• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Who We Are
    • About Our Firm
    • Meet Our Team
    • News and Events
    • Seniors Rock Radio
  • Estate Planning
    • Elder Law & Medicaid Planning
    • Estate Planning Services
    • Estate and Gift Tax Figures
    • Family Farm Succession Planning
    • Family-Owned Businesses & Farms
    • IRA Planning
      • Planning With An IRA
      • IRA & Retirement Planning
    • Legacy Planning Services
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
    • Young Families
  • Elder Law
    • Coping With Alzheimer’s
    • Elder Law Resources
      • Elder Law Reports
    • Guardianship & Conservatorship
    • Hospice Care
    • Veteran’s Benefits
  • Resources
    • Definitions
    • FREE Estate Planning Worksheet
    • FREE Webinars
    • Estate Administration Legal Guide
    • Estate Planning Articles
      • Questions for Your Estate Planning Attorney Before Creating Your First Estate Plan
      • How to Create Your First Estate Plan in 2022
      • How to Choose a Guardian for Your Child
      • Address These Three Questions in Your First Estate Plan
    • Estate and Gift Tax Figures
    • Frequently Asked Questions
      • Adult Guardianship
      • Alzheimer’s Care
      • Custodial Accounts for Minors
      • Estate Planning
      • FAQs for Families Without an Estate Plan
      • Elder Law
      • IRA & Retirement Planning
      • Is Your Estate Plan Outdated?
      • Legacy Planning
      • LGBTQ Estate Planning
      • Medicare and Social Security
      • Probate
      • Probate Avoidance
      • Irrevocable Trusts
      • Trust Administration
      • Trusts
      • Veterans’ Benefits
      • Wills
    • Newsletters
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning for Niches
      • Trust Administration
    • Top Estate Planning Techniques
  • Reviews
    • Our Reviews
    • Review Us
  • Medicaid Planning
    • Medicaid Planning
    • Emergency Medicaid & Nursing Home Planning
    • Medicaid Frequently Asked Questions
    • Medicaid Resources
  • Blog
  • Contact Us

Law Office of Michael Robinson, P.C.

Estate Planning Services in Rochester, New York and the Finger Lakes Area

Connect With Us Today

(585) 374-5210
Law Pay Button
Attend a Free Webinar
Home » Estate Planning » Does Your Estate Have Sufficient Liquidity?

Does Your Estate Have Sufficient Liquidity?

July 11, 2019Estate Planning

Rochester estate planning attorneysCreating a successful estate plan requires you to consider numerous inter-related goals and objectives. One goal that is often overlooked is the need to leave behind sufficient liquid assets in your estate. To help you create a successful estate plan, the Rochester estate planning attorneys at the Law Office of Michael Robinson, P.C. explain the need for estate liquidity.

Understanding the Probate Process

One reason people frequently overlook the issue of insufficient estate liquidity is that it is a problem that won’t become apparent until after death, during the probate of an estate. Probate is the legal process that will follow your death. Probate serves several purposes, starting with identifying and securing assets owned by the decedent. Eventually, any assets remaining at the end of probate will be transferred to the intended beneficiaries and/or heirs of the estate. Probate also serves to authenticate the decedent’s Last Will and Testament, if one was left behind, as well as provide a forum for challenging the validity of that Will. Finally, probate allows creditors of the estate to file claims against the estate and ensures that all state and federal gift and estate taxes are paid.

What Does “Estate Liquidity” Mean?

A liquid asset is one that can easily be converted into cash. Obviously, cash held in a checking or savings account qualifies as a liquid asset. Other assets have varying degrees of liquidity, based on how easily and/or quickly they can be turned into cash. Your home, for example, is not a liquid asset because it may take months to turn the home’s value into cash.  The value of your estate’s liquid assets is often very important when it comes time to probate your estate.

Why Is It Important to Have Sufficient Estate Liquidity?

Given that the consequences of insufficient liquidity won’t be felt until after you are gone, you need to understand now why your estate should include sufficient liquid assets. During the probate of your estate, notice must be given to all creditors of the estate and those creditors must be allowed the opportunity to file claims against the estate.  Creditor claims submitted to the court are reviewed by the Executor and approved or denied. Approved claims must then be paid out of the available estate assets. Likewise, any federal (and/or state) gift and estate taxes due must be paid out of the estate assets. If the estate has sufficient cash, either from a financial account or another source, paying those claims is a fairly simple process; however, if the estate lacks sufficient liquid assets to cover all the approved claims and the taxes that are due, the Executor of the estate will be forced to make some tough, and likely unpopular, decisions.

