Broker Check

Dierdre Collins, MSFS, RFC
Tim Murphy, AIF, RFC

 

Estate Liquidity

Planning for liquidity in your estate is as important as having good estate plan documents. Liquidity is clearly important to fund a tax obligation, if your estate will owe taxes. However, whether taxes are going to be due or not, liquidity can be important if your estate contains mostly illiquid assets (real estate or family business) that you wish to bequeath to your heirs without a forced sale, to equalize inheritances if specific heirs are to receive specific assets, if you own a closely-held business, have a family vacation home or are in a second marriage.

Taxes

We can provide an estimate of the amount of estate tax that your estate will owe to the Federal and state government. The estate tax laws are changing frequently and sometime retroactively. We constantly monitor the tax changes and can apply the current rate schedule to your estate to provide an estimated tax liability. More importantly, we can customize a set of estimates for you to project the taxes that would be due in the future based on the tax laws in effect today. Using these same projections, we can compare the amount needed for taxes to the projected amount of liquidity. If it looks like there will be a shortfall, we can recommend alternatives so that your heirs don’t inherit a cash shortfall.

Simplicity

We can help you evaluate whether life insurance is a good alternative to a complex tax-saving plan that requires you to make gifts that are larger than you are really comfortable making.

Illiquid Assets

Your estate may contain an interest in a family business or one or more real estate assets. Your heirs may be the natural objects of your affection, but they may not be good business partners. Often, the best plan is to bequeath specific assets to particular heirs. Liquidity can be used to equalize the overall value of each heir’s inheritance. We can help you develop an equitable and workable plan for the distribution of your estate.

Closely-Held Businesses

If your plan is to sell your interest in a closely-held business to a co-owner, key employee or family member, we can help identify whether, what kind and how much life insurance may be needed to accomplish your plan. Circumstances change and if you are an owner of a closely-held business, the value, liquidity needs and overall plan must be re-evaluated on a regular basis.

Family Vacation Homes

If your plan is to leave a family vacation home to your children and grandchildren, have you considered how they will maintain it? We can help you evaluate the possibility of establishing a fund to maintain the property for generations to come.

Second Marriages

How do you provide for children of different marriages? What if your second spouse is much younger than you are? We have experience dealing with these issues and can suggest workable solutions.

Please also visit our Wealth Management page or contact us today.


Tax projections generated regarding the likelihood of various outcomes are hypothetical in nature, do not reflect actual results and are not guarantees of future results. Harbor Strategies Group and LPL Financial do not provide legal/tax advice or services.