Financial Plan for George J Jones and Marianne P Jones Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 1
Financial Plan Husband: George J Jones Wife: Marianne P Jones Date: 10/15/2013-2:09pm Case: 44-32323 George J Jones vs. Marianne P Jones Judge: Marion Winslet, phone: 610-333-2323 Court: Family Court 333 Monroe St Court address 222 Newtown, PA 19323 Phone: 610-333-2222 Fax: 222-333-4444 Contact & Background Information George J Jones SSN: 444-55-3333 Birth Date: 4/5/1971 State where George J Jones lives: AZ Address: 17 Merion Ln, Merion, AZ 19333 Phone: 610-444-5555 E-mail: hjones@merrybuilders.com Marianne P Jones SSN: 222-33-4444 Birth Date: 11/20/1974 State where Marianne P Jones lives: AZ Address: 40 Winding Way, Berwyn, AZ 19434 Phone: 610-333-2222 E-mail: marianne55@hotmail.com Children Tiffany Amber Birth Date: 4/5/1999 Tiffany is a child of this relationship. Tiffany is young enough to be eligible for child support. George J Jones will claim the tax exemption. Tiffany will be a tax exemption until 21. Birth Date: 12/2/2003 Amber is a child of this relationship. Amber is young enough to be eligible for child support. George J Jones will claim the tax exemption. Amber will be a tax exemption until 21. Prepared by: Nancy Hetrick, CDFA, AWMA, AAMS Divorce Financial Strategies, LLC 11811 N Tatum Blvd. Suite 3031 Phoenix, AZ 85028 Phone: 602-349-0164, 877-552-4017 Email: Nancy@DivorceFinancialStrategiesLLC.com You must not rely on the information in this report as an alternative to legal advice from your attorney or other professional legal services provider. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 2
If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 3
Table Of Contents Key Reports (1) One-Page Summary (2) Division of Marital Property (3) Projected Net Income After Expenses and Taxes (4) Projected Net Worth (5) Summary Totals Spreadsheet (6) Budget Report (7) View/Edit Taxes (8) Spreadsheet for Net Income After Expenses and Taxes (9) Liquidations to Cover Negative Cash Flow (10) Accumulated Savings (11) Net Worth Spreadsheet (12) Key Entries and Assumptions (13) Observations Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 4
One-Page Summary Monthly totals for George J Jones and Marianne P Jones. Total Income George Marianne Wages and Salary $14,583 $4,117 Child Support Received 0 1,699 Spousal Maintenance Received 0 1,000 All Other Income 667 208 TOTAL INCOME 15,250 7,024 Total Expenses Child Support Paid 1,699 0 Spousal Maintenance Paid 1,000 0 All Other Expenses 6,538 6,869 TOTAL EXPENSES 9,237 6,869 Taxes Federal Income Tax 3,421 358 State Income Tax 534 147 Local Tax on Wages 0 0 FICA/Medicare tax 809 315 TOTAL TAXES 4,764 820 BUDGET NET INCOME 1,249-665 Property Marital Property 130,402 72,426 Separate Property 0 83,644 TOTAL PROPERTY $130,402 $156,070 Miscellaneous Number of Dependents 2 0 Filing Status Filing Separate Head Hsld Income After Taxes 7,787 6,184 % of Combined Income After Taxes 5 4 Spousal Maintenance paid, % of gross income 7 0 Child Support paid, % of gross income 11 0 Combined pmts, % of gross income 18 0 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 5
Division of Marital Property Property division report for George J Jones and Marianne P Jones. George Marianne Total Amount Pct Amount Pct Amount Real Estate Equity 40 Winding Way (1) $40,000 $40,000 $80,000 Total Value $450,000 1st Mortgage $320,000 Equity $130,000 Vacation Home $81,250 $0 $81,250 Total Value $100,000 1st Mortgage $18,750 Equity $81,250 Total Real Estate Equity $121,250 75% $40,000 25% $161,250 Cash & Investments Cash-Equivalent Investments: First Union -- -- $1,875 Bank of America (2) -- -- $0 Bank of America -- -- $3,292 Total Cash-Equivalent $0 0% $0 0% $5,167 Other Investments: Vanguard Index 500 -- -- $12,755 Nuveen Bond Fund -- -- $10,000 Municipal Bonds -- -- $20,000 Total Other Investments $0 0% $0 0% $42,755 Total Investments $0 0% $0 0% $47,922 Businesses Mary Kay franchise $0 $0 $0 Cars and Personal Effects Jewelry $1,500 $0 $1,500 Paintings (3) $700 $0 $700 2001 Toyota Corolla -- -- $21,000 2010 Ford Pickup -- -- $24,000 Total Personal Items $2,200 100% $0 0% $47,200 Subtotal Non-Retirement $123,450 76% $40,000 24% $256,372 IRA/401ks Vanguard IRA $12,555 $0 $12,555 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 6
