Estate planning can be tricky and often sneaks up during stressful times of family illness, discussions about money, or a loved one getting older. Mistakes are easily avoidable with some careful planning and knowledge of what's in store for you.
One common mistake is a lack of liquidity, or not being able to convert assets into cash quickly to cover future unforeseen costs. Lacking liquidity is especially important when it comes to estate planning, since people do not know how significant the cost may be to settle affairs and cover taxes or related estate expenses quickly.
Nine months later--and in cash
Luckily, Florida doesn't impose any estate or inheritance taxes. However the federal taxes on an estate are generally due before nine months have passed after death. What makes this amount of money hard to handle is the fact you pay taxes and fees in cash. The cost can force you to liquidate assets you weren't prepared to spend or to scramble to raise the necessary funds quickly.
Liquid assets are essential
Be aware of all the assets or accounts you have on hand to utilize if cash is needed fast. Some useful assets include checking and savings accounts, investments, market money funds, mutual funds, stocks, bonds and more.
Avoid these problems
Being financially aware and knowing your easily liquidated assets could be the difference between a smooth estate transition and a stressful one. Don't be caught off guard by common mistakes--prepare far in advance with your family and trusted counsel.