Ques 1 Marybeth is concerned that the majority of her and her husband's wealth is registered in Kyle's name only. She has asked you privately what her financial rights would be in the event of a divorce or if Kyle should die and bequeath all of his assets to someone other than her. She lives in a province that has a deferred community of property regime. case study question. Please answer and explain in detail. case study is as follows: PagePage number

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Case Study #1: Kyle and Marybeth RamseyIt is April 30th.Kyle and Marybeth Ramsey have approached you for financial planning services with respect toKyle's company and family estate planning issues. FamilyKyle and Marybeth are 52 and 50 years of age, respectively, and they have been married for 29years. They have two adult children, Audrey (26) and Nora (23).Audrey is married to Jack (32), and they plan to start a family in the next five years. Audrey isjust completing her first year of full-time employment teaching kindergarten. She earns a salaryof $28,500. Jack has worked for Kyle for the last six years and he was recently promoted togeneral manager.Nora is a single parent to Todd (4), and she and Todd live with Kyle and Marybeth, who aresupporting both of them while Nora goes to university part-time, where she is studyingbusiness administration. Nora does not work, but she does receive child support of $600 permonth from Todd's father. Employment and Family BusinessKyle worked as a floor supervisor in Retox Inc., a major manufacturing plant from the time hefinished college at age 23 until he was laid off several years ago. At the time, Kyle was 38 yearsold. After the layoff, he used $350,000 that he inherited from his father to start Shadow Ltd., acompany that designs and builds custom sunshades and awnings for customers throughoutNorth America.Shadow Ltd. currently has a total of 32 employees, including Kyle and his son-in-law, Jack. Thisyear, Kyle expects to draw a salary of $85,000 and dividends of $20,000. The company providesa basic extended health care plan, including group life insurance for all full-time employees; thecompany does not offer a retirement savings plan.The company has an estimated value of $2.6 million. This year, it is anticipated Shadow Ltd. willhave net income from business operations of $620,000 before tax, but Kyle will leave most ofthis money in the company to finance expansion.The increasing awareness of the negative effects of sun exposure has meant that interest inShadow's products continues to grow at a healthy pace, and Kyle expects sales to increasesteadily, resulting in profit increases of 8% per year over the next ten years.Shadow Ltd. outgrew its original premises, and the company recently acquired and retrofitted alarger industrial property. Last month, full business operations were transferred to the newlocation, and the old property is up for sale. When Shadow Ltd. first purchased the old

property, the land was valued at $120,000 and the building was valued at $140,000. Based oncurrent market appraisals, the land is now worth $210,000 and the building is worth $160,000.The building has an undepreciated capital cost of $84,000.Shadow Ltd. was able to finance the new building with existing resources, so assuming the oldbuilding is sold for its appraised value, the company will soon have $370,000 in excess cash.Kyle is concerned about the tax implications of the sale, as well as what the company should dowith the money.Marybeth worked for a few years when she first finished college, but as soon as Audrey wasborn she and Kyle decided that she would stay at home until the children were out ofelementary school. She returned to the workforce 12 years ago, and she is currently working asan executive assistant for a job placement agency. She earns a salary of $48,000 per year andshe is a member of her employer's group extended health care plan, which also providescoverage for Kyle. Retirement Plans and AssetsKyle would like to start easing into retirement, starting at age 58, and he would like to be fullyretired at age 62. Marybeth would like to retire fully at age 60.Kyle is wondering how he can best use the business to finance his retirement. He does not wantto sell the business outright because he wants to be able to receive a steady income from iteven after retirement. He wants the flexibility of being able to draw on his capital if he needs itduring retirement, but he would also like to preserve the business for his children. He wouldlike to get Nora and Audrey or Jack involved in the business so that they could take it over whenhe retires, but he does not want to hand over control of the business to any of them until he issure that they are capable of handling it. He also does not want to favor one child over theother, financially.Kyle has made sporadic contributions to a self-directed RRSP over the last 20 years, and he hasaccumulated RRSP funds of $170,000. He has $80,000 in unused RRSP contribution room.Kyle was also a member of the defined contribution pension plan sponsored by Retox prior tobeing laid off by the company. At that time, he transferred his accumulated benefits into alocked-in RRSP, which has a current balance of $150,000. Kyle cannot begin receiving paymentsfrom that locked-in RRSP until age 65. The plan is governed by the Federal Pension BenefitsStandards Act.Marybeth has been maximizing her RRSP contributions ever since she returned to work; she hasaccumulated $114,000 in a self-directed RRSP. Other Assets and Liabilities

The Ramseys own a house valued at $340,000 with an outstanding mortgage of $18,000 and ahomeowner's line of credit with an outstanding balance of $12,000. They are registered as jointtenants. They have been aggressively paying down their mortgage the last couple of years andexpect to pay off the balance within the next year. This will leave them with surplus cash flowof about $30,000 per year that they can direct towards retirement savings.Other than $5,000 in short-term GICs and Kyle's business interests, they do not currently haveany non-registered investment assets. Estate Planning and InsuranceKyle took out a $300,000 10-year renewable term policy with a child-life rider eight years ago.At the same time, he purchased a $100,000 10-year term policy on Marybeth's life. He also haslife insurance of two times salary through his company's group life insurance plan. Marybethdoes not have any life insurance through her employer and she does not own any policies onher life or on Kyle's life.Kyle and Marybeth updated their wills eight years ago and in those wills they basically leave allassets to the surviving spouse or to the children in equal shares per stirpes in the event of theirsimultaneous death. Neither of their wills addresses their existing or future grandchildren.Kyle and Marybeth have named each other as the beneficiaries of their RRSPs and insurancepolicies, with no alternate beneficiaries named.The Ramseys want to update their estate plan to ensure that both Audrey and Nora are treatedequitably, and they want to ensure that Todd and any future grandchildren also receive somesupport. They are also very concerned about minimizing income taxes and probate fees upondeath, especially on Shadow Ltd. Miscellaneous Facts and Figuresbasic personal amount: $13,808spouse or common-law partner amount: $13,808base lifetime capital gains exemption for qualified properties: $892,218