Division of Marital Property (cont.) Property division report for George J Jones and Marianne P Jones. George Marianne Total Amount Pct Amount Pct Amount Defined Benefit Pensions School district $0 $38,029 $38,029 Total Pensions $0 0% $38,029 100% $38,029 Subtotal Retirement $12,555 25% $38,029 75% $50,584 Total Assets $136,005 64% $78,029 36% $306,956 Debts MasterCard Bank Two ($1,728) ($1,728) ($3,456) VISA Country Card ($3,875) ($3,875) ($7,750) Total Debt ($5,603) 50% ($5,603) 50% ($11,206) Total Debts ($5,603) 50% ($5,603) 50% ($11,206) Total Assets $136,005 64% $78,029 36% $306,956 Total Debts ($5,603) 50% ($5,603) 50% ($11,206) Total Marital Property $130,402 64% $72,426 36% $295,750 Equalization Payment ($28,988) $28,988 Total Marital After Equalization $101,414 50% $101,414 50% Note: $92,922 is unallocated. Also, "Total Amount" column may not add due to rounding. Footnotes: (1) 40 Winding Way - Marianne will remain in the marital home. (2) Bank of America - Funds from Inheritance, kept separate. Value is as of most recent bank statement. (3) Paintings - Paintings have sentimental value to Marianne Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 7
Division of Marital Property (cont.) Division of Marital Property: George property after payment $101,414 - (50.0%). Equalization Payment George Marianneproperty before payment $72,426 - (35.7%). Marianne Equalization Payment $28,988 - (14.3%). Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 8
Projected Net Income After Expenses and Taxes Projected Net Income After Expenses and Taxes for George J Jones and Marianne P Jones for 10 years. George Marianne George Marianne 2013 $ 14,985 ($ 7,979) 2018 $ 35,663 ($ 54,520) 2014 $ 21,655 ($ 8,288) 2019 $ 43,107 ($ 67,288) 2015 $ 23,043 ($ 8,614) 2020 $ 43,774 ($ 73,892) 2016 $ 28,957 ($ 13,583) 2021 $ 46,507 ($ 33,942) 2017 $ 30,663 ($ 45,776) 2022 $ 48,738 ($ 37,833) George Marianne $60,000 $40,000 $20,000 $0 2014 2015 2016 2017 2018 2019 2020 2021 2022 $-20,000 $-40,000 $-60,000 $-80,000 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 9
Projected Net Worth Projected Net Worth for George J Jones and Marianne P Jones for 10 years. Note: Numbers are all as of "end of year." George Marianne George Marianne 2013 $ 174,602 $ 200,382 2018 $ 417,538 $ 237,765 2014 $ 213,035 $ 222,352 2019 $ 488,365 $ 209,937 2015 $ 254,692 $ 245,392 2020 $ 563,044 $ 177,614 2016 $ 303,870 $ 265,384 2021 $ 626,924 $ 154,939 2017 $ 356,964 $ 254,955 2022 $ 695,024 $ 128,459 George Marianne $800,000 $600,000 $400,000 $200,000 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 10
Summary Totals Spreadsheet George Summary Totals Spreadsheet INCOME ASSETS & DEBT Year Age Total Total Total Net After Accum Fin Equity in Other Net Income Expenses Taxes Exp & Tax Savings Assets Real Est. IRA/401k Assets/Debt Worth 2013 42 183,000 110,849 57,166 14,985 14,985 0 148,309 13,183 (1,875) 174,602 2014 43 186,775 112,320 52,800 21,655 37,239 0 163,175 13,842 (1,221) 213,035 2015 44 190,829 113,814 53,972 23,043 61,772 0 178,863 14,534 (477) 254,692 2016 45 195,020 108,966 57,097 28,957 93,200 0 195,430 15,261 (21) 303,870 2017 46 199,480 110,443 58,374 30,663 127,591 0 212,933 16,024 416 356,964 2018 47 204,097 108,700 59,734 35,663 168,358 0 231,437 16,825 918 417,538 2019 48 208,974 102,649 63,218 43,107 218,199 0 251,006 17,666 1,494 488,365 2020 49 214,191 104,291 66,126 43,774 270,701 0 271,637 18,549 2,157 563,044 2021 50 219,559 105,296 67,756 46,507 328,036 0 277,212 19,476 2,200 626,924 2022 51 225,143 106,956 69,449 48,738 389,895 0 282,479 20,450 2,200 695,024 Marianne Summary Totals Spreadsheet INCOME ASSETS & DEBT Year Age Total Total Total Net After Accum Fin Equity in Other Net Income Expenses Taxes Exp & Tax Savings Assets Real Est. IRA/401k Assets/Debt Worth 2013 39 84,288 82,429 9,838 (7,979) 0 17,043 140,741 0 42,598 200,382 2014 40 85,168 83,073 10,383 (8,288) 0 8,476 166,151 0 47,725 222,352 2015 41 86,058 83,726 10,946 (8,614) (673) 0 193,124 0 52,941 245,392 2016 42 80,973 84,078 10,478 (13,583) (14,256) 0 221,771 0 57,869 265,384 2017 43 82,082 116,155 11,703 (45,776) (60,032) 0 252,210 0 62,777 254,955 2018 44 79,888 122,029 12,379 (54,520) (114,552) 0 284,566 0 67,751 237,765 2019 45 73,382 128,693 11,977 (67,288) (181,840) 0 318,977 0 72,800 209,937 2020 46 74,567 136,215 12,244 (73,892) (255,732) 0 355,412 0 77,934 177,614 2021 47 75,779 97,212 12,509 (33,942) (289,674) 0 362,164 0 82,449 154,939 2022 48 77,018 102,069 12,782 (37,833) (327,507) 0 369,045 0 86,921 128,459 Note: Numbers are all as of "end of year." Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 11
