When expanding an estate, it is important that an individual is careful not to invest in toxic asset. A toxic asset is a type of financial asset that does not function due to an extreme decline in its value. When the value of an asset is drastically reduce, the asset is no longer advantageous. If an individual is not cautious with his/her investment, he/she could lose a significant portion of his/her estate due to toxic assets. 

A major increase in toxic assets occurred during the economic crisis that occurred from 2007-2010. These toxic assets was a major contributing factor during this widespread event. Individual’s who invested in toxic assets lost a substantial amount of money. In order to avoid investing in toxic assets, an individual should invest in popular, widespread markets that are necessary and lasting.

Two of the known types of toxic assets are subprime loans and mortgage backed securities. When an individual exhibits a poor credit history, he/she will find it difficult to obtain a loan. If he/she requires a loan for a necessary or desired purchase, he/she may locate a lender that offers a subprime loan. This type of investment is risky for the lender, and therefore, the individual acquiring the loan will be required to pay a high interest rate. 

During the economic crisis, subprime loans became toxic assets. This was caused by the substantial increase in foreclosures and mortgage delinquencies throughout the United States. This caused major complications for lenders and banks around the globe, and the devastating effects were felt in the financial markets. In turn, this had adverse consequences on individuals who invested in mortgage backed securities. 

When officials are evaluating and determining the value of a deceased individual’s estate, only his/her current assets will be analyzed. A current asset is a tangible asset or an intangible asset that is included in an individual’s estate at the time of his/her death. Past assets are not included in an individual’s estate inventory. 

Therefore, if an individual was once wealthy or owned many tangible items, his/her estate will only encompass the possessions that he/she owns on the day that he/she dies. As a result, his/her estate can not be subject to tax for assets that he/she possessed in the past. Current assets, sometimes referred to as countable assets, are assets that are usually inherited by loved ones of the deceased. Determining the market value of current assets helps to conclude the financial worth of an individual at the time of his/her death. 

The term current assets is most frequently used to refer to the assets that a company possess, however, it can also be used to describe the assets included within an individual’s estate at the time that he/she died. For example, if an individual owned a home, this real estate is considered to be a current asset. 

Any motor vehicles that he/she possessed are also current assets, as are any monetary funds or personal belongings. Following an individual’s death, all of his/her current assets are evaluated, in order to determine the total value of his/her estate. If his/her estate exceeds a specified amount, the estate will be taxed by the state government, and may also be taxed by the federal government. 

When an individual dies, his/her estate will be evaluated in order to determine the total value of his/her assets. This evaluation will not only consider an individual’s tangible assets, but also any intangible assets that may exist. Therefore, it is important for an individual to understand the difference between tangible assets and intangible assets. 

A tangible assets is something that exists physically. This type of asset can usually been seen or touched. An individual who inherits a tangible asset will likely benefit from this asset immediately. A house and a motor vehicle are two examples of tangible assets that are frequently included in inheritances. Other types of tangible assets include jewelry, furniture, monetary funds, retirement funds, and pensions. A tangible asset will be allocated to a relative or a friend following an individual’s death, either based upon the specifications included in his/her will, or the laws or intestacy.

An intangible asset is an asset that does not physically or materially exist. Though an individual may not be able to view or touch an intangible asset, it can still be extremely valuable. In most cases, it is companies that possess intangible assets, such as business contracts. 

However, there are some instances in which an individual can hold this type of asset. Some examples of intangible assets that may be owned by an individual include patents, trademarks, and copyrights. Although an individual may not be able to observe the benefits of these assets immediately, they can be very advantageous. Like all assets, an individual may bestow intangible assets on a loved one in the event that he/she dies. 

When an individual dies, his/her estate must be assessed for tax purposes. When a individual inherits assets from a deceased individual, an estate tax is placed on the property that he/she acquires. In many instances, an estate will only be subject to estate tax if the asset valuation finds that the estate is worth a certain amount. In some cases, an individual may be entitled to an estate tax return from a federal government. 

An asset inventory will be taken following an individual’s death, regardless of the size of his/her estate. The procedure will be conducted by the state in which an individual lived, following guidelines listed in the Internal Revenue Code. This evaluation is an essential aspect of estate distribution, and must be completed before the assets are distributed. 

When asset valuation occurs, all of the assets owned by a deceased individual will be valued at their market price, or fair market value. The market value that is used is the fair market price of these assets on the date that the owner died. All of an individual’s assets will be subject to asset inventory, regardless of their location. Therefore, even if property is located in another state or another country, it will be subject to asset inventory and valuation. 

The precision that is used when determining the value of an individual’s estate will vary depending upon the state in which he/she lived. All assets are included in this inventory, including real estate, motor vehicles, jewlery,  furniture, retirement funds, securities, life insurance, and income tax refunds, just to name a few.

