Does your small business own sufficient liquid assets?

Most small businesses need to be concerned about the issue of liquidity; however, if your business is a farm or ranch you should play particular attention to this issue. Small to medium size farms and ranches are notoriously short on liquid assets because the value of the farm or ranch is usually tied up in land, equipment, livestock, and other non-liquid assets. Federal gift and estate taxes, however, are calculated based on the total value of your estate assets, without regard to whether those assets are liquid or non-liquid assets. If your estate lacks sufficient liquid assets to pay any gift and estate taxes due, your estate Executor will have to sell estate assets to pay off the debt. Those assets, however, could be critical to the continued operation of the business.