Photo of Kenneth L. Gibson Jr.
Photo of Kenneth L. Gibson Jr.
Photo of Kenneth L. Gibson Jr.

Why are liquid assets important in a divorce?

On Behalf of | Jul 5, 2019 | property division | 0 comments

There are different types of assets that can be divided up by a divorce court. Some assets are classified as liquid assets. These assets should not be overlooked in importance as you prepare to divide your property between you and your spouse. If you end your divorce with too many of your liquid assets given away, you may find it harder to land on your feet once your divorce in Louisville is concluded.

According to the Motley Fool, liquid assets are defined as cash or an asset that can be transformed into cash with little trouble. Basically, an asset is liquid if it can be converted into cash without losing much of its market value. Store or company inventory, for instance, can be sold off for money that retains a lot of market value. But a piece of real estate cannot be quickly sold for its market value, so real estate is not classified as a liquid asset.

People who go through a divorce should make sure they plan out how many liquid assets they will need to handle everyday expenses following the divorce. However, some people focus on large assets like their house or vehicles, without considering that they need money on hand for groceries, medicine, or to handle particular needs like paint or household tools. While you might end up retaining your house, you could lack the money to keep it up.

Non-liquid assets, in addition to real estate, can include a general ownership of land whether it possesses a solid structure on it or not. If you are a business owner, the type of ownership interest you possess can be liquid or non-liquid. Stocks can be easily sold for cash, but ownership in a non-publicly traded company typically cannot. Collectibles are also hard to quickly sell. Rare coins and pieces of artwork are two such examples.

If you are going into a divorce, it is wise to work out how much money you will need for your everyday living, with bills, taxes and basic needs all considered. This may entail giving up a non-liquid asset or two in exchange for cash or investments you can more quickly sell off. An experienced divorce attorney can also assist you in realizing your asset goals for your post-divorce life.

Property division can take many different forms. For this reason, do not consider this article as legal counsel for your situation. Read it only for your educational benefit.


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Photo of Kenneth L. Gibson Jr.