Recently a friend of Rodrigo and Sarah Gonzales passed away at the age of 54. This tragic event has motivated them to look at what the consequences to their family would be should they die.

Rodrigo, age 50, works full time as a network engineer, earning $95,000 last year. Sarah, age 46, makes $48,000 as a care aide in a nursing home.

Rodrigo has a life insurance policy through his employment which would pay twice his annual salary. Should he die his estate would also receive $2,500 from Canada Pension Plan.

The couple owns a home worth $580,000 on which they still owe $128,420. They also have a car loan with an outstanding balance of $12,500 and a HELOC on which they owe $22,000. Annual living expenses for the family are $58,200.

Rodrigo and Sarah have two daughters, who are 14 and 11 years old. The couple would like to have $150,000 saved for their educations. They currently have $59,000 in an RESP.

The couple currently has $12,000 in various bank accounts and $89,000 in an investment account. Should either Rodrigo or Sarah die, they expect funeral costs to be $5,000.

Should he pass away, Rodrigo would like to leave his family debt free.

Required:

a) Use the Family Need Method to determine Rodrigo's life insurance need (assume 5 times his personal annual income)

b) Identify two ways you can reduce/avoid probate fees.