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Important Facts on Net Asset Value

Important Facts on Net Asset Value

When determining the value of an individual’s estate, the net asset value must be attained. The first step in this process is to create an inventory of an individual’s assets. Government officials will locate and document all of an individual’s assets, including any real estate, monetary funds, and personal belongings that he/she owns.
Asset pricing will then occur. The fair market value of each of these items must be determined. This refers to the price that these assets would be sold for and purchased for, without any intervention from the consumer or the individual selling the item. Any offshore assets, such as real estate or bank accounts in foreign countries, will also be included in an asset inventory. The value of all of an individual’s assets will determine the value of his/her estate. 
It is important to note that the value of an individual’s estate is not necessarily the net asset value of the estate. An individual’s estate could be valued very high, however, after deductions from the estate, the net asset value may decrease significantly. It is possible for certain deductions to be made from the value of an individual’s estate. 
For example, if an individual dies with an extensive of debt, including credit card debt, this debt may be paid by taking money from is/her estate and providing it to lenders. If a portion of the estate is used to repay an individual’s debts, the net value of his/her estate will be much lower than the initial value of his/her estate. Therefore, determining the net asset value of an estate can be more difficult than adding the values obtained through asset pricing.  

The Truth About Asset Based Lending

The Truth About Asset Based Lending

Asset based lending occurs when an individual acquires a loan that is backed by an asset. In order to obtain an loan from asset based lenders, an individual will be required to offer an asset as collateral. In the event that an individual is not able to repay the lender for the debt that he/she has accrued, the asset can be seized by the lender. For most people, asset based lending is a procedure that is necessary to build and expand their estate. 
A large part of the population has been involved in some type of asset based lending. These consumers will offer a valuable asset as collateral, to obtain a necessary loan. Without this type of financial strategy, an individual would likely not be able to acquire the valuable assets that compose a significant portion of his/her estate. 
One of the most common types of asset based lending occurs when an individual obtains a mortgage. Purchasing a home is a very expensive financial endeavor. Most individuals do not have access to the monetary funds necessary to pay for a home. However, they are able to apply for a home mortgage loan, which will cover the remaining cost of the home. 
In order for an individual to acquire a home mortgage loan, he/she must offer the home as collateral. In the event that the debtor is not able to effectively pay his/her monthly mortgage payments, the bank or lender will be permitted to initiate a foreclosure. The debtor will be required to leave the home and the home will become the property of the bank. It is important for an individual to understand the fundamental features of assert based lending,  as he/she will likely rely upon this strategy to advance his/her estate.

Understanding Asset Backed Securities

Understanding Asset Backed Securities

If an individual is looking to expand his/her assets and increase the value of his/her estate, he/she may wish to consider purchasing asset backed securities. Asset backed securities work very similarly to bonds. They are an investment vehicle that allow individuals to obtain additional funds. 
However, it is important that an individual be cautious when purchasing asset backed securities. Though these investments are generally considered to be safer than investment is the stock market, a bad market can destroy an individual’s investment and he/she may not acquire a suitable return on his/her investment. Mortgage backed securities are some of the most popular types of asset back securities available for the public to purchase, though an individual can also invest in auto loan backed securities, among others. 
In order for lenders to continue issuing loans to applicants, they must have access to the financial funds necessary to offer these loans. Asset backed securities help to stabilize the monetary funds that lenders require to offer these loans to applicants. When an individual purchases an asset backed security, such as a mortgage backed security, he/she places money in the financial pool that lenders draw from. 
As a result, he/she will receive regular monthly payments, with interest attached to these payments. Purchasing asset backed securities is a great way for an individual to improve the value of his/her estate. The profit acquired through interest can provide an individual with additional funds to leave his/her loved ones as inheritable assets.

Understanding Asset Bubble

Understanding Asset Bubble

When an individual is seeking to expand his/her estate by increasing his/her assets, one concern that he/she must consider is the possibility of an asset bubble. An asset bubble, or an economic bubble, occurs when a commodity is in high demand, and as a result, the price of this asset becomes very inflated. As a result, consumers may find it difficult to attain this asset. 
One example of an asset bubble was increased oil prices during the summer months of 2008. Gas prices soared to outrageous highs, making it difficult for consumers to afford filling their cars with gas. In some instances, an asset bubble can cause serious, widespread complications, such as the credit crisis that aggravated the economy and caused a national, and international, economic crisis. 
The credit crisis is often thought to have been amplified by the high demand for real estate, which was initiated by very low interest rates. As seen throughout the economic crisis that began in 2008, an asset bubble can cause devastating effects, causing consumers to lose a large portion of their estates. Hundreds of thousands of people lost their jobs due to the state of the economy, and many individuals were unable to pay their debts, forcing them to file for bankruptcy and foreclose their