Read case of The Maria and Sancho Ruiz Case 16 (ONLY)

1. Briefly summarize the relevant facts of the case.
2. Estimate the amount of income earned from non-business source. Be sure to account for federal,
   state, and FICA taxes withheld at the household level.
3. Estimate the net taxable income from Sancho’s consulting business. Be sure to account for FICA
   taxes, federal tax withholdings, and state tax withholdings. Also determine how much of the net
   income from the business flows to Sancho’s brokerage account versus the household budget.
4. Estimate net income from the rental real estate LLC.
5. Estimate the Ruizs’ current discretionary cash flow position.
   a. Identify strengths and weakness associated with their cash flow situation.
   b. Use financial ratios to evaluate areas for improvement.
   c. Draft a list of potential recommendations that can be used to improve or enhance the
   situation.
6. Estimate the Ruizs’ current net worth situation.
   a. Identify strengths and weakness associated with their net worth situation.
   b. Use financial ratios to evaluate areas for improvement.
   c. Draft a list of potential recommendations that can be used to improve or enhance the
   situation.
7. Determine the weighted average rate of return for each portfolio, based on the current asset
   allocation.
   a. Estimate the amount of qualified dividends from the MNO, ABC, and XYZ portfolios.
   b. Estimate the amount of interest earned from the MNO, ABC, and XYZ portfolios.
   c. Determine whether the current value of each portfolio account matches an estimate of the
   account value based on contributions, time invested, and rate of return assumptions.
8. Develop an estimate of this year’s tax situation for the Ruiz family? Can Maria and Sancho
   expect a federal income tax refund?
   a. Identify strengths and weakness associated with their federal tax situation.
   b. Draft a list of potential recommendations that can be used to improve or enhance the
   situation.
9. Do Maria and Sancho need long-term insurance coverage at this time? If yes, how much?
10. Does Sancho need additional short-term disability coverage? Does Sancho need additional
    long-term disability coverage? If the answer is yes to either question, how much? Provide an
    estimate of the cost of coverage?
11. Do Maria and Sancho need additional life insurance coverage? Answer the question based on:
    I. A full needs analysis.
    II. The human life value approach.
    III. The capital retention approach.
    IV. The income retention approach.
    a. How much additional life insurance, if any, does Maria need?
    b. How much additional life insurance, if any, does Sancho need?
    c. If either has a need, what type of insurance policy would be most appropriate? How much
    might such a policy cost?
    d. Draft a list of other potential recommendations that can be used to improve or enhance the
    situation.
12. Are Maria and Sancho on track to meet their retirement goal(s) based on the current case
    assumptions?
    a. Identify strengths and weakness associated with their retirement situation.
    b. Draft a list of potential recommendations that can be used to improve or enhance the
    situation.
13. Do Maria and Sancho need to worry about paying federal estate taxes should either die
    prematurely this year?
    a. Identify strengths and weakness associated with their estate planning situation.
    b. Draft a list of potential recommendations that can be used to improve or enhance the
    situation.
14. Identify other issues Maria should be aware of as she evaluates the information provided in the
    context of a comprehensive financial plan.