When getting started with your estate planning, it is easy to be overwhelmed by the sheer amount of information – not to mention highly specific terminology – that comes with it. At the Davidson Law Group, we strive to keep you informed and make the estate planning process easier for you.
One way our probate lawyers can do this is by explaining some of the basics to give you a clearer idea of certain terms mean. In this blog, the Davidson Law Group will give you a better understanding of what is meant by “assets” and how it might apply to your process.
A Basic Definition
A basic definition of the term “assets” is anything that you own that is of a value that can be converted into cash. These assets can be owned by businesses, individuals, and even governments.
Examples of Assets
To illustrate what this means, the Davidson Law Group can give a few examples of things that can be used as assets.
- Real Property: The value of land or property owned by a person is an asset
- Property: anything owned by an individual or entity that is not “real” property, such as vehicles, jewelry, collectibles, etc.
- Investments: bonds, mutual funds, pensions, retirement plans and cash value of life insurance
- Cash: cash or cash equivalents, including checking and savings, deposits (with proof), and physical cash.
Liquid or Illiquid?
Assets are not just of one type and are typically divided into two categories – liquid and illiquid. Liquid assets are assets that can be quickly converted into cash without significantly affecting the amount received. This includes things such as stocks and government bonds.
Illiquid assets cannot be quickly converted into cash without suffering a loss of actual value once the process is complete. For example, your home or property you own is an illiquid asset, as attempting to quickly convert it to cash value will result in a significant loss.
You may have heard of famously wealthy people being described by their “net worth”, and assets are primarily the way in which net worth is calculated. Net worth is found by subtracting existing liabilities from assets.
Your assets are the items of value you own, while the liability is the debt you are liable for. A professional in estate law from Davidson Law Group can help you to accurately assess your net worth.
Contact the Davidson Law Group
If you are looking professional legal aid in setting up a charitable trust, writing your will, or estate planning, contact the Davidson Law Group today. We have an office in Fort Worth, Allen, and Tyler. We have helped countless individuals and families achieve peace of mind with compassion and understanding, and we are here to help you establish your Texas legacy.