2. If you were to draft a Personal Financial Statement for Jill, what would the total value of Jill's assets be?

Client:                                      Jill Thompson, age 50, Accountant, divorced

Children:                                Dorothy, age 14

Jill's parents:                       Mother, age 78, terminally ill; father, deceased

Financial Data

Primary residence (Jill's).............................................................................$500,000

Mortgage on primary residence............................................................  .$305,000

Cash account (Jill).............................................................................................$6,000

Cash account (Mother)...................................................................................$1,000

Jill's 401(k)................................................................................................ ..$125,000

Jill's IRA............................................................................................................$50,000

Jill's investment account...............................................................................$75,000

Jill's automobile.............................................................................................$24,000

Jill's credit card debt......................................................................................$18,000

Income/Expense Data

Jill's income......................................................................................................$125,000

Jill's investment income.....................................................................................$6,500

Child Support for Dorothy (monthly)..............................................................$1,000

Family monthly expenses (excluding mortgage & taxes)..............................$7,500

Other Pertinent Information

·      Jill has been divorced from Dorothy's father for five years.

·      Jill's mother is in a nursing home and is terminally ill. She is expected to live only 2-4 months. She has no remaining assets besides her small bank account and is currently on Medicaid.

·      Jill owns a $500,000 term life insurance policy on her mother (it was given to Jill six years ago by her mother) and she has named herself as beneficiary.

·      Jill has a will that leaves everything outright to Dorothy. She has a power-of-attorney and health care power-of-attorney that names her mother as attorney-in-fact.

·      Jill's mother has a will that leaves everything to Jill and a power-of-attorney and health care power-of-attorney that names Jill as attorney-in-fact with no successor.

·      Jill states that she is extremely conservative and her investment account is almost entirely invested in fixed income investments.

·      Jill contributes $12,000 each year to her 401(k). She wants to contribute the maximum.

·      Dorothy is the beneficiary of Jill's 401(k).

·      Jill has a $500,000 20-year term life insurance that she took out three years ago; Dorothy is the beneficiary.

·      Jill has a disability insurance policy paid by her employer that provides 60% of her income up to a maximum of $7,000/month; the policy has a 90-day elimination period and provides benefits until age 67; the policy provides benefits if Jill is unable to perform the duties of any occupation for which she is reasonably qualified by education, training, and experience.

·      The primary residence mortgage is a 30-year fixed loan and was taken out 1 year ago at 4.75%. $100,000 of these proceeds were part of a cash-out refinance that was spent on high quality medical treatment for her mother last year while Jill was fully supporting her mother.

·      Jill is currently paying a 20.99% annual interest rate on her credit card debt.