Asset valuation is the process that is used to determine the value of an individual’s estate after he/she has died. Following the death of an individual, his/her estate will be subject to asset inventory, which is completed by the state in which he/she lived. This process must be complete for tax purposes.
When an individual dies, his/her estate will analyzed and an inventory will be taken, to determine whether an Estate Tax Return on total assets must be filed. In order to determine whether a federal estate tax return or a state estate tax return most be file, the value of an individual’s total assets must first be concluded.
Asset protection is often difficult to achieve, and even offshore asset protection may not be successful in avoiding estate tax. If an individual wishes to avoid estate taxation following his/her death, he/she must be strategic in his/her protection techniques. For example, he/she can gift a specified amount of money to loved ones annually, without tax.
When an individual is developing an will or an asset protection plan, he/she should consider asset tracking and asset recovery. If these aspects are overlooked, loved ones may receive a much smaller inheritance than intended. Working with an estate lawyer and frequently updating his/her will, will help an individual to establish an effective asset protection plan.
Asset allocation is a process that occurs during an individual’s life, and following his/her death. Some individuals, specifically those who have extensive assets, are meticulous regarding allocation, creating asset labels and thoroughly researching all investment opportunities. This will help his/her estate to grow, and he/she should determine how to distribute these assets following his/her death.
Tangible Assets vs. Intangible Assets
An individual can possess both tangible assets and intangible assets. In the event that he/she dies, both of these types of assets will be distributed to his/her loved ones, either by the regulations specified in intestacy legislation or based upon a legal will drafted by the deceased. There are important differences between each of these types of assets.
Return on Assets
Federal and state tax return on assets and estate taxes have a large impact on estates that include small businesses. A small business is considered to be an asset that makes up a part of an individual’s estate. Therefore, when he/she dies, the state will use an asset turnover ration to determine the business’s asset turnover and the value of the business.
When an individual’s estate is evaluated, it is only his/her current assets that will be included in the asset inventory. Past assets, or assets that were once owned by the deceased individual, do not comprise his/her estate at the time of death. Any asset owned at the time of death, whether tangible or intangible, is a current asset.
Capital Asset Pricing Model
When individuals actively seek to build their estate and increase their capital assets, they must ensure that they practice effective capital asset management. Failure to manage capital assets successfully can result in devastating loses. One way in which an individual can assess stock investments is my utilizing the capital asset pricing model.
A fixed asset is an asset that is necessary for a business to operate, but not sold to obtain a profit. In the event that a small business owner dies, fixed assets and fixed asset turnover associated with his/her business will be evaluated, in order to determine the value of his/her business. A successful business can increase the value of his/her personal estate.
During the asset valuation of an individual’s estate, the liquidity of all of his/her assets is determined. The market value of these assets is used to determine the complete value of an individual’s estate. In many instances, a large portion of an individual’s estate will be made of liquid assets, which include monetary funds and investments.
The term asset finance, sometime called asset based financing, is a branch of finance that deals with asset backed investments. In order for an individual to expand his/her estate, he/she must practice successful financial asset management. One example of when this may occur is when an individual obtains a mortgage to purchase a home.
Net Asset Value
During the process of asset pricing, the value of an individual’s assets are obtained, in order to determine the value of his/her estate. However, the value acquired from this process is not necessarily correct, as an individual’s debts may need to be taken from the estate, significantly reducing the net asset value of his/her estate.
Asset Based Lending
Asset based lending is a type of financial strategy that allows an individual to acquire an extensive loan for a desired asset. In order for an individual to obtain a loan from asset based lenders, he/she must offer a specified asset as collateral. In the event that he/she is unable to pay his/her debt to the lender, the lender will take that asset.
Asset Backed Securities
Much like bonds, asset backed securities are investment opportunities that can allow an individual to expand his/her estate, and increase the value of his/her estate. When an individual purchases asset backed securities, his/her investment is placed in a pool of finances, subsequently used by lenders. Overtime, he/she is re-paid for his/her investment, with interest.
An asset is a possession that maintains an exchange rate. An individual’s estate is comprised of all of his/her assets. Some common types of assets that are included within an individual’s estate are real estate, motor vehicles, and monetary funds. When an individual dies, his/her assets are distributed to his/her relatives.
An asset bubble occurs when the cost of an asset increases significantly, due to high demand for this commodity. An economic bubble can have devastating effects on the economy, as seen with the 2008 credit crisis. In the event that an asset bubble occurs, the effects can destroy an individual’s estate, causing him/her to lose valuable assets.
Asset Protection Trusts
For individuals who are concerned about the security of their assets, an action protection trust may be an effective method to secure and protect certain assets. There are a variety of different action protection trusts, and there are many different reasons why an individual may choose to establish a trust.
A toxic asset is a type of asset that is not functional because of a severe decline in the asset’s value. If an individual invests in a toxic asset, he/she may lose a significant portion of his/her estate. Toxic assets became a major concern during the economic crisis that occurred between 2007 and 2010.
Impairment of Assets
The impairment of assets is one event that can cause an individual to lose important financial assets. When an asset is impaired, it experiences a sudden decline in value. As a result, an individual who acquired in this asset may not be able to recovery the funds that he/she invested in this commodity.