Keep in mind that the law imposes an order of priority that dictates what claims and expenses must be paid first during probate. Taxes, certain expenses, and approved creditor claims must be paid before probate can be wrapped up and the remaining assets distributed to beneficiaries. If the estate lacks the necessary liquid assets to pay those claims and expenses, the Executor must convert non-liquid assets into liquid assets. Typically, that entails selling estate assets to raise the necessary funds. Inevitably, the need to sell estate assets creates controversy because it means selling tangible assets that may have sentimental meaning to the estate’s beneficiaries. All too often an Executor is put in a position where he/she is forced to sell the family home or valuable heirlooms, which is not a desirable result for anyone involved. It also increases the likelihood of conflict that could turn into litigation. If your estate becomes involved in litigation, it will dramatically increase the time it takes for loved ones to actually receive their intended inheritance and diminish the value of that inheritance because of the cost of litigation.

To avoid putting your Executor and your loved ones through such an ordeal, make sure you are aware of the need for liquidity when you are creating and/or updating your estate plan. Just in case, consider using your Will or a Letter of Instruction to provide your Executor with guidance should the need to sell assets arise despite your efforts to leave behind sufficient liquid assets.

Contact Rochester Estate Planning Attorneys

For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about the need for estate liquidity, contact the Rochester estate planning attorneys at the Law Office of Michael Robinson, P.C. by calling 585-374-5210 to schedule an appointment.

  • Author
  • Recent Posts
Michael Robinson, Estate Planning Attorney
Michael Robinson, Estate Planning Attorney
Clients notice Michael Robinson’s unique approach to his estate planning practice the minute they walk through his office doors.
Michael Robinson, Estate Planning Attorney
Latest posts by Michael Robinson, Estate Planning Attorney (see all)
  • Business Succession Planning May Be Easier than You Think - June 1, 2022
  • Estate Planning – Something You Shouldn’t Do Yourself - May 18, 2022
  • Just When You Thought You Understood the 10-Year Rule, Think Again - May 11, 2022

Other Articles You May Find Useful

Business Succession Planning May Be Easier than You Think
Just When You Thought You Understood the 10-Year Rule, Think Again
Let’s Talk about Trusts…and Taxation
What Estate of Marion Levine Means for Life Insurance
Application of the Transfer for Value Rule to the Sale of Life Insurance
estate plan
Estate Planning Basics for Young Parents

Primary Sidebar

Law Office of Michael Robinson, P.C.

Blog Subscription

  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • Twitter
  • Linkdin
  • Youtube

TESTIMONIALS

A pleasure as always dealing with the entire staff. Always willing to explain the answers to our questions.

- Joseph and Julie Ann M.

Over the years we have been to many programs regarding Estate Planning. We were most impressed with Mr. Robinson’s presentation - both in subject matter and explanation in an understandable manner. We have put our “trust” in his competent hands. We were not aware of the complexity and the volume of paperwork generated for this undertaking. We found his staff to be most capable and client oriented in their knowledge and delivery.

- F.T. & L.T.

Our overall experience was one of thoughtfulness, clarity and comprehensiveness on the part of Michael Robinson, his staff and associates. We attended Michael’s seminar on legacy wealth, and found him to be clear and well-spoken. He touched on all aspects of Estate Planning in which we were interested. Our first of two visits to his office was timely and helpful enough for us to consider developing a plan. We finalized our document at a necessary meeting. His staff was accommodating and virtually spelled out every aspect of the plan. We highly recommended Michael and his system for developing a trust.

- Sharon T.

“From the first visit I was welcomed (like family). The office & girls have all their ducks in order! Very friendly! Mr. Robinson explained everything in detail. 100% satisfied. Will pass the word on. Great Law Firm. Thank you so much.”

- Geraldine P.

Establishing a Family Wealth Trust through the Law Office has been a positive experience, the staff is congenial, patient, thorough, professional and knowledgeable. Thank you for all your kindness. We certainly are comfortable and confident with our decision.

Beverly L.

<
>

News & Events

Seniors Rock Radio Show Recording 5-1-21

https://drive.google.com/file/d/1U7UkQbEGy-xY7XFAXvX9Qz7pKSVDVV3D/view?usp=drive_web   Author Recent Posts Michael Robinson, Estate Planning AttorneyClients notice Michael Robinson’s unique approach to his estate planning practice the minute they walk through his office doors. Latest posts by Michael Robinson, Estate Planning Attorney (see all) Business Succession Planning May Be Easier than You Think - June 1,... Read more →

Pittsford Office

1163 Pittsford-Victor Road, Suite 120 (Powder Mill Office Park)
Pittsford, NY 14534-3817
Phone: (585) 374-5210
Fax: (585) 485-0394

See Larger Map Get Directions

Map

mrobinson_sidbr_map

Footer

  • Advantages of Working With Our Firm
  • About The American Academy
  • Disclaimer
  • Privacy Policy
  • Sitemap
  • Contact Us

Connect with Us

  • Facebook
  • Twitter
  • Linkdin
  • Youtube
robinson law logo

The Law Office of Michael Robinson, P.C.

Attorney Advertisement


© 2022 American Academy of Estate Planning Attorneys, Inc.