Which of the following is correct regarding the delivery of the written narrative concerning investment advisory services for Autumn? The planner will be in violation of the delivery requirements. The written narrative will fulfill the disclosure requirements under the Investment Advisers Act. The written narrative will not meet the brochure rule requirements because it is not a direct copy of Part II of Form ADV. The written narrative automatically fulfills CFP Board's disclosure requirements. AUTUMN BLAKE Financial Planning Case PERSONAL INFORMATION AND BACKGROUND After 12 years of marriage, Autumn's husband Chase suddenly left her for another woman at the end of last year. Autumn was very surprised when Chase came home one night and told her after their kids, Jennifer and Benjamin, were in bed. Chase packed a couple suitcases that night and moved out of the home without saying goodbye to the kids. Autumn sought professional help for minor depression after Chase left her. Her therapist got Autumn to join a local running club to train for an upcoming 10k race as a way to help release some stress in her life. Autumn has also joined a network of single mothers so that she can meet other women who are struggling with similar issues. Autumn is extremely close with her parents, Patrick and Sophia, as they live about 15 minutes away. Her parents are both retired and like to spoil their grandkids. Patrick and Sophia have helped out with the kids two days a week for the last three years. Now that Chase is gone, they try to help out four days a week. Patrick and Sophia have enough assets to live comfortably in retirement. Autumn anticipates she will inherit around $1.5 million when her parents pass away as she is an only child. Autumn's parents are currently in their mid-70s. Autumn expects she and her parents will all live to be 85 years old. GOALS Autumn has come to you, the CFP practitioner to assist her in the following: 1. To establish an estate plan to provide for Jennifer and Benjamin while minimizing any estate taxes. 2. To determine what amount she needs to set aside to fund the children's education. 3. To determine the most tax efficient way to save for college for the children. 4. To determine what amount she needs to save for her retirement. 5. To determine if she needs to get a job while the kids are in school. 6. To obtain her own health insurance policy. 7. To review the insurance currently in place and make any recommendations to reduce the risk exposures. 8. To revise her portfolio allocations to minimize her risk now that she is a single parent. 9. To determine if she needs to make estimated tax payments to the IRS. 10. To determine the best way to finance a $10,000 purchase of new furniture. CHASE Chase is a heart surgeon at the local hospital. He is paid $350,000 a year. The hospital currently provides health, dental and vision insurance for the entire family. The hospital also pays the premium for Chase on $750,000 of group term life insurance. Chase has a disability policy that will pay $200,000 a year in the event of a disability. Chase called your office late last week asking to set up an appointment with you. However, you have not yet returned his call. FINANCIAL PLANNING INFORMATION Chase and Autumn engaged you at the beginning of last year to create a financial plan for them. You recommended several items to them including changing their investment allocation, purchasing additional life insurance, purchasing an umbrella policy, and contributing to a 529 plan for each child. All of the meetings went well until it was time to implement the plan. Chase was unable to attend any of the implementation meetings. As a result, the plan was never implemented and the engagement ended. INCOME TAX INFORMATION Autumn's main source of income will be the alimony and child support from Chase. She will only have around $5,000 of interest, dividends and capital gains on the brokerage account. Autumn anticipates her AGI will be $125,000 annually now that the divorce was finalized last week. DIVORCE INFORMATION Autumn, with the help of a divorce attorney, negotiated the following terms for the divorce agreement: - The children will live with Autumn and she will claim them as dependents. - The kids will stay with Chase every other weekend. - Autumn will get to keep the house. - Chase will pay Autumn $10,000 at the beginning of each month in alimony. - Chase will pay Autumn $2,000 at the beginning of each month per child under the age of 18 in child support. - Chase is responsible for paying for 80% of the kid's college education. - Chase is to purchase $1 million of life insurance on his life and name Autumn as the primary beneficiary and the two kids as the contingent beneficiaries. - They will each keep their own vehicles. - They will split the checking account equally. - Autumn will get $250,000 from the brokerage account and Chase will get the rest. - Chase will keep his 401(k) plan and defined benefit