Read the following scenario and answer the questions: Sonia and Sam have been married for 6 years and live in Ontario. They have both had unsuccessful marriages in the past. They are both 47 years old. Sonia has two daughters from her first marriage. Krystal is 9 and Kristie is 11 years old. She has joint parenting (joint custody) of the kids with her exhusband, Steve. Steve is single and works as a pharmacist and makes $100,000 per year. Sonia is an accountant and makes $190,000 per year and owns a large investment portfolio as well as significant savings in cash and GICs and wishes to give Sam, who is an artist and makes $30,000 per year, a taxable income of $50,000 per year (or more if possible) until his life expectancy of 82 years in the event of her premature death. She also wants her children to be very well provided for. She does not want her children to have to wait until Sam's death to receive their inheritance and would like to give them a portion of their inheritance immediately if she dies prematurely (minimum $400,000 per child). She also wants the remainder of what Sam inherits from her investments to go to her children in the event of Sam's death. Sonia set up her will when she was married to Steve, but the will has not been updated. Sam has a son, Spencer 10, from his previous marriage. His ex-wife, Susan, has the sole parenting (sole custody) of Spencer. Susan is an executive at a software company and is making $165,000 a year. Sonia and Sam are not planning to have any more children. Sonia's major assets are as follows: - A $900,000 mortgage-free home owned jointly (joint ownership with the right of survivorship) with Sam. - RRSPs totaling $285,000 (Sam is named as the beneficiary). - A portfolio of stocks with a total value of $800,000 and an ACB of $75,000 (the portfolio is conservatively projected to return 6% on average per year). - GICs, and cash, totaling $800,000 See next page for the questions! FIN2327 - Risk Management and Estate Planning Group Assignment 2 With regards to the scenario: - Discuss what the likely court ruling has been regarding child support and spousal support for Sam and Susan's divorce. Who is paying who? What are the amounts for child support using current income? Who pays the taxes on the amounts paid and received for child support and spousal support? (3 Points) - Who is paying child support for Krystal and Kristie? Please explain and determine the amounts using the current incomes. (1 points) - Assume Sonia has died prematurely. What's going to happen to the house and RRSP holdings? What is the tax treatment of RRSP and the house? (2 points) - Propose two trusts (one for Sam and one for Krystal and Kristie) that would help Sonia achieve her objective of leaving income until age 82 for Sam and providing for Krystal and Kristie in the event of her premature death. In case of each trust describe how the trust should be set up and what assets you recommend being transferred to each trust and why. Explain tax treatment of each trust at the time they are set up and when they distribute income and capital. (6 points) - Any other suggestions for Sonia? (1 point) - Presentation and clarity of the language. (2 points