Budget Report for 2013 Budget Report for George J Jones and Marianne P Jones for 2013 This report shows George's and Marianne's income, taxes, expenses, including spousal maintenance income and child support income, including spousal maintenance expenses and child support expenses. George Marianne Monthly Monthly Income Merry Builders, Inc $14,583.33 $0.00 Marianne's Employer #1 0.00 4,116.67 Bonuses 666.67 0.00 Total Wage and Non-Wage Income $15,250.00 $4,116.67 Investment Income Bank of America $0.00 $41.67 Total Investment Income $0.00 $41.67 Business Income Mary Kay franchise $0.00 $166.67 Total Business Income $0.00 $166.67 Support Received Child Support Received $0.00 $1,699.00 Spousal Maintenance Received $0.00 $1,000.00 Total Support Received $0.00 $2,699.00 TOTAL INCOME $15,250.00 $7,024.00 Mortgage Payments 40 Winding Way (1) $0.00 $3,750.00 Vacation Home $0.00 $200.00 Total Mortgage Payments $0.00 $3,950.00 Living Expenses Union Dues $0.00 $20.00 Rent 1,200.00 900.00 Homeowners' Insurance 66.67 0.00 Real Estate Tax 0.00 250.00 Cable TV 40.00 50.00 Internet Access 80.00 0.00 Painting/Wallpapering 50.00 0.00 Household Supplies 70.00 0.00 Maid/Cleaning Service 325.00 0.00 Lawn Service 0.00 100.00 Utilities - Electricity 75.00 100.00 Utilities - Oil Heat 100.00 66.67 Car Payments 500.00 350.00 Car Insurance 1,200.00 41.67 Car Gasoline/Oil 130.00 0.00 Car Maintenance and Repair 75.00 0.00 Car License/Stickers 50.00 0.00 Parking 43.33 0.00 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 12
Budget Report (cont.) George Marianne Monthly Monthly Public/Alt. Transportation 43.33 0.00 Child Care - Day Care 0.00 476.67 Child Education Lunches 100.00 0.00 Bank Fees 4.17 0.00 Cell Phone 90.00 70.00 Clothes 400.00 0.00 Charitable 83.33 0.00 Church/Synagogue/Mosque etc 83.33 0.00 Dues/Clubs 83.33 0.00 Entertainment 86.67 0.00 Food/Groceries 216.67 346.67 Gifts 41.67 0.00 Hair 30.00 0.00 Laundry 3.00 0.00 Previous Relship Child Support 200.00 0.00 Restaurants 130.00 0.00 Subscriptions, Books 80.00 0.00 Toiletries/Grooming/Drug Store 86.67 0.00 Vacations 166.67 0.00 Other Personal 200.00 0.00 Health Insurance 120.00 0.00 Medical/Doctor 0.00 50.00 Dental 100.00 0.00 Drug & Prescription 87.00 0.00 Total Living Expenses $6,440.83 $2,821.67 Payments on Debt MasterCard Bank Two $37.58 $37.42 VISA Country Card 60.00 60.00 Total Payments on Debt $97.58 $97.42 Support Paid Child Support Paid $1,699.00 $0.00 Spousal Maintenance Paid 1,000.00 0.00 Total Support Paid $2,699.00 $0.00 TOTAL EXPENSES $9,237.42 $6,869.08 Taxes Federal Taxes $3,421.00 $357.67 FICA & Medicare $808.58 $314.92 State Taxes (estimate only) $534.25 $147.25 Local Wage Tax $0.00 $0.00 TOTAL TAXES $4,763.83 $819.83 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 13
Budget Report (cont.) George Marianne Monthly Monthly Total Income $15,250.00 $7,024.00 Minus Total Expenses (9,237.42) (6,869.08) Minus Total Taxes (4,763.83) (819.83) BUDGET NET INCOME $1,248.75 $(664.92) Footnotes: (1) 40 Winding Way - Marianne will remain in the marital home. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 14
