You have just opened your own estate planning business and have landed new clients, John, age 30, and Becky Warbucks, age 29, who have just received a large inheritance from John's late grandmother. They inherited $200,000 and have asked you to prepare a comprehensive financial plan for them. Prior to receiving the inheritance, the clients had money in savings, checking, and investments. In your plan, you must incorporate recommendations for existing assets and develop a strategy for the inheritance that will include a trust, a will, an insurance needs analysis, recommendations on retirement plans, a proposed investment portfolio, and a proposed real estate portfolio.

Each of the first four project assignments was an in-depth analysis, all of which you have completed in subsequent weeks prior. In preparation for your meeting with the Warbuckses, you will summarize all of your findings at a higher level in a comprehensive financial plan document to be delivered to the client.

Requirements:

Take the holistic view of the Warbucks' financials and write a plan that includes sections with headings for each of the following:

• Executive Summary- this should include a title page with the client names, age, report title, date, and your name. Summarize the information that the client will find in the presentation. The information should also include the current financial state of the Warbucks. Also, talk about the significance of the inheritance.
• Insurance recommendations- based on the findings from the Insurance Analysis project assignment, include your recommendations for the type of life insurance that is best for the clients. Explain your recommendation.
• Retirement recommendations- based on the findings from the Retirement Analysis project assignment, include your recommendations for the type of retirement plan that is best for the clients. Explain your recommendation.
• Real Estate Portfolio recommendations- based on the findings from the Real Estate Portfolio Analysis project assignment, include your recommendations for the type of real estate that is best for the client's portfolio. Explain your recommendation.
• Conclude the presentationwith the next steps of action that the Warbuckses need to do to execute your recommendations.

NOTE:

The foundation of any financial plan should be centered around what will happen to everything you have accumulated over a lifetime, which is considered estate planning. This is the least popular topic of discussion in financial planning because it involves thinking about the inevitable and careful thought and consideration are needed for this portion. By definition,estate planningis a process used to develop plans that administer and help to distribute your assets after your death in a manner that you directed, all while minimizing any tax implications. Everyone needs some type of estate plan, whether it is a simple will or an elaborate trust. The major areas that estate planning covers are:

• Asset planning- this involves providing directions in your will or trust on how to disperse your real assets at the time of your death. Real assets include:
• Cash
• Real property
• Cars
• Collectibles
• Stocks
• Bonds
• People planning- this involves providing guidance to your heirs on how to manage your real assets, guardianship of small children, handicapped loved ones, or a spouse. People planning includes:
• Custodial accounts- these can be investment or savings accounts that are accessible through a financial institution, mutual fund company or brokerage firm. Typically, an adult or guardian controls for a minor child under the age of 18, depending on state laws. There are two types of custodial accounts:
• Uniform Gift to Minors Act (UGMA)- this account is established by a parent or grandparent, who will be the official custodian that donates the assets to start the account and establishes who manages the account management (usually the same parent or grandparent). The custodian will name the beneficiary and determines the age at which the beneficiary receives the money. For UGMA accounts, the age is 18 for the majority of the states.
• Uniform Transfer to Minors Act (UTMA)- this account is established by a parent or grandparent, who will be the official custodian that donates the assets to start the account and establishes who manages the account management (same parent or grandparent). The custodian will name the beneficiary and determines the age at which the beneficiary receives the money. For UTMA accounts the age is up to 25 for the majority of the states.
• Guardianships- this is an arrangement where a guardian is appointed by a court or an estate plan to be legally responsible for another individual, referred to as a "ward."
• Trusts- this is a legal entity created by a person, known as a trustor, through which a secondary party, the trustee, holds the right to manage the trustor's assets or property for the benefit of a third party, known as a beneficiary.
• Will and Testament- this is a legal document by which a person, the testator, expresses their wishes as to how their property is to be distributed at death, and names one or more persons, the executor(s), to manage their estate until its final distribution.

Why Create an Estate Plan?

Estate planning was once only for the wealthy; however, everyone should have some type of estate planning for their heirs. The planning can range from the most elaborate irrevocable trust to a very simple will that was handwritten on a piece of paper and notarized. Let's review some of the reasons why you should have an estate plan:

• An estate plan prevents your accumulated assets from going to unintended beneficiaries. Without a will, trust, or estate plan, the courts will often decide who gets your assets, through a process called probate, which is where a court of law determines how the decedent's assets are distributed.
• It can help to protect families with young children because a will contains instructions on guardianship for children under the age of 18.
• Another good reason for estate planning is the transfer of assets to your heirs by minimizing any tax burdens levied by the Internal Revenue Service (IRS).
• Doing a little planning now and leaving instructions can eliminate disagreements with family members over the disbursement of your assets and who will control your estate.

What Can an Estate Plan Do for You?

Now that you understand why you should have an estate plan, we will discuss the advantages of some planning in advance. Let's review some of the top benefits of an estate plan:

2. It allows you to transfer your property and real assets to your beneficiaries quickly without the direction of the court. The plan will also include the designation of beneficiaries on insurance policies, which are paid directly to the beneficiary. Other examples include trusts that direct the division of your assets.
4. A thorough plan allows you to plan for a time in your life where you may be incapacitated due to a mental or physical illness. This planning is done through living wills and durable healthcare powers of attorney, which allow you to select a representative to decide for you. In addition, you can even decide in advance about life support or any future medical treatments that you might need or want to refuse.
6. Your estate plan can help support causes that are close to your heart:

• Religious- you can set aside money or assets to be given to your church or other religious organization.
• Educational- you can support your alma mater by leaving money, insurance proceeds, or other assets in the form of a planned gift or by naming the institution as a beneficiary of your estate.
• Other charitable causes- you can leave a part of your estate to one of your favorite institutions such as a local charity, organization, or another entity. You can do so either during your lifetime or upon your death and take advantage of tax laws designed to encourage individual giving through philanthropy.

As a resource on estate planning, the American Bar Association,www.americanbar.org, has an excellent section on consumer laws and estate planning. As we wrap up the introduction to estate planning, watch the following video clip,Advanced Directives, which walks you through the process of pre-planning for your estate.