Liquid Asset Law and Legal Definition

A liquid asset is one which can be easily converted to cash. Examples of liquid assets may include, among others, checking accounts, cash on hand, certificates of deposits. A life insurance policy, equity in real estate, or a defined benefit plan payments are examples of non-liquid assets. Precise definitions vary by entity. For example, the following is a Freddie Mac definition to determine eligibility for benefits:

Liquid Assets: For the purpose of determining compliance with the Program Plus eligibility requirements, liquid assets are defined at follows:

* Cash or cash equivalents

* Treasury Bills

* Money market investments or certificates of deposit with maturities of one year or less

* Marketable securities, such as stocks and bonds (Any stocks or bonds for a company that is in default must not be included as a liquid asset.)