View/Edit Taxes for 2013 George Marianne Filing Separate Head Hsld Filing Status in 2013 3 1 Number of exemptions Income: 175,000 49,400 Wages and salary. 0 Taxable interest income. 0 500 Taxable dividend income. 12,000 Spousal Maintenance income. 2,000 Business and farm income. 0 Capital gain taxable. Other gains and losses. Taxable IRA and pension income. Rent, royalty, partnership, S corporation. Social Security taxable. 8,000 Other income. 183,000 63,900 Taxable gross income. Adjustments: Payroll deductions for health, etc. IRA/401k deduction. Moving expenses. 142 Deduction of 1/2 of self-employment tax. Part of health insurance for self-employed people. 12,000 Spousal Maintenance paid. Interest on education loans. Other deductions. 12,000 142 Total adjustments. 171,000 63,758 Adjusted Gross Income ("AGI") = gross income - total adjustments). Itemized Deductions: 3,684 600 Total medical expenditures. 10.0 10.0 Info only: Medical expense threshold % (7.5% or 10.0%, depending on year and age). 17,100 6,376 Info only: Medical expense threshold = Medical expense threshold % * AGI Deductible medical (= medical expenses in excess of threshold). 6,411 1,767 State income taxes. Local income taxes. 3,000 Real estate taxes. 19,612 Mortgage interest. 2,000 Charitable contributions. 50 240 Miscellaneous, subject to 2% AGI threshold. miscellaneous, after 2% AGI threshold. Miscellaneous, not subject to 2% AGI threshold. 8,411 24,379 Itemized deductions before phase-out. 7,781 24,379 Itemized deductions after phase-out. 6,100 8,950 Compare: standard deduction. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 15
View/Edit Taxes (cont.) George Marianne Exemptions: 11,700 3,900 Deduction for exemptions before phase-out. 7,721 3,900 Deduction for exemptions after phase-out. Tax Before Credits and Other Taxes: 155,498 35,479 Taxable Income = AGI - greater of itemized or standard deductions - exemptions. 39,471 4,609 Tax before credits and other taxes. 33 15 Marginal federal tax bracket (%) Non-refundable Credits: 600 Child care credit. Hope education credit, non-refundable portion. Lifetime learning credit. Child credit, after phase-out, non-refundable portion. 600 Total non-refundable credits (reduce tax, but not below zero). Refundable Credits: Child credit, after phase-out, refundable portion. 2 # Children for Earned income credit. Earned income credit. Making work pay credit. Hope credit, refundable portion. Total refundable credits (can reduce tax below zero and generate a payment from the IRS). Other Taxes on Form 1040: Tax on retirement plan premature distribution. 1,581 Alternative minimum tax. Lump-sum distribution 5- or 10- year averaging. 283 Self-employment tax. 0 Unearned Income Medicare Contribution. Total Federal Income Tax: = tax before credits and other taxes - total nonrefundable credits (down to zero) - total refundable credits + other taxes on Form 1040 41,052 4,292 Total Federal Income Tax. 22 7 Average federal tax rate (= Fed Tax / Gross Income) (%) Taxes Not on Form 1040: 7,049 3,063 FICA Taxes. 2,654 716 Medicare Taxes. 6,411 1,767 State Income Tax (estimate only) Local Wage Tax. Total Taxes: Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 16
View/Edit Taxes (cont.) 57,166 9,838 Total taxes. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 17
Spreadsheet for Net Income After Expenses and Taxes (Annual) George Spreadsheet for Net Income After Expenses and Taxes Year Age Wages & Non-Wage Income on Total Living Spousal Child Payments Total Pre-tax Salary Income Accum Svg Income Expenses Maint. Pd. Supt Pd on Debt Expenses Cash flow 2013 42 175,000 8,000 0 183,000 77,290 12,000 20,388 1,171 110,849 72,151 2014 43 178,325 8,000 450 186,775 78,761 12,000 20,388 1,171 112,320 74,455 2015 44 181,713 8,000 1,116 190,829 80,254 12,000 20,388 1,172 113,814 77,015 2016 45 185,166 8,000 1,854 195,020 81,780 6,000 20,388 798 108,966 86,054 2017 46 188,684 8,000 2,796 199,480 83,334 6,000 20,388 721 110,443 89,037 2018 47 192,269 8,000 3,828 204,097 84,919 6,000 17,060 721 108,700 95,397 2019 48 195,922 8,000 5,052 208,974 86,532 0 15,396 721 102,649 106,325 2020 49 199,645 8,000 6,546 214,191 88,174 0 15,396 721 104,291 109,900 2021 50 203,438 8,000 8,121 219,559 89,856 0 15,396 44 105,296 114,263 2022 51 207,303 8,000 9,840 225,143 91,560 0 15,396 0 106,956 118,187 George Spreadsheet for Net Income After Expenses and Taxes Year Age Federal FICA / State Tax Total Net After Inc Tax Soc Sec (Estimate) Taxes Exp&Tax 2013 42 41,052 9,703 6,411 57,166 14,985 2014 43 36,332 9,885 6,583 52,800 21,655 2015 44 37,134 10,071 6,767 53,972 23,043 2016 45 39,608 10,260 7,229 57,097 28,957 2017 46 40,489 10,453 7,432 58,374 30,663 2018 47 41,442 10,651 7,641 59,734 35,663 2019 48 44,199 10,884 8,135 63,218 43,107 2020 49 46,528 11,122 8,476 66,126 43,774 2021 50 47,672 11,364 8,720 67,756 46,507 2022 51 48,864 11,611 8,974 69,449 48,738 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 18
