SOI Tax Stats - Personal Wealth Study Terms and Concepts


This page provides information about selected terms and concepts used in SOI's Personal Wealth tables and articles.

Please visit Personal Wealth Statistics  to access these tables and articles.

All real estate
Includes the personal residence, other residential real estate, commercial property, farm land and undeveloped land, real estate mutual funds (REITs), and real estate partnerships.


This asset category includes items such as paintings, sculptures, busts, engravings, and etchings.


Bond funds
This asset category includes mutual funds composed of a variety of different types of bonds.  Also includes mutual funds that could be identified as being composed of bonds, but for which a primary bond type could not be determined. 


This asset category includes actual cash, savings and checking accounts held at banks, certificates of deposit (CDs), and call accounts held in a brokerage.


Cash management accounts
This asset category includes all money market accounts, such as Money Market Deposit Accounts (MMDAs) and Money Market Mutual Funds (MMMFs), and sweep accounts held in a brokerage.


Cash value life insurance
This is the value of the cash account feature of a whole life insurance policy, which is funded by a portion of the premium payments and grows over time.   For SOI's Personal Wealth estimates, the cash value of a whole life insurance policy is imputed from a policy's face value, which is paid upon the death of the insured, as reported on Federal estate tax returns.  Estate tax returns report the net value of life insurance that was paid out upon the decedent's death, which was not an asset held by the individual when living. 

Cash value life insurance amounts are imputed using a two-step statistical model created using data from The Federal Reserve Board of Governor's triennial Survey of Consumer Finances, which is supported by the Statistics of Income division. 


Closely held stock
This asset category includes the total value of stock in closely held corporations.  Closely held corporations are those whose ownership is concentrated among a relatively small numbers of owners, and  whose stock is not traded publicly.  These corporations include all S corporations and some C corporations. 


Corporate and foreign bonds
This asset category includes debt securities issued by businesses and all bonds issued by foreign governments.  Also includes mutual funds that are solely or primarily composed of these bonds.


Debts and mortgages
Includes morgages, liens, and other debts of the individual. This category should not be confused with "Mortgages and notes" (see below), an asset category which represents money owed to the individual.


Diversified mutual funds
This asset category includes mutual funds that are broadly composed of a variety of different kinds of investment instruments.  Also includes mutual funds whose asset composition could not be determined.


Estate multiplier technique
The estate multiplier technique assumes that estate tax returns, taken as a whole, represent a random sample of the living wealthy population and thus provide a means of producing reasonable estimates of personal wealth.  Estimates of the wealth holdings of the living population are derived by applying a multiplier, based on appropriate mortality rates, to this sample.  The multiplier is equivalent to a sampling weight where the probabilities of selection include the probability of being a decedent and also that of being included in the Statistics of Income sample of estate tax returns.  Mathematically, this is represented as MULT=1/(p*r), where p is the probability of selection to the estate tax sample and r is the mortality rate appropriate to wealthy individuals.

The more difficult computation is determining the probability of being a decedent. Mortality rates for the general population, by age and sex, are available from the National Center for Health Statistics. However, there is much evidence that the wealthy have mortality rates significantly lower than those of the entire population (see, for example, Adler, Nancy E. et al, "Socioeconomic Status and Health:  The Challenge of the Gradient",  American Psychologist, January 1994).  Factors such as access to better health services, better diet and nutrition, and fewer work-related risks seem to contribute to this phenomenon.  For 2001 and later personal wealth estimates, SOI has used mortality rates for holders of large dollar value annuity policies obtained from the Society of Actuaries. 

For a thorough discussion of the estate multiplier technique, see Atkinson, A.B. and Harrison, A.J. (1978), Distribution of Personal Wealth in Britain.


Farm assets
This asset category includes all assets used in conjunction with a farm or agricultural business, as well as incorporated farms, farm partnerships, and farm sole proprietorships.  Farm land is not included in this category, but is instead included in the "Other real estate" category. 


Federal savings bonds
Includes all savings bonds issued by the U.S. Department of the Treasury, including Series E, EE, F, G, H, HH, I, and J.


Financial assets
This aggregate asset category includes all stocks, bonds, mutual funds, cash, and cash management accounts.


Gross assets
A Federal estate tax concept of wealth that includes the value of all assets owned by a decedent, including the full face value of life insurance, reduced by the value of any policy loans, but excluding any reduction for other indebtedness.


Gross estate
A Federal estate tax concept of wealth that does not conform to usual definitions of wealth, primarily because it includes components that are traditionally considered part of a living individual's portfolio and because there are features of the tax code that allow certain real property to be specially valued when used in farming or running a business.


Limited partnerships
A limited partnership is a business organization with one or more general partners, who manage the business and assume legal debts and obligations, and one or more limited partners, who are liable only to the extent of their investments. 

This asset category includes the value of all all limited partnerships except for those organized as farms, which are included in the "Farm assets" category.  Hedge funds and private equity funds, usually organized as limited partnerships, are included in this category. 


Mortgages and notes
This asset category includes money owed to the individual through arrangements such as personal loans made to a business or another individual.  Also includes claims, settlements, and judgments owed to the individual. 


Net worth
This wealth concept is defined as total assets minus debts and mortgages.


Noncorporate business assets
This asset category includes non-farm business assets used in an enterprise owned by the decedent, either as a sole proprietor or as a partner in a business partnership.  Common business entity types included in this category are sole proprietorships, general partnerships and limited liability companies (LLCs).  Excludes limited partnerships.


Other assets
This asset categroy includes depletable and intangible assets and assets for which another category could not be assigned.


Other Federal bonds
This asset category includes all debt securities issued by the U.S. Department of the Treasury other than savings bonds, including Treasury bonds, notes, and bills, and bonds issued by government-chartered enterprises such as Fannie Mae and Freddie Mac.  Also includes mutual funds that are solely or primarily composed of these bonds.


Other real estate
This asset category includes commercial property, farm land and undeveloped land, real estate mutual funds (REITs), real estate partnerships, and residential property other than the personal residence.


Personal residence
This asset category includes real estate listed on the Federal estate tax return as the primary residence.  At most, one piece of residential property per individual is included in this asset category.


Publicly traded stock
This asset category includes publicly traded shares issued by domestic corporations and foreign businesses (including American Depository Receipts), and mutual funds that are solely or primarily composed of these shares.


Retirement assets
This asset category includes annuities, assets held in defined contribution plans, such as individual retirement accounts (IRAs) and 401ks, and the taxable portion of survivor benefits from defined benefit plans, such as traditional employer pensions. 


State and local government bonds
This asset category includes debt securities issued by state and local municipalities, such as general obligations bonds, revenue bonds, and municipal notes.  These bonds are often exempt from Federal and state income taxes.  Also includes mutual funds that are solely or primarily composed of these bonds.


Total assets
The sum of all assets owned by the individual before subtracting debts, mortgages, and liens owed to others.


(Back to top)