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Question

Raj, a $75-$year$-$old retiree, is simplifying his estate after recently selling a silent partnership for $$750,000$ currently in high$-$yield savings at five institutions. Raj also has a $$2,000,000$ life insurance policy, a $$900,000$ IRA with a spouse and charity as beneficiaries, and a $$5,000,000$ grantor trust for his children and grandchildren. The trust was established $10$ years ago after selling his primary business for $$3,000,000.$ Upon his death, his estate beneficiaries will need to pay various expenses, including funeral costs, taxes, and debts.

What is the best option for Raj's estate to address its liquidity needs?

A$.$The estate will need to borrow from the children and grandchildren$$s trust for liquidity.

B$.$The estate can use proceeds from the life insurance policy to satisfy liquidity needs.

C$.$The estate$$s best option is to use assets from the IRA for liquidity.

D$.$Liquidity is sufficient and not a concern at Raj's death.