Liquidity Assessment

• Estate liquidity refers to the ability of the estate to pay taxes and any other associated costs (debts, obligations) that arise after one’s death using cash or its equivalent.

• This means that there is enough liquid cash available to meet the obligations of the estate such that there is no need to sell estate assets (which significantly reduces the estate) to realize the necessary amounts.

• Life insurance is useful in securing liquidity of an estate. It provides the estate with a source of capital needed to pay the estates’ obligations without the need to sell assets for liquidity.

Life insurance can be ceded to the estate, such that in the event of death, the estate can access the proceeds of the life insurance to settle any debts or obligations. This is crucial to wealth creation and preservation.