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There are more risks to estate planning than taxes

When our Texas readers are going through the estate planning process, they are faced with many decisions along the way. This includes questions regarding what they can do to save their heirs from paying too much in taxes upon their death.

While there is nothing wrong with being aware of the tax situation you are leaving behind, it is important to realize that there are other risks of the estate planning process that must be taken into consideration.

For example, if a business is at the center of the estate, it is a must for the owner to have a clear idea of how it is going to be passed along to the appropriate person or persons.

Liquidity is often brought to the forefront when creating an estate plan with a business involved. You must ensure that there is enough liquidity to take care of anything that may arise, such as paying off creditors, funding a buyout, and supplementing lost revenue.

When you take the right approach to estate planning, such as by funding it with liquid sources and life insurance, for example, you can be rest assured that cash will be provided upon your death without delay.

It is common to focus solely on taxes when creating an estate plan. You don't want to negatively impact your tax situation now, and at the same time you want to help your heirs avoid this in the future. Along the way, make sure you pay close attention to other risks, such as the liquidity of a business, to ensure that nothing of importance is overlooked.

Source: Forbes, "Worry About Your Estate Plan, Not The Taxes," July 1, 2014.

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