plan. - Autumn will keep all of her individual retirement account. Chase got Autumn to agree to return her wedding ring to him as it was Chase's great grandmother's ring. However, the attorney forgot to mention this is the divorce agreement. Chase called Autumn yesterday to ask for the ring back. Autumn has not yet returned Chase's call. ESTATE PLANNING INFORMATION Chase and Autumn last updated their wills five years ago. They have not yet executed new documents. Their current wills include a bypass trust and a QTIP trust with reduce to zero provisions. In the event there is no surviving spouse, the assets will be placed in trust for Jennifer and Benjamin. Their wills name Autumn's parents as the guardians of Jennifer and Benjamin if Chase and Autumn should both pass away. Chase and Autumn granted each other a springing durable general power of attorney. They also signed advanced medical directives stating they do not want life support if they are deemed brain dead with no chance of recovery by two doctors. ECONOMIC INFORMATION Autumn wants to assume the following economic information: - 4.9% interest on 5 -year auto loans - 9.8% interest on 4-year furniture loans - 4% interest on home equity loans and home equity lines of credit - 4% interest rate on 20 -year fixed rate mortgages - 5% interest rate on 30 -year fixed rate mortgages - 6% interest rate on reverse mortgages - 8% inflation rate on education - 3% general inflation rate - 5% rate of return on investments - 3% interest on 3-year CDs - 5% interest on 5-year CDs EDUCATION INFORMATION Chase and Autumn want their kids to attend the same college they did. The current cost is $10,000 per year. Autumn believes each child will be in school for 5 years. INVESTMENT INFORMATION Pursuant to the divorce decree, Autumn received the brokerage account assets listed below. Autumn will sign the investment advisory contract at the meeting with the CFP practitioner next week. The CFP practitioner will give Autumn a written narrative containing all of the information in Part II of Form ADV at that same meeting. INSURANCE INFORMATION Automobile Insurance Autumn Blake Projected Annual Cash Flow Now That the Divorce Is Final Statement of Financial Position Autumn Blake A: Owned by Autumn 1 The account is held at City Union Bank. 2 See investment detail. 3 Chase is the current beneficiary. The account is held at City Union Bank. 4 Land is valued at $150,000. 5 The mortgage is fixed at 6%. There are 15 years remaining on the loan. Which of the following is correct regarding the delivery of the written narrative concerning investment advisory services for Autumn? The planner will be in violation of the delivery requirements. The written narrative will fulfill the disclosure requirements under the Investment Advisers Act. The written narrative will not meet the brochure rule requirements because it is not a direct copy of Part II of Form ADV. The written narrative automatically fulfills CFP Board's disclosure requirements. AUTUMN BLAKE Financial Planning Case PERSONAL INFORMATION AND BACKGROUND After 12 years of marriage, Autumn's husband Chase suddenly left her for another woman at the end of last year. Autumn was very surprised when Chase came home one night and told her after their kids, Jennifer and Benjamin, were in bed. Chase packed a couple suitcases that night and moved out of the home without saying goodbye to the kids. Autumn sought professional help for minor depression after Chase left her. Her therapist got Autumn to join a local running club to train for an upcoming 10k race as a way to help release some stress in her life. Autumn has also joined a network of single mothers so that she can meet other women who are struggling with similar issues. Autumn is extremely close with her parents, Patrick and Sophia, as they live about 15 minutes away. Her parents are both retired and like to spoil their grandkids. Patrick and Sophia have helped out with the kids two days a week for the last three years. Now that Chase is gone, they try to help out four days a week. Patrick and Sophia have enough assets to live comfortably in retirement. Autumn anticipates she will inherit around $1.5 million when her parents pass away as she is an only child. Autumn's parents are currently in their mid-70s. Autumn expects she and her parents will all live to be 85 years old. GOALS Autumn has come to you, the CFP practitioner to assist her in the following: 1. To establish an estate plan to provide for Jennifer and Benjamin while minimizing any estate taxes. 2. To determine what amount she needs to set aside to fund the children's education. 3. To determine the most tax efficient way to save for college for the children. 4. To determine what amount she needs to save for her retirement. 5. To determine if she needs to get a job while the kids are in school. 6. To obtain her own health insurance policy. 7. To review the insurance currently in place and make any recommendations to reduce the risk exposures. 