Spreadsheet for Net Income After Expenses and Taxes (cont.) Marianne Spreadsheet for Net Income After Expenses and Taxes Year Age Wages & Business Fin. Child Spousal Total Living Major Mortgage Payments Salary Income Invest. Support Maint. Income Expenses Expenses Payments on Debt 2013 39 49,400 2,000 500 20,388 12,000 84,288 33,860 0 47,400 1,169 2014 40 50,339 2,100 341 20,388 12,000 85,168 34,504 0 47,400 1,169 2015 41 51,295 2,205 170 20,388 12,000 86,058 35,158 0 47,400 1,168 2016 42 52,270 2,315 0 20,388 6,000 80,973 35,827 0 47,400 797 2017 43 53,263 2,431 0 20,388 6,000 82,082 36,508 30,388 47,400 719 2018 44 54,275 2,553 0 17,060 6,000 79,888 37,200 31,907 47,400 719 2019 45 55,306 2,680 0 15,396 0 73,382 37,908 33,502 47,400 719 2020 46 56,357 2,814 0 15,396 0 74,567 38,627 35,178 47,144 719 2021 47 57,428 2,955 0 15,396 0 75,779 39,365 36,936 409 43 2022 48 58,519 3,103 0 15,396 0 77,018 40,112 38,783 0 0 Marianne Spreadsheet for Net Income After Expenses and Taxes Year Age Acc Debt Total Pre-tax Federal FICA / State Tax Total Net After Interest Expenses Cash flow Inc Tax Soc Sec (Estimate) Taxes Exp&Tax 2013 39 0 82,429 1,859 4,292 3,779 1,767 9,838 (7,979) 2014 40 0 83,073 2,095 4,736 3,851 1,796 10,383 (8,288) 2015 41 0 83,726 2,332 5,196 3,924 1,826 10,946 (8,614) 2016 42 54 84,078 (3,105) 4,824 3,999 1,655 10,478 (13,583) 2017 43 1,140 116,155 (34,073) 5,937 4,074 1,692 11,703 (45,776) 2018 44 4,803 122,029 (42,141) 6,497 4,152 1,730 12,379 (54,520) 2019 45 9,164 128,693 (55,311) 6,179 4,231 1,567 11,977 (67,288) 2020 46 14,547 136,215 (61,648) 6,327 4,311 1,606 12,244 (73,892) 2021 47 20,459 97,212 (21,433) 6,468 4,394 1,647 12,509 (33,942) 2022 48 23,174 102,069 (25,051) 6,617 4,477 1,688 12,782 (37,833) Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 19
Liquidations to Cover Negative Cash Flow Liquidations to Cover Negative Cash Flow report for George J Jones and Marianne P Jones. The "liquidation" amount is the amount of investments and IRA/401k that is used to cover negative cash flow (expenses in excess of income) and downpayments on homes to be purchased in the future. The software first sells securities, then distributes from the IRA/401k plan(s). Upon each liquidation sale, the software sells a bit extra to pay for taxes on the sales. Data Entries: YES YES YES YES YES Distribute accumulated savings to cover downpayment? Sell securities to cover downpayment? Distribute accumulated savings to cover negative cash flow? Sell securities to cover negative cash flow? Distribute from IRA/401k to cover negative cash flow? Liquidations of Securities and IRA/401k: Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Accumulated savings distributed Plus: Securities sold Marianne 8,707 9,078 8,730 0 0 0 0 0 0 0 Plus: IRA/401k distributed Equals: Total Liquidations Marianne 8,707 9,078 8,730 0 0 0 0 0 0 0 Less: Incremental federal and state tax (including penalties) Marianne 728 790 789 0 0 0 0 0 0 0 Equals: Liquidation Available for Negative Cash Flow Marianne 7,979 8,288 7,941 0 0 0 0 0 0 0 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 20
Liquidations to Cover Negative Cash Flow (cont.) Assets Used to Cover Negative Cash Flow George Marianne $10,000 $8,000 $6,000 $4,000 $2,000 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 21
Accumulated Savings Accumulated Savings report for George J Jones and Marianne P Jones. Accumulated Savings is the account for reinvested earnings that are not spent, and also for deficits (negative Accumulated Savings), which reflect borrowing to cover expenses and taxes. Real Estate sale and refinance proceeds and downpayments affect Net Worth through additions to or subtractions from the Accumulated Savings account. Liquidations of assets increase the Accumulated Savings account by offsetting deficits which would otherwise have to be covered by borrowing. Accumulated Savings are also appreciating at 4.00% (George) / 4.00% (Marianne). Accumulated Savings: Accumulated savings at end of the previous year George 0 14,985 37,239 61,772 93,200 127,591 168,358 218,199 270,701 328,036 Marianne 0 0 0 (673) (14,256) (60,032) (114,552) (181,840) (255,732) (289,674) Plus: Appreciation on previous accumulated savings at (4.00% (George) and 4.00% (Marianne)). George 0 599 1,490 2,471 3,728 5,104 6,734 8,728 10,828 13,121 Plus or Minus: Current year Net Income After Expenses and Taxes George 14,985 21,655 23,043 28,957 30,663 35,663 43,107 43,774 46,507 48,738 Marianne (7,979) (8,288) (8,614) (13,583) (45,776) (54,520) (67,288) (73,892) (33,942) (37,833) Plus: Real estate sale or refinance proceeds Minus: Current year down payment on real estate Minus: Tax paid when accumulated savings are liquidated to cover negative net income and downpayments Plus: Investment assets transferred in to cover negative cash flow (net of tax on sale of investments) Marianne 7,979 8,288 7,941 0 0 0 0 0 0 0 Plus: IRA/401k assets transferred in to cover negative cash flow (net of tax on IRA distribution) Equals: End of year accumulated savings George 14,985 37,239 61,772 93,200 127,591 168,358 218,199 270,701 328,036 389,895 Marianne 0 0 (673) (14,256) (60,032) (114,552) (181,840) (255,732) (289,674) (327,507) Calculating Untaxed Appreciation on Accumulated Savings at End Of Year Before Liquidations: Untaxed appreciation at end of prior year, after liquidations (see below) Plus: Appreciation on previous accumulated savings at 4.00% (George) and 4.00% (Marianne)). George 0 599 1,490 2,471 3,728 5,104 6,734 8,728 10,828 13,121 Equals: Untaxed appreciation at the end of the current year, before liquidations George 0 599 1,490 2,471 3,728 5,104 6,734 8,728 10,828 13,121 Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 22
Accumulated Savings (cont.) Calculating Untaxed Appreciation at End of Year After Liquidations, and Tax Paid: (a) Accumulated savings at end of the previous year (see above) George 0 14,985 37,239 61,772 93,200 127,591 168,358 218,199 270,701 328,036 Marianne 0 0 0 (673) (14,256) (60,032) (114,552) (181,840) (255,732) (289,674) (b) Untaxed appreciation at the end of the current year, before liquidations (see above) George 0 599 1,490 2,471 3,728 5,104 6,734 8,728 10,828 13,121 (c) Accumulated savings liquidated to cover net deficit after expenses and taxes and downpayments (d) Percent of accumulated savings liquidated: (c) / (a) (rounded here) (e) Untaxed appreciation used (sold) in the liquidation: (d)*(b) (f) Untaxed appreciation at end of year, after liquidations: (b)-(e) (g) Tax paid on liquidation: (e) * (KG rate + state tax rate) = (e) * (e.g., 20.04% (George) and 20.04% (Marianne) in 2013) Figuring Amount of Accumulated Savings Used to Cover Negative Cash Flow: (a) Amount liquidated (b) Less: Tax paid on liquidation of accumulated savings (see above) (c) Equals: Amount of accumulated savings used to cover negative cash flow and downpayments Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 23
Net Worth Spreadsheet George Net Worth Spreadsheet Year Age Fin. Cars / Equity in Defined Accum. Net Assets Furn. Real Est. IRA/401k Benefit Debt Savings Worth 2013 42 0 2,200 148,309 13,183 0 (4,075) 14,985 174,602 2014 43 0 2,200 163,175 13,842 0 (3,421) 37,239 213,035 2015 44 0 2,200 178,863 14,534 0 (2,677) 61,772 254,692 2016 45 0 2,200 195,430 15,261 0 (2,221) 93,200 303,870 2017 46 0 2,200 212,933 16,024 0 (1,784) 127,591 356,964 2018 47 0 2,200 231,437 16,825 0 (1,282) 168,358 417,538 2019 48 0 2,200 251,006 17,666 0 (706) 218,199 488,365 2020 49 0 2,200 271,637 18,549 0 (43) 270,701 563,044 2021 50 0 2,200 277,212 19,476 0 0 328,036 626,924 2022 51 0 2,200 282,479 20,450 0 0 389,895 695,024 Note: Numbers are all as of "end of year." Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 24
Net Worth Spreadsheet (cont.) Marianne Net Worth Spreadsheet Year Age Fin. Cars / Equity in Defined Accum. Net Assets Furn. Real Est. IRA/401k Benefit Debt Savings Worth 2013 39 17,043 0 140,741 0 46,673 (4,075) 0 200,382 2014 40 8,476 0 166,151 0 51,145 (3,420) 0 222,352 2015 41 0 0 193,124 0 55,617 (2,676) (673) 245,392 2016 42 0 0 221,771 0 60,089 (2,220) (14,256) 265,384 2017 43 0 0 252,210 0 64,561 (1,784) (60,032) 254,955 2018 44 0 0 284,566 0 69,033 (1,282) (114,552) 237,765 2019 45 0 0 318,977 0 73,505 (705) (181,840) 209,937 2020 46 0 0 355,412 0 77,977 (43) (255,732) 177,614 2021 47 0 0 362,164 0 82,449 0 (289,674) 154,939 2022 48 0 0 369,045 0 86,921 0 (327,507) 128,459 Note: Numbers are all as of "end of year." Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 25
