Question

frank is a widower. he has a $15.3 million estate consisting primarily of undeveloped real estate and life insurance. his children are the beneficiaries of his life insurance. his will leaves 30% of probate assets to each of his three children, with the residue to his cousin, james. frank learned that his estate may have liquidity problems when he dies. which one of the following techniques is the most appropriate to increase liquidity in frank's estate?

Answer 1

A technique that that can be used to increase liquidity in Frank's estate is to transfer existing life insurance policies to an irrevocable life insurance trust with his children as beneficiaries, which allows the trustee to purchase some of the hard-to-sell property from the estate and/or to loan funds to the estate.

What can Frank do?

If Frank wants to improve liquidity in his estate, he should transfer the life insurance policies to an irrevocable life insurance trust.

If this trust has his children as beneficiaries than the undeveloped land can be used to acquired loans and can be purchased to increase actual cash flow of liquidity.

Options for this question include:

• place the undeveloped real estate in a QTIP trust and make the QTIP election
• change the beneficiary on his life insurance to his estate
• amend his will to place the undeveloped real estate in an power of appointment trust
• transfer existing life insurance policies to an irrevocable life insurance trust with his children as beneficiaries, which allows the trustee to purchase some of the hard-to-sell property from the estate and/or to loan funds to the estate

Find out more on irrevocable life insurance trusts at brainly.com/question/22669361

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