Following an individual’s death, his/her estate will be evaluated and an inventory of his/her assets will be established. This process is used to determine the total value of an individual’s estate, and whether or not a tax return on assets that comprise the estate must be filed. All of an individual’s assets are included in this evaluation, including any motor vehicles, real estate, personal property, and financial funds owned by the deceased individual. 

If the total value of his/her estate exceeds a certain amount, he/she will be required to file a state tax return on assets. In some instances, a federal estate tax return will also be necessary. The estate will also be subject to estate tax, which can substantially reduce the amount of money that is inherited by an individual’s surviving loved ones. 

Another asset that is include in the estate evaluation is small businesses. If a deceased individual owned a small business, such as a family farm, it comprises a portion of his/her estate, and can therefore be subject to estate tax. State officials can analyze the business’s assert turnover and use an asset turnover ration to determine the value of the company. 

If a small business is present as an asset within an estate, the estate may lose a much larger portion of its assets due to taxation. There has been a significant amount of debate regarding the effect that estate tax has on farmers and small business owners. Though federal and state officials argue that the effect is minimal, individual’s who inherit these businesses and who are subject to estate tax notice the impact.

If a small business owners dies, his/her business is included as an asset that comprises a part of his/her estate. Therefore, a small business can significantly increase the value of an individual’s estate, and cause it to become subject to estate tax. In many states, an estate is only taxed if its value exceeds the specified amount. If a deceased individual owns a thriving small business, this can greatly amplify the value of his/her estate. 

Following the death of a small business owner, his/her business will be evaluated and the value of the business will be determined. Government officials may analyze the capital assets of the company, the asset turnover, and the fixed asset turnover. It is important to understand that, in addition to the profit acquired by the business, the associated fixed assets may also be assessed during an inventory of an individual’s assets.

Fixed assets are assets that are essential for a business to make a profit, but which are not sold to attain this profit. For example, a building that is used as a location from which the business operates is considered to be a fixed asset. If the business owns motor vehicles that are necessary for operation, these vehicles are also fixed assets. If an individual owns and operates a farm, the machinery and equipment used in daily processes are fixed assets. 

Generally, these assets are used over an extended period of time. In order for an asset to be considered fixed, it usually must be used for over one year. In some instances, a fixed asset will increase the total value of a small business, and subsequently increase the value of an individual’s estate. 

Asset finance is a branch of finance that is concerned with financial investments that are backed by asset security. Like liquid assets, asset based financing is vital to increasing the value of an individual’s estate. In order for an individual to cautiously amplify his/her estate, it is important that he/she practice effective financial asset management.

If he/she fails to manage his/her asset backed investments, he/she may lose a substantial portion of his/her estate, accumulate debt, and acquired a poor credit history. As a result, he/she may find that it is very difficult to rebuild his/her estate. Therefore, he/she will not have extensive assets to distribute to his/her loved ones, including his/her spouse or children, following his/her death. Nevertheless, asset based financing is an essential component of estate building. 

When considering the assets frequently included in an individual’s estate, real estate is often one of the first types to be noted. In order for an individual to acquire real estate, he/she will most likely be required to dabble in asset finance. He/she will obtain a mortgage to cover the cost of the home, however, the property and other assets will be used as collateral, to compensate the lender in the event that he/she is unable to pay his/her debt. Small businesses work much the same way.

 If an individual wishes to expand his/her estate by establishing a small business, he/she will be required to obtain a small business loan. In order to achieve this, he/she will likely need to offer certain assets, such as his/her home, as collateral.

Throughout an individual’s life, asset allocation is very important. An individual will be required to decide the best locations to place his/her assets, including the most advantageous bank accounts and retirement funds. An individual who enjoys the benefits of possessing many assets may go as far as to produce asset labels for organizational and tracking purposes. 

Asset allocation can have a huge impact on the funds that are included within an individual’s estate at the time of his/her death. For example, if an individual invests his/her money in an unsuccessful stock, he/she may lose a significant quantity of assets, intended to be left as inheritances to loved ones. Therefore, an individual should be extremely cautious in regard to asset allocation and thoroughly research all investment opportunities. 

Asset allocation is not limited to life, as most individuals with establish a will, which will subsequently be used to distribute his/her estate. In this instances, asset allocation can be very overwhelming. In many instances, an individual will be certain who he/she wants to inherit his/her assets, however, in some cases, he/she may not have the assets necessary to care for all of his/her loved ones. 

When this occurs, an individual may need to make difficult decisions regarding how to best care for his/her loved following his/her death. Asset allocation can be a difficult process that requires a great deal of thought. An individual should carefully consider all of his/her assets before drafting a legal will, and determine how he/she wants his/her estate to be distributed when he/she dies.