Key Entries and Assumptions This report presents the key assumptions behind the income and asset projections for George J Jones and Marianne P Jones. Key Rates 1. Inflation.................................................................... 1.9 % 2. George - Interest rate of return on accumulated (re-invested) savings................ 1.00 % 3. George - Dividend rate of return on accumulated (re-invested) savings............... 1.00 % 4. George - Capital Gain income rate on accumulated (re-invested) savings............. 1.00 % 5. George - Tax-free income rate of return on accumulated (re-invested) savings......... 0.00 % 6. George - Appreciation on accumulated (re-invested) savings........................ 4.00 % 7. George - Interest rate on borrowing to cover excess spending...................... 8.00 % 8. Marianne - Interest rate of return on accumulated (re-invested) savings............... 1.00 % 9. Marianne - Dividend rate of return on accumulated (re-invested) savings.............. 1.00 % 10. Marianne - Capital Gain income rate on accumulated (re-invested) savings............ 1.00 % 11. Marianne - Tax-free income rate of return on accumulated (re-invested) savings........ 0.00 % 12. Marianne - Appreciation on accumulated (re-invested) savings...................... 4.00 % 13. Marianne - Interest rate on borrowing to cover excess spending..................... 8.00 % Taxes 1. Federal taxes are calculated on a detailed basis using the tax laws for each year, including Earned Income Credit, Alternative Minimum tax, and phase-outs currently enacted. 2. Taxes for George J Jones Federal and state filing status for 2013...................................... Married Filing Separately Filing status for subsequent years.......................................... Single State taxes are estimated by applying the current tax table to adjusted gross income. 3. Taxes for Marianne P Jones Federal and state filing status for 2013...................................... Head of Household Filing status for subsequent years.......................................... Head of Household State taxes are estimated by applying the current tax table to adjusted gross income. Assumptions Relating to Children Custody Tax Exemption 1. Tiffany............................................. Marianne George 2. Amber............................................. Marianne George Assumptions Relating to Child Support 1. George paying child support through 4/2018..................................... $ 1,699 per month 2. Then, child support through 12/2022............................................ $ 1,283 per month Assumptions Relating to Spousal Maintenance 1. George paying spousal maintenance through 12/2015............................. $ 1,000 per month 2. Then, spousal maintenance through 12/2018..................................... $ 500 per month Real Estate Assumptions - 40 Winding Way 1. Market Value.............................................................. $450,000 2. Rate of appreciation of property............................................... With Inflation 3. This property will not be sold in the time frame under consideration. 4. There is a first mortgage with a current mortgage balance of $320,000. 5. This mortgage will be paid by Marianne. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 26
Key Entries and Assumptions (cont.) Real Estate Assumptions - Vacation Home 1. Market Value.............................................................. $100,000 2. Rate of appreciation of property............................................... With Inflation 3. This property will not be sold in the time frame under consideration. 4. There is a first mortgage with a current mortgage balance of $18,750. 