Mrs. Howe is curren Howe both 36 years old. Mr Howe recently accepted a job making $93K a year, Both are licensed lawyers and have They have one child age 2 an English Setter and Maine Coon Cat. The Extended Family Mr. Howe has a mother in her 60 's who is living far away and is modestly self-sufficient. Mr. Howe has two siblings both married and self-sufficient. Mr Howe inherited $400K from his late Uncle Stan who was 100 years old when he died and had worked every day of his life. He has spent the inheritance down to $200K. Mrs Howe has one brother who is married, wealthy and has two children. Mrs Howe's mother is a pharma distributor and lives in another state - she is 60 and self-sufficient. Mrs Howe's father lives in the same town as the Howe's and her father is self-sufficient and healthy. Mrs Howe's Father (Trust 1) Mrs Howe's father set up a trust for the benefit of Mrs Howe. Her brother is trustee, but it is really controlled by the father. The trust distributes $30K/ year to Mrs Howe. The basis is $700K and it has an average earnings rate of about 8.5% per year for the last 10 years. There is no plan to increase distributions. Economic Info Inflation averages 3% for last 20 years and expected to continue at 3% Bank lending rates: 15 year 3.25%;30 year 3.75%; Any closing costs associated with refinance are 3% and included in refinanced mortgage. Expected rate of return 8.5% Residence Current value $550K; Balance on 30 -year mortgage at 5.5%$260,514; Land value $150K; Monthly payment (P\&I) \$1703.37; Owned home for 8 years; Will not qualify for refinance until Mr. Howe has been with his current employer for one year. Life - No life insurance; Mr Howe expects $50K group term from new employer Health - Covered under Mr Howe employer plan; Cost \$1K/month for family Disability - No disability; Mr Howe will be covered for LTD provided by employer at 65% of gross pay. Homeowner - HO3 with open perils and replacement value; $250 deductible; Dwelling covered $300K with 80/20 coinsurance clause; Premium $2400/ year. Auto - $250 deductible; 100/300/50; Premium $1800/ year Assets JT Bank account \$28K JT Inherited portfolio \$200K C Brokerage account $127K G401K \$32K - with brokerage account JT Residence $550K JT Auto 1$40K G Auto 2$25K JTHH Items $150K JT Liabilities Mortgage $260514 Investments Investment portfolio $327K Brokerage account includes gifts from Mrs Howe's father - invested in money market account at 0% earnings 401K from Mr Howe's prior job invested in index fund Economic Info Inflation averages 3% for last 20 years and expected to continue at 3% Bank lending rates: 15 year 3.25%;30 year 3.75%; Any closing costs associated with refinance are 3% and included in refinanced mortgage Expected rate of return 8.5% Residence Current value $550K; Balancece on 30 year mortgage at 5.5%$260.514; Land value $150K; Monthly payment (P\&1) \$1703.37; Owned home for 8 years; Not qualify for refi until Mr Howe in new; job 1 year Residence Current value $550K; Balancece on 30 year mortgage at 5.5%$260,514; Land value $150K; Monthly payment (P\&.) \$1703.37; Owned home for 8 years; Not qualify for refi until Mr Howe in new job 1 year Estate Info - No estate planning documents Goals and Concerns Want proper insurance, investment and estate portfolio Want to know cost of college education for their child so they can approach Mrs Howe's father about funding a 529 plan. Current cost of education $35K in today's dollars with expected 5% inflation. Expect the child to be in school six years and expect rate of return 8.5% Want to plan for early retirement ( 100% WRR, excluding trust income) at age 62 . Mr Howe to save $17500 /yr in 401K with an employer match of $6K. Expect to live to age 90 . Do not include SS benefits if planning. Want to be debt free at retirement 6 - Describe the estate planning documents the Howe's need immediately and what are the important provisions of each? If you recommend powers, who is the power holder? 