Liquidity of an Estate
What does Liquidity mean?
Liquidity refers to the cash available in an estate or to the assets such as investments that can easily be turned into cash.
Why is Liquidity important in an Estate?
Liquidity in an estate is required for a number of reasons, listed below a few
Firstly, all debts need to be settled when one dies. These debts could include property mortgages, vehicle finance, credit card debt and this burden will devolve upon the estate.
Secondly, all relevant taxes and costs need to be paid. These include estate duty, capital gains tax, transfer costs for fixed property as well as valuation costs, Master’s fees and executor’s remuneration
Thirdly, liquidity would be required to provide for the immediate financial needs of your loved ones. General monthly expenses such as groceries, fuel, clothing, medical expenses, school fees to mention but a few will need to be catered for.
Lastly, liquidity would be required to provide for the long-term financial needs of your loved ones.
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