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2. Are there globally-accepted, client-specific, or plannergenerated planning assumptions that will influence the estate planning situation analysis? List the assumptions as they might appear in a plan. 3. What documents should the Gabriel's put in place for their estate plan. Please give recommendation of documents and what they need to consider in relation to these documents. 4. With the Gabriel's looking to avoid probate, what changes should they make to their assets in order to accomplish avoiding probate? You should look at assets and life insurance policies. 5. In the case it mentions that Peter and Kate have the following concerns: a. Peter and Kate are concerned about how their other children will feel about Tony being Executor, but they are afraid to discuss with family. b. Peter and Kate do have some concerns about the marriages of their children being successful. What do you suggest Peter and Kate do to address these concerns? Retirement Assets Peter's 401K (beneficiary is Kate for 100%, no contingency beneficiaries) Peter's company does have a company match which is equivalent to 100% on the first 4% of compensation and all contributions are to a traditional 401K. Kate's 401K (beneficiary is Peter for 100%, no contingency beneficiaries) Kate's company does have a company match which is equivalent to 50% on the first 6% of compensation and all contributions are to a traditional 401K. Peter's Roth IRA (no beneficiaries are identified) Description Ticker Symbol Owner/Title Current Market Value Vanguard Money Market VMFXX Peter $200,000 Peter is not making any more contributions to his Roth IRA. Retirement Income Social Security Both Peter and Kate Social Security taxes have reached the Social Security Taxable Wage Base for a long time, so they are both entitled to Social Security at a fairly high level. They are each eligible to receive $39,280 per year at their full retirement age (FRA) of 67 . They are unsure when to take Social Security as they heard that if you take it prior to their FRA they get penalized and if they take it after their FRA they can get more. You are going to help them through this process of thinking when to take Social Security. Pension Income Peter worked at a company early on in his career where he had earned a pension (was vested) through a defined benefit plan. He is not able to start collecting from his pension until the age of 65 , and the amount is based on his salary at the time he worked for that company and his years of service. His annual pension will be $5,000 per year. This $5,000 per year is on a single life annuity option and will be decreased to $4,000 if the pension is taken on a 100% joint life annuity or reduced to $4,500 if taken on a 50% joint life annuity. No matter how the pension is chosen, there is no inflation adjustment on the amount and there is no Social Security offset. Peter can not take his pension before age 65 at a reduced amount. Insurance Planning The Gabriel's are concerned about their risk management and want to know if they are managing the risk of negative outcomes on the lives. They have purchased various forms of insurance to meet their contingent needs associated with health, disability, life and property. They are uncertain if the policies suit their needs and the details of each are below. Health Insurance Health insurance is provided through their employers and they have chosen Peter's health plan and have family coverage. This plan allows for the family to choose any doctor they wish and do not need to go through a primary doctor. The Gabriel's pay Estate Planning It is important to the Gabriel's to leave a legacy to their children. In addition, they want to minimize any estate and inheritance tax, and probate costs and timing. They have wills, but they were done 35 years ago and have not been updated. They do not have any other state planning documents. They do want their estate to avoid probate if possible and they have chosen Tony to be the executor of the will. Peter and Kate are concerned about how their other children will feel about Tony being Executor, but they are afraid to discuss with family. In addition, Peter and Kast do have some concerns about the marriages of their children being successful. Educational Planning Peter and Kate want to start college funds for their grandchildren. They have thought about gifting funds to Paula and her husband for the grandchildren (Ian and Steven). Peter and Kate are concerned about Paula's marriage lasting and they do not trust Paula's husband to use the funds in the right manner for the grandchildren. Additionally, Peter and Kate do not know the best way to support the college savings and actually how much college costs. Additional Information and Assumptions Working assumptions - Municipal bonds rates are yielding 2.50% and taxable bonds of equivalent duration and risk are yielding 3.25% - New Jersey state marginal tax rate is 5.0% - The credit scores for the Gabriel's are as follows: Pete 763; Kate 787. - Life expectancy for Peter and Kate is 95 Other Issues - Inflation is expected to 2.5% and that is for all expenses and the cost-of-living adjustment for Social Security. - Taxes will maintain with the current tax rates as of today for both state and federal taxes both pre- and post-retirement. - Interest rates have declined and so have mortgage rates. The Gabriel's can now refinance their mortgage with the followino terme. tollowing terms: 15 years fixed at 3.0% with 1 point. 20 years fixed at 3.25% with 1 point 30 years fixed at 3.5% with 1 point. - The Gabriel's are open to paying off the car loan if it makes sense. - The home is expected to continue to appreciate by 4% each year. - The annual nursing home coast if a long-term care situation occurs is anywhere from $300$350 per day in NJ