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What are Liquid Assets

Liquid Assets

When an individual dies, the liquidity, or market value, of his/her assets will be assessed, in order to determine the total value of an individual's estate, which will subsequently be used for tax purposes. Liquid assets often make up a large and important portion of an individual's estate. It is liquid assets that are often intended to provide loved ones with necessary care.

In addition to liquid assets, an individual's estate may include real property. Real property includes land and real estate. Other types of assets may include motor vehicles and personal belongings, such as jewlery. Liquid assets are often the most beneficial to loved ones, especially when other property, such as real estate and motor vehicles, is old or run down.

The term liquid assets refers to money, or something that can easily be exchanged for money. Therefore money, funds in banks accounts, and funds deposited in checking accounts, are all types of liquid assets. These funds are immediately accessible and can be used to pay debts.

However, not all types of liquid assets are accessible immediately. For example, stock market shares are considered to be a liquid asset, as are bonds. Mutual funds are also grouped into this category. In addition, the monetary value of an individual's life insurance policy is a liquid asset. Liquid assets frequently comprise a significant portion of individuals estates, especially when taking into account all bank accounts, retirement funds, stock investments, and pensions.

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