The estate taxes on $10 million in liquid assets will probably have a much greater impact on your daughter’s financial future than the inconsistency of your consulting income. Consider purchasing permanent life insurance in an irrevocable life insurance trust to help offset this loss. Though your insurance premiums may be slightly higher given your medical history, the death benefit will not be subject to estate or income tax and can help pay the taxes on your estate.

A sound plan includes a review of your assets and a candid discussion about your financial hopes, dreams and fears. If income concerns you, diversify any cash you have in bank accounts for greater yield. Consider investing in a Roth 401(k) retirement plan (new in 2006) or a 529 college savings plan for greater tax efficiency and creditor protection. To limit your financial exposure, review your personal excess liability and professional liability coverage regularly.

David B. Higger, Higger & Associates, New York

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