PFP $360$ Estate Planning

Final Case

In the following assignment, you will be expected to draft a report to your clients, Diana and

Luis Johnson, regarding their current estate plan. This will include answering some of their

questions about the estate planning process. There are two major goals for this assignment. First,

to demonstrate mastery of the material. This may require searching for information online

regarding state laws. Your second goal is to demonstrate that you can communicate with your

clients in a professional manner. This includes addressing the report to your clients. For example,

$$One item that would benefit your family is purchasing.....$.$

Below is information pertaining to the case as well as a list of questions and concerns that the

Johnson$$s have. Please address these concerns fully. Part of financial planning is client

education, so be sure to elaborate on your thoughts so that your clients understand.

If you have any questions or feel that you need additional information, please be sure to

email me$!$

Case Information

Diana and Luis Johnson live in New Mexico and have been married for $35$ years. Diana is

currently $56$ and Luis is currently $60.$ They have three children, Jeffery $($age $24),$ Miranda $($age

$26),$ and Melody $($age $28).$ Melody, the couple$$s eldest daughter, passed away from cancer this

past year. She left behind two daughters, Brooklyn $($age $6)$ and Emily $($age $4).$ Melody was a

single mother, so Diana and Luis became the legal guardians of Brooklyn and Emily. They

currently have no other grandchildren.

Luis was recently diagnosed with a heart condition. This, in addition to Melody$$s death, has

prompted the couple to seek advice related to their estate as well as discuss some questions that

they have.

The couple owns the following major assets:

Luis

Asset

Cash and Cash Equivalents

Value

$

Residence

Brokerage Account

Life Insurance $($death benefit$)$

Retirement Account

Boat

$

$

$1,200,000$

$3,500,000$

$4,300,000$

$

$

$

Miscellaneous Assets $($art$,$ furniture, etc.$)$

$

$2,000,000$

$2,960,000$

$500,000$

$1,300,000$

$$ Cash and cash equivalents is held in a bank account with Diana named as the beneficiary.

$$ The residence was purchased before Luis and Diana married. It is titled JTWROS.

$$ The brokerage account lists Diana as the primary beneficiary.

$$ The life insurance policy is valued at $$600,000.$ The beneficiary is Luis$$s mother $$ Mary $$ who passed away $2$ years ago. The policy has not been updated since.

$$ The retirement account lists Diana as the primary beneficiary.

$$ The boat is as titled tenancy in common with Luis contributing $60\%$ of the $$500,000$

value and Jeffery contributing $40\%.$

Diana

Asset

Cash and Cash Equivalents

Jewelry

Family Farm

Brokerage Account

Business $(20\%$ value$)$

Life Insurance $1($death benefit$)$

Life Insurance $2($death benefit$)$

$

$

$

$

$

$

$

Value

$1,250,000$

$300,000$

$5,300,000$

$2,400,000$

$800,000$

$1,500,000$

$2,500,000$

$$ Cash and cash equivalents are held in a bank account with Luis named as the beneficiary.

$$ The jewelry is owned solely by Diana.

$$ The farm was inherited by Diana from her parents after Diana married.

$$ The brokerage account lists Luis as the primary beneficiary.

$$ Diana owns $20\%$ of a business she shares with her good friend, Pam. Her portion of the

business is valued at $$800,000.$

$$ Life insurance policy $1$ is valued at $$400,000.$ The beneficiary is Diana$$s friend Pam.

$$ Life insurance policy $2$ is valued at $$650,000.$ The beneficiary is Luis.

The Johnson$$s are concerned about the following points and wish for your guidance. Please

write a report which fully addresses these concerns.

$$ Both Diana and Luis would like to know the value of their probate estate.

$$ Are there any assets that should have updated beneficiaries?

$$ Both Luis and Diana assume that Luis will pass away before Diana. They are concerned

about the potential estate tax. They would like to know what their current tax liability is in

the event that they pass in $2024.$

$$ The Johnson$$s would like to know how to reduce their tax liability. They are completely

new to this process and would like to know their options. They are open to establishing

trusts and making transfers to their heirs while they are still living.

$$ The Johnson$$s are concerned about what will happen to Brooklyn and Emily should

something happen to them. What options do they have to protect Brooklyn and Emily?

$$ Diana and Luis are considering how they should split their inheritance. They want to be

fair, but they are unsure of how to do that now that Melody has passed away. Additionally,

they are interested in donating a portion of their wealth to a ch