Top 10 Mistakes People Make in Estate Planning, Wills and Trusts: # 10 – Failure to Plan for Liquidity


Failure to Plan for Liquidity is a common error. Money Jar 1This mistake can occur regardless whether you’ve made a Will or estate plan, and even if you have a trust.

For example:

→  You want to keep your vacation home available for your kids and their families to continue using for family reunions or getaways.  Your trust provides that your vacation home will continue to be held in trust for their benefit, but you don’t leave any cash to pay for the taxes and maintenance.

→  You divide things equally between your two children by adding one of them to your cash bank accounts to make them joint accounts that will pass to the child upon your death.  You leave non-cash property of equal value to your other child (in a Will or trust).   The second child may need to sell part of that inheritance to pay for the upkeep, transportation, storage, or other expenses of the property inherited, or may need to pay the expenses of your estate or trust administration. In most cases, the one inheriting the cash account as a joint account holder will not be required to kick in toward these expenses. Even though you intended to keep things equal, the end result is that one child gets to keep more.

→  A cash crunch can also occur if you owe income taxes or estate tax. Property you might have intended that an heir keep might have to be sold to come up with the required payments.

About Helene P. Dreyer Koch

Estate Planning Attorney (Wills, Trusts, Probate) Indian Wells, California * 760.360.2400
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