The Value of Future Projections What does the Financial Divorce Specialists provide for clients and other professionals?

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Presentation transcript:

The Value of Future Projections What does the Financial Divorce Specialists provide for clients and other professionals?

Two Perspectives Two Perspectives Here and Now – Present Value of assets (the traditional method) as understood by clients and accepted by the courts as being “fair”. Here and Now – Present Value of assets (the traditional method) as understood by clients and accepted by the courts as being “fair”. Long term considerations – revealing the effects going forward of financial “choices” for better or for worse. Long term considerations – revealing the effects going forward of financial “choices” for better or for worse.

Legal Report Shows assets as of separation date (all “property”) Shows assets as of separation date (all “property”) Budgets (both parties) Budgets (both parties) Proposed Equalization Proposed Equalization Maintenance considerations Maintenance considerations

“Divorce Mate” Report

Assumptions Plan Term 30 Life Expectancy 85 CPI Inflation 2.50% Real Estate Inflation 3.00% Spouse Support Inflation 2.00% Child Support Inflation 2.00% Salary Inflation 2.00% Equity Investment Return 6.00% Interest Investment Return 3.00% Average Tax Rate 17.00%28.00% RRSP Investment Return 6.00% Personal Debt Interest Rate 9.00% -assumptions used to take growth, debt costs & inflation into account

NameMinnieMickey Current Age3537 Anticipated Retirement Age60 Income Salary Child Support Number of Support Periods20 Support Amount for Period # Support for both children End Year for Period # 11299Minerva leaves home Support Amount for Period # so support reduces End Year for Period # 21599Mickey Jr leaves home Current Client Details

Client Assets for Projections Non-registered AssetsMinnieMickey Cash & Cash Equivalents Other Investments Registered Assets RRSP Value Annual Contribution03000 Final Contribution Age60 Pensions Corporate RPP Benefit RPP Increase%0.00%1.00% RPP Start Age6661 OAS Benefit OAS Start Age66 CPP Benefit CPP Start Age61

Expenses Today & Tomorrow ExpensesMinnieMickey Living Expenses Number of Expense Adjustments33 Expense Adjustment # 1 - Value0-4800Debt paid off by Mickey Start Year04 End Year99 Expense Adjustment # 2 - Value-70920Minerva leaves home Start Year120 End Year99 Expense Adjustment # 3 - Value-70920Mickey Jr leaves home Start Year150 End Year99

RRSP/RRIF WithdrawalsMinnieMickey Number of Withdrawal Adjustments22 Withdrawal Adjustment # 1 -Value Both start to use RSP accts at Age 60 & take more until OAS begins at age 65 Start Year2725 End Year99 Withdrawal Adjustment # 2 -Value Start Year3029 End Year99 Personal Debts Personal Debt Minnie keeps Suburban loan Number of Lumpsum Payments00 Mickey keeps Credit Card debt Fixed Annual Debt Payment

Real Estate Asset Division Real EstateMinnieMickey Property # 1 -Value Family Home stays with Minnie Mortgage Balance Interest Rate6.00% Payment Amount12670 Payments Per Year12 Amortization10 Year Purchased00 Year Sold99 Property # 2 -Value Cottage stays with Mickey Property # 3 -Value Farm stays with Mickey It is exempt due to inheritance

Effects of Choices Years Ahead

Mickey’s Cash Flow less while Paying Support but Minnie’s Cash Flow is much less in later Years

Academy of Financial Divorce Specialists Questions? Questions?