A Way To Solve Estate Liquidity Problems

On Jeopardy and at the racetrack you find the daily double. On Jeopardy it is a chance to double your score while at the racetrack it is the ability to bet on two events both occuring. At the racetrack you get better odds to bet on two events.

Joint life second to die life insurance is like that too. If an insurer doesn’t pay until the second death you’ll get a better price (lower premium) than you could get on either life. Even if one life is impaired the premium will still be less than on the standard life.

When it matters

  1. Many estates have no liquidity issues until the second death of a couple. No taxes and need to no equalize shares. Good life insurance design assesses both the amount and the timing of the need. Why pay extra to satisfy that need. 
  2. Consider a second to die policy to offset the potential capital loss in a joint life annuity.
  3. Consider a large charitable bequest. This one further has the advantage of creating a credit against taxes due in the estate. This one is always worth exploring. Sometimes their is a multiplication of value.

Where to look

Many people prefer participating life insurance late in life and it is not a follish move. However, universal life with level insurance cost is sometimes a better choice. You could compare and decide. My experience is universal life works a little better with older people. 

Estate planning is a complicated subject and every insurance solution fits with a myriad of other factors. It is important that estate planning be seem to part of the present and the rest of life. Many expenses in the estate can be less costly if they are part of the fabric of the retirement plan.

Always look for and easy advantage.

People often spend too much time focusing on minimizing costs in the estate and too little time understanding how the liquidity will be there to pay for them. They forget that the price to make the money available is consequential too. Estates only have cash from four sources. The deceased supplied it with liquid assets or life insurance. The executor acquires it by selling somehting or borrowing. 

In every estate there are costs due at the second death. In every estate there are economical and costly ways to arrange for that money. Second to die life insurance is among the least costly. Be sure to notice.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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