7- Perform analysis of the Howe's portfolio taking into consideration risk tolerance and asset allocation. Assume they are aggressive investors (goal of 10% return) and revise asset allocation to achieve this goal. Assume risk tolerance appropriate for their age and years to retirement 8. Based on your analysis what are the strengths and weaknesses of the Howe family financial plan and overall financial condition. What recommendations would you make to them based on your analysis. What additional information would you need to do a complete analysis. SWOT type analysis. Mrs. Howe is curren Howe both 36 years old. Mr Howe recently accepted a job making $93K a year, Both are licensed lawyers and have They have one child age 2 an English Setter and Maine Coon Cat. The Extended Family Mr. Howe has a mother in her 60 's who is living far away and is modestly self-sufficient. Mr. Howe has two siblings both married and self-sufficient. Mr Howe inherited $400K from his late Uncle Stan who was 100 years old when he died and had worked every day of his life. He has spent the inheritance down to $200K. Mrs Howe has one brother who is married, wealthy and has two children. Mrs Howe's mother is a pharma distributor and lives in another state - she is 60 and self-sufficient. Mrs Howe's father lives in the same town as the Howe's and her father is self-sufficient and healthy. Mrs Howe's Father (Trust 1) Mrs Howe's father set up a trust for the benefit of Mrs Howe. Her brother is trustee, but it is really controlled by the father. The trust distributes $30K/ year to Mrs Howe. The basis is $700K and it has an average earnings rate of about 8.5% per year for the last 10 years. There is no plan to increase distributions. Economic Info Inflation averages 3% for last 20 years and expected to continue at 3% Bank lending rates: 15 year 3.25%;30 year 3.75%; Any closing costs associated with refinance are 3% and included in refinanced mortgage. Expected rate of return 8.5% Residence Current value $550K; Balance on 30 -year mortgage at 5.5%$260,514; Land value $150K; Monthly payment (P\&I) \$1703.37; Owned home for 8 years; Will not qualify for refinance until Mr. Howe has been with his current employer for one year. Life - No life insurance; Mr Howe expects $50K group term from new employer Health - Covered under Mr Howe employer plan; Cost \$1K/month for family Disability - No disability; Mr Howe will be covered for LTD provided by employer at 65% of gross pay. Homeowner - HO3 with open perils and replacement value; $250 deductible; Dwelling covered $300K with 80/20 coinsurance clause; Premium $2400/ year. Auto - $250 deductible; 100/300/50; Premium $1800/ year Assets JT Bank account \$28K JT Inherited portfolio \$200K C Brokerage account $127K G401K \$32K - with brokerage account JT Residence $550K JT Auto 1$40K G Auto 2$25K JTHH Items $150K JT Liabilities Mortgage $260514 Investments Investment portfolio $327K Brokerage account includes gifts from Mrs Howe's father - invested in money market account at 0% earnings 401K from Mr Howe's prior job invested in index fund Economic Info Inflation averages 3% for last 20 years and expected to continue at 3% Bank lending rates: 15 year 3.25%;30 year 3.75%; Any closing costs associated with refinance are 3% and included in refinanced mortgage Expected rate of return 8.5% Residence Current value $550K; Balancece on 30 year mortgage at 5.5%$260.514; Land value $150K; Monthly payment (P\&1) \$1703.37; Owned home for 8 years; Not qualify for refi until Mr Howe in new; job 1 year Residence Current value $550K; Balancece on 30 year mortgage at 5.5%$260,514; Land value $150K; Monthly payment (P\&.) \$1703.37; Owned home for 8 years; Not qualify for refi until Mr Howe in new job 1 year Estate Info - No estate planning documents Goals and Concerns Want proper insurance, investment and estate portfolio Want to know cost of college education for their child so they can approach Mrs Howe's father about funding a 529 plan. Current cost of education $35K in today's dollars with expected 5% inflation. Expect the child to be in school six years and expect rate of return 8.5% Want to plan for early retirement ( 100% WRR, excluding trust income) at age 62 . Mr Howe to save $17500 /yr in 401K with an employer match of $6K. Expect to live to age 90 . Do not include SS benefits if planning. Want to be debt free at retirement 6 - Describe the estate planning documents the Howe's need immediately and what are the important provisions of each? If you recommend powers, who is the power holder? 7- Perform analysis of the Howe's portfolio taking into consideration risk tolerance and asset allocation. Assume they are aggressive investors (goal of 10% return) and revise asset allocation to achieve this goal. Assume risk tolerance appropriate for their age and years to retirement 8. Based on your analysis what are the strengths and weaknesses of the Howe family financial plan and overall financial condition. What recommendations would you make to them based on your analysis. What additional information would you need to do a complete analysis. SWOT type analysis