in the event that he is disabled and the Disability Income Insurance policy covers him up to the age of 65 years. The annual premium for his plan is $10,800 p.a.

4.  Darren rents out one common room to Mr. Leow for $850 per month. Mr. Leow has gone overseas for 6 weeks and will return in early January 2017. Mr. Leow said that he would pay the rent for December 2016 and January 2017 upon his return.

WEALTH ACCUMULATION - RETIREMENT PLANNING

1.  Darren Leong currently works as a freelance Logistics Consultant and for the last 5 years he has been earning an average annual gross income of $60,000. Darren also draws an Income of $2,500 per month from an “Interior Décor Specialist” partnership.

2.  Darren expects his average annual gross income from his freelance logistics consultancy and partnership business to grow at 3% per annum. His expected retirement age is 65.

WEALTH GIVING – ESTATE PLANNING

Darren’s parents are still alive and staying with him. Darren has a will which only provides for the current house to be given to his wife. His Unit Trust and insurance policy are to be shared equally between his parents and daughter, Katherine.

Question 1 (WEALTH GROUNDING – FOUNDATIONAL PART)

1) (I) what is Darren’s total investment asset to net worth ratio?

ii) What are the TWO (2) primary considerations in determining Darren’s ability to handle debt?

WEALTH PRESEVATION – TAX PLANNING

2) State the year of assessment Darren needs to declare the rent income.

3) What type of insurance policies can Darren claim against his Life Insurance Tax Relief?

5) Explain who will be entitled to the following assets upon Darren’s demise:

Current House

CPF OA and SA amount

Unit Trust $65,000

Whole Life Insurance Policy $150,000

Savings and Fixed Deposit $3,000 and $4,500

6) What THREE (3) options are open to the “Interior Décor Specialist” partnership in continuing the business upon Darren’s death?

7) Calculate Darren’s First Year Income Required at Retirement age.