Address the unknown with certainty and an insurance partner who will never leave your side. Marsh McLennan Agency understands the impact insurance and workforce programs can have on your organization’s financial well-being. Safeguard your investments and build sustainable profitability with a partner invested in your success. To learn more, find an an agent at MMANorthwest.com/Banks d/b/a in California as Marsh & McLennan Insurance Agency LLC; CA Insurance Lic: 0H18131. Copyright © 2024 Marsh & McLennan Agency LLC. All rights reserved. resilience • A set value for the business for state and estate tax purposes, which can help to avoid settlement delays and IRS challenges. • Confidence in the ongoing vitality of the business in the eyes of customers, employees and creditors. DEPLETION OF AN ESTATE BY TAXES AND COSTS DUE TO THE DEATH OF A SHAREHOLDER The Estate Liquidity Problem After a person dies, certain taxes and other costs must be paid in cash within a short period following the date of death. These taxes and costs will reduce the amount left for the business and heirs and may include such expenses as federal and state estate taxes, funeral expenses, expenses of the decedent’s last illness, debts, attorney’s fees and court costs. In addition, if an estate/business is short of cash, it may be forced to sell assets at a loss in value, resulting in a reduction in the wealth that is transferred. A comprehensive estate strategy, which includes having liquid cash available or through life insurance proceeds, is the most common way to pay for these expenses. Avoid Probate with a Revocable Living Trust A revocable living trust is a legal entity created by a grantor who wants to use the trust to receive assets and then distribute them according to the grantor’s wishes. Because the trust is revocable, the grantor may alter, amend or revoke it at any time during his or her lifetime; however, the trust becomes irrevocable (terminates) at the grantor’s death. A primary reason for establishing such a trust is to avoid probate on the assets that are transferred during the grantor’s lifetime. Distribution of the trust assets can remain private, unlike assets that go through probate, which is a record open to public inspection. One will need the help of an attorney well-versed in probate and estate work to establish such a trust. Shaun McChesney is a chartered financial consultant, chartered life underwriter and certified exit planner through education at the American College. Reach out to Shaun at shaun.mcchesney@marshmma.com to get started on ensuring a bright future for your business. Community Banker 23
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