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Liquidity of your Estate

You need to ensure that there is sufficient cash in your estate to pay for expenses like executor fees, master fees, outstanding loans, bank overdraft, credit cards etc. You should calculate how much cash your estate needs should you die.

How can you ensure that your estate will be sufficiently liquid?

  1. Build Up Cash Reserves - This will take years – and who knows how long you’ll live?
  2. Sell Assets - Your heir could sell off assets, for example, your house or business. This should be a last resort as it usually results in losses because you are forced to sell.
  3. Borrow Funds - Your heirs could borrow funds to settle your debts. This is very expensive. If the estate assets are pledged or bonded as security, your heirs may not be able to enjoy them.
  4. Take out Life Insurance -  This is the most effective method to provide cash for an estate. In addition you will save on executor fees. Life Insurance enables you to create instant security for your family and there is no tax to pay on the proceeds. It should form the backbone of any estate.

The worksheet below will help you calculate if there will be a surplus or a shortfall in your estate. Or, you can  Contact Us and let us help you with a comprehensive plan for your estate which takes into account all aspects of your financial plan.

Estate Planning Liquidity Worksheet Minimize

Assets

Property R___________________
Furniture, cars  R___________________
Investments, unit trusts, shares, cash R___________________
Life insurance, retirement funds R___________________
Sub Total (1) R

Liabilities

Bank loans    R___________________
Outstanding mortgage bond R___________________
Overdraft and credit cards R___________________
Monthly bills R___________________
HP contracts R___________________
Hospital expenses R___________________
Funeral expenses R___________________
Unpaid income tax on death R___________________
Executor Fees (normally 3.99% of gross assets) R___________________
Cash bequests R___________________
Deceased interest in business  R___________________
Spouse accrual claim R___________________
Living expenses while estate is being wound up R___________________
Sub Total (2) R                  


Surplus / Shortfall

Sub Total (1) R___________________
Sub Total (2) R___________________  
Surplus (Shortfall) R

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