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RISK MANAGEMENT

Background

Paul , age 55, immigrated to Canada from Scotland in his 20s. Over the years, he built a small chain of budget-rate hotels in the GTA and has become wealthy beyond his dreams. His private corporation, Nessie Inc., owns the hotels and, in some cases, the land on which the hotels are built.

Paul and his first wife divorced years ago and she returned to Scotland. He has no ongoing obligations toward his first wife and is now happily married to Lisa, 45. He has a son, Gavin, 28, from his first marriage and a daughter Leslie, 17, with Lisa. Gavin is actively involved in his fathers business and Lisa wants Leslie to become involved also.

Information Gathering Meeting

At your first meeting with Paul, you gathered the following information:

Paul

Personal Assets	FMV	ACB
Home owned jointly with Lisa	$1,800,000	$800,000
RRSPs	$500,000
Non-Registered Portfolio	$1,000,000	$900,000
Corporate Assets/Liabilities	FMV	ACB
1000 Common Shares of Nessie Inc.	$8,000,000	$0

Lisa

• Not employed
• Serves on the board of the Toronto General Hospital Foundation
• Home jointly owned with Paul
• Other Personal Assets:

Personal Assets	FMV	ACB
RRSPs	$200,000
Non-Registered Portfolio inherited from parents	$700,000	$400,000

Gavin

• Employed by Nessie Inc.; reports to a General Manager who reports to Paul

Leslie

• Full-time student. Note: Leslie has a new boyfriend, 25, who the family thinks may be a drug dealer.

Planning to Date

On her marriage to Paul, Lisa purchased a Universal Life policy with a death benefit of $500,000 and named Paul beneficiary. She did not name a contingent beneficiary. Paul and Lisa recently purchased a joint and last-to-die Term-to-100 insurance policy with a death benefit of $2,000,000. Their respective estates are beneficiary. This is their only personal life insurance.

Paul and Lisa have both named each other as beneficiaries on their RRSPs.

Paul plans to expand his business and projects that Nessie will continue to grow at 6 - 8% per year. He expects that Gavin will take over the business eventually, as long as he proves himself capable. He hasnt given any thought as to whether Leslie will eventually join Nessie.

Paul and Lisa have met with their lawyer to discuss their wills but the wills havent been drawn up yet.

• In Scenario Two Paul and Lisa are still living and looking for detailed estate planning

Scenario---Paul and Lisas accident was just a terrible nightmare. They are still living but the nightmare has scared them both. They want to make sure that an appropriate estate plan is in place as soon as possible.

QUESTION :

What steps should Paul take to further facilitate the viability of Nessie in the event of his sudden death? (300 words)

RISK MANAGEMENT

Background

Paul , age 55, immigrated to Canada from Scotland in his 20s. Over the years, he built a small chain of budget-rate hotels in the GTA and has become wealthy beyond his dreams. His private corporation, Nessie Inc., owns the hotels and, in some cases, the land on which the hotels are built.

Paul and his first wife divorced years ago and she returned to Scotland. He has no ongoing obligations toward his first wife and is now happily married to Lisa, 45. He has a son, Gavin, 28, from his first marriage and a daughter Leslie, 17, with Lisa. Gavin is actively involved in his fathers business and Lisa wants Leslie to become involved also.

Information Gathering Meeting

At your first meeting with Paul, you gathered the following information:

Paul

Personal Assets	FMV	ACB
Home owned jointly with Lisa	$1,800,000	$800,000
RRSPs	$500,000
Non-Registered Portfolio	$1,000,000	$900,000
Corporate Assets/Liabilities	FMV	ACB
1000 Common Shares of Nessie Inc.	$8,000,000	$0

Lisa

• Not employed
• Serves on the board of the Toronto General Hospital Foundation
• Home jointly owned with Paul
• Other Personal Assets:

Personal Assets	FMV	ACB
RRSPs	$200,000
Non-Registered Portfolio inherited from parents	$700,000	$400,000

Gavin

• Employed by Nessie Inc.; reports to a General Manager who reports to Paul

Leslie

• Full-time student. Note: Leslie has a new boyfriend, 25, who the family thinks may be a drug dealer.

Planning to Date

On her marriage to Paul, Lisa purchased a Universal Life policy with a death benefit of $500,000 and named Paul beneficiary. She did not name a contingent beneficiary. Paul and Lisa recently purchased a joint and last-to-die Term-to-100 insurance policy with a death benefit of $2,000,000. Their respective estates are beneficiary. This is their only personal life insurance.

Paul and Lisa have both named each other as beneficiaries on their RRSPs.

Paul plans to expand his business and projects that Nessie will continue to grow at 6 - 8% per year. He expects that Gavin will take over the business eventually, as long as he proves himself capable. He hasnt given any thought as to whether Leslie will eventually join Nessie.

Paul and Lisa have met with their lawyer to discuss their wills but the wills havent been drawn up yet.

• In Scenario Two Paul and Lisa are still living and looking for detailed estate planning

Scenario---Paul and Lisas accident was just a terrible nightmare. They are still living but the nightmare has scared them both. They want to make sure that an appropriate estate plan is in place as soon as possible.

QUESTION :

What steps should Paul take to further facilitate the viability of Nessie in the event of his sudden death? (300 words)

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