5. This mortgage will be paid by Marianne. Assumptions Relating to Wages George Merry Builders, Inc: 1. Wage amount and period.................................................... $175,000 / year 2. Rate of increase of wages.................................................... With Inflation 3. Retirement age............................................................ 65 Marianne Marianne's Employer #1: 1. Wage amount and period.................................................... $950 / week 2. Rate of increase of wages.................................................... With Inflation 3. Retirement age............................................................ 65 Assumptions Relating to Major Expenses 1. Tiffany's college expense will start on 1/1/2017, run for 4 years. The annual cost is $25,000 in present dollars, and will increase at a rate of 5.0%. Marianne P Jones will pay 100% of this expense. 2. Amber's college expense will start on 1/1/2021, run for 4 years. The annual cost is $25,000 in present dollars, and will increase at a rate of 5.0%. Marianne P Jones will pay 100% of this expense. Assumptions Relating to Cash & Investments 1. First Union [Checking]: The current market value is $1,875. The annual income from this asset is $0. The annual rate of appreciation is 0.0%. 2. Vanguard Index 500 [Mutual fund]: The current market value is $12,755. The annual income from this asset is $1,000. The annual rate of appreciation is 8.0%. 3. Bank of America [Checking]: The current market value is $25,000. The annual rate of return is 2.0%. The annual rate of appreciation is 3.0%. 4. Nuveen Bond Fund [Bond fund]: The current market value is $10,000. The annual rate of return is 4.6%. The annual rate of appreciation is 0.0%. 5. Municipal Bonds [Tax-exempt]: The current market value is $20,000. The annual rate of return is 2.2%. The annual rate of appreciation is 0.0%. 6. Bank of America [Checking]: The current market value is $3,292. Assumptions Relating to IRA/401k Plans 1. Vanguard IRA. The current value is $12,555, and the growth rate is 5.0%. The age at which distributions will start for George J Jones is 65. George J Jones will take minimum distributions at retirement. Assumptions Relating to Defined Benefit Pensions 1. School district. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 27
Key Entries and Assumptions (cont.) The plan is owned by Marianne P Jones. The monthly benefit is $945. This assumes the participant works until the cut-off date and begins receiving payments at age 65. The discount rate is 4.32%. We are using mortality table RP-2000. Assumptions Relating to Debts 1. MasterCard Bank Two. The current balance is $3,456. The current rate is 12.000%. The monthly payment is $75.00. 2. VISA Country Card. The current balance is $7,750. The current rate is 14.000%. The monthly payment is $120.00. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 28
Observations ** High Priority Issues ** Other Observations Tax Exemptions May Not Benefit Party The Alternative Minimum Tax (AMT) applies for George in 2013. One effect of the Alternative Minimum Tax may be to offset the tax benefit of claiming the exemption for children. If you see that a party's tax does not change when you give that party the exemption for a child, the AMT may be the reason. The same thing applies also to state taxes, property taxes, medical deductions, and the standard deduction. Cash Flow / Budget Report Accumulated Debt Interest Expense Marianne has "Accumulated Debt Interest Expense" in at least one year in the cash flow projections. This note explains what that is and, if you wish, how to remove it. In a nutshell, "Accumulated Debt Interest Expense" is borrowing to cover negative cash flow. When expenses and taxes are more than income, a party has negative cash flow. In the software, as in real life, when there is negative cash flow, we first spend down prior Accumulated Savings (if any), then we sell Cash & Investments, then we liquidate IRA/401ks. If we have exhausted those assets, we borrow. This borrowing results in negative Accumulated Savings. The interest on this borrowing results in "Accumulated Debt Interest Expense." You may change the rate of this interest on the Assumptions screen. If you change the rate of this interest to zero, there will be no interest on the borrowing, and this column will disappear. Divorce Financial Strategies, LLC Prepared by Nancy Hetrick, CDFA, AWMA, AAMS (c) Family Law Software, Inc. v 15.03 10/15/2013 2:09pm George J Jones & Marianne P Jones Page 29