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Financial Literacy - Planning for your heirs
MONEY MAKEOVER
Planning for a life event
Jennifer must make some financial adjustments to stay on track as she begins her new life.
Planning for your heirs
 
Profile:
Jennifer Haeselich
The problem:
Jennifer faces a life event and needs to revise her estate plan.
The plan:
Update her will, contracts and other ancillary documents.
 
 The plan in 3 steps
 Invest funds for son's education wisely

Place funds in an all-equity portfolio while the child is young.
Hire a financial adviser to oversee investments.
In 10 years, portfolio should shift to more conservative stance.
Supplement any shortfall by pursuing grants, scholarships and loans.
Tip: Use Bankrate's 529 college savings plan estimator to determine if a 529 plan is a suitable vehicle for education funds.
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  The plan

Jennifer's cash flow on one income will be tight because the mortgage payment represents a large portion of her income. This is cause for concern, since it's likely only a matter of time before she will need funds for a major repair on her home or automobile, which could result in debt.

We strongly recommend Jennifer seek child care assistance and, if possible, a cash settlement as part of the divorce settlement. Further, if her husband seeks any portion of their home equity, her cash flow problems will rise since she'll need a loan to "buy him out." Affordability of her home is something Jennifer needs to carefully consider. She should seek advice from her divorce attorney.

Invest wisely for son's education
Jennifer's son has inherited $25,000 in a trust to pay for college. At an assumed 8 percent annual compound rate of growth, the trust will grow to over $82,000 by the time her son is ready for college.

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Keys to success

Seek child support and cash in divorce settlement.
Build up an emergency savings fund.
Invest education funds for growth.
Beef up contributions to retirement plan.
Update will, beneficiary designations.
Review how assets are titled.
Get other estate planning documents in order.




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