8. To revise her portfolio allocations to minimize her risk now that she is a single parent. 9. To determine if she needs to make estimated tax payments to the IRS. 10. To determine the best way to finance a $10,000 purchase of new furniture. CHASE Chase is a heart surgeon at the local hospital. He is paid $350,000 a year. The hospital currently provides health, dental and vision insurance for the entire family. The hospital also pays the premium for Chase on $750,000 of group term life insurance. Chase has a disability policy that will pay $200,000 a year in the event of a disability. Chase called your office late last week asking to set up an appointment with you. However, you have not yet returned his call. FINANCIAL PLANNING INFORMATION Chase and Autumn engaged you at the beginning of last year to create a financial plan for them. You recommended several items to them including changing their investment allocation, purchasing additional life insurance, purchasing an umbrella policy, and contributing to a 529 plan for each child. All of the meetings went well until it was time to implement the plan. Chase was unable to attend any of the implementation meetings. As a result, the plan was never implemented and the engagement ended. INCOME TAX INFORMATION Autumn's main source of income will be the alimony and child support from Chase. She will only have around $5,000 of interest, dividends and capital gains on the brokerage account. Autumn anticipates her AGI will be $125,000 annually now that the divorce was finalized last week. DIVORCE INFORMATION Autumn, with the help of a divorce attorney, negotiated the following terms for the divorce agreement: - The children will live with Autumn and she will claim them as dependents. - The kids will stay with Chase every other weekend. - Autumn will get to keep the house. - Chase will pay Autumn $10,000 at the beginning of each month in alimony. - Chase will pay Autumn $2,000 at the beginning of each month per child under the age of 18 in child support. - Chase is responsible for paying for 80% of the kid's college education. - Chase is to purchase $1 million of life insurance on his life and name Autumn as the primary beneficiary and the two kids as the contingent beneficiaries. - They will each keep their own vehicles. - They will split the checking account equally. - Autumn will get $250,000 from the brokerage account and Chase will get the rest. - Chase will keep his 401(k) plan and defined benefit plan. - Autumn will keep all of her individual retirement account. Chase got Autumn to agree to return her wedding ring to him as it was Chase's great grandmother's ring. However, the attorney forgot to mention this is the divorce agreement. Chase called Autumn yesterday to ask for the ring back. Autumn has not yet returned Chase's call. ESTATE PLANNING INFORMATION Chase and Autumn last updated their wills five years ago. They have not yet executed new documents. Their current wills include a bypass trust and a QTIP trust with reduce to zero provisions. In the event there is no surviving spouse, the assets will be placed in trust for Jennifer and Benjamin. Their wills name Autumn's parents as the guardians of Jennifer and Benjamin if Chase and Autumn should both pass away. Chase and Autumn granted each other a springing durable general power of attorney. They also signed advanced medical directives stating they do not want life support if they are deemed brain dead with no chance of recovery by two doctors. ECONOMIC INFORMATION Autumn wants to assume the following economic information: - 4.9% interest on 5 -year auto loans - 9.8% interest on 4-year furniture loans - 4% interest on home equity loans and home equity lines of credit - 4% interest rate on 20 -year fixed rate mortgages - 5% interest rate on 30 -year fixed rate mortgages - 6% interest rate on reverse mortgages - 8% inflation rate on education - 3% general inflation rate - 5% rate of return on investments - 3% interest on 3-year CDs - 5% interest on 5-year CDs EDUCATION INFORMATION Chase and Autumn want their kids to attend the same college they did. The current cost is $10,000 per year. Autumn believes each child will be in school for 5 years. INVESTMENT INFORMATION Pursuant to the divorce decree, Autumn received the brokerage account assets listed below. Autumn will sign the investment advisory contract at the meeting with the CFP practitioner next week. The CFP practitioner will give Autumn a written narrative containing all of the information in Part II of Form ADV at that same meeting. INSURANCE INFORMATION Automobile Insurance Autumn Blake Projected Annual Cash Flow Now That the Divorce Is Final Statement of Financial Position Autumn Blake A: Owned by Autumn 1 The account is held at City Union Bank. 2 See investment detail. 3 Chase is the current beneficiary. The account is held at City Union Bank. 4 Land is valued at $150,000. 5 The mortgage is fixed at 6%. There are 15 years remaining on the loan