The Bus List—Essential Estate Planning: Including Wills, Trusts, Durable Powers, Beneficiary Deeds, TODs and PODs, Plus Organizing and Securing Your Records by Keith Dorney

Author:Keith Dorney [Dorney, Keith]
Language: eng
Format: epub
Published: 2016-11-05T23:00:00+00:00

Estate Liquidity

Your estate is going to incur expenses. Make sure you have enough liquid cash available in your estate to pay for them. Typical expenses include:

- funeral related expenses

- probate fees

- executor and administration fees

- debts of the decedent

- state, federal, and estate taxes

- attorney and accountant expenses

If there are insufficient funds made available in one’s estate to pay expenses, this could present big problems. That money has to come from somewhere. It can get tricky.

A non-liquid probated asset might need to be sold. Or, if your heirs received assets through will substitutes, your executor and probate judge must decide how to solicit those heirs for their fair share of expenses.

It’s like trying to put the Genie back in the bottle, especially if heirs received assets like real property that are not liquid. Often, this can be confusing and makes it extra hard on your executor and beneficiaries.

If you decide on a trust, make sure you transfer enough liquid assets into the trust to handle the job, and specifically spell out their use in the terms of the trust. Another option is to allow the appropriate liquid assets to be probated. Your executor will then have the cash available to pay those last expenses.

Life insurance is another way to provide estate liquidity. Naming your estate or trust as the primary beneficiary insures the amount paid out will be available for use by your named brains.

These expenses are deductible on your estate tax return if your estate needs to file one. If your gross estate is greater than the estate tax exemption amount, you’re obligated to file a return, even if you don’t end up owing any tax. This goes for both federal and, if appropriate, state estate and gift taxes.

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