Liquidity is usually a problem when a majority of your assets cannot readily be converted to cash if needed to pay taxes or other expenses of administering your estate. For example, real estate, retirement accounts, or a closely held business may either take time to liquidate, have adverse tax consequences upon liquidation, or the family may desire the asset not to be sold. One way to increase liquidity is to purchase life insurance. However, life insurance proceeds are included in your taxable estate if you own the policy at death, which defeats the purpose of the insurance in providing liquidity to cover taxes and costs. For that reason, an estate planning attorney may recommend an Irrevocable Life Insurance Trust, which (if drafted and administered properly) will hold the life insurance outside of your taxable estate.
Contributed by MH Arrowhead, Scottsdale and Phoenix Estate Planning Attorney David T. Eastman.
Morris Hall Can Protect You in Today’s Litigious Society:
We live in a litigious society, where over 1 million lawsuits are filed every year in America alone. Financial predators are looking for ways to take funds from others and often use litigation as their means to do so. At Morris Hall we provide your assets and your loved ones with important protections that can prevent financial predators from taking advantage of you. We do this through proper and current estate planning techniques. With an MH living trust, we can also protect your property, assets and loved ones from probate, estate taxes, gift taxes, creditors, Medicaid spend-down, conservatorship or guardianship proceedings, ex-spouses and more. A living trust also keeps your asset and beneficiary information private and secure to avoid giving financial predators information to use against you and your family. Without a living trust, this information will be made public. For those living in Arizona, we serve the areas of Phoenix, Mesa, Gilbert, Fountain Hills, Scottsdale, Cave Creek, Prescott, Flagstaff, Sedona, Tucson, Sonoita, Arrowhead, Avondale, Goodyear and Tempe. In New Mexico we serve the areas of Albuquerque, Santa Fe, Las Cruces, Rio Rancho, White Rock, Alamogordo, Truth or Consequences and more. Contact us today at 888.222.1328 to schedule an appointment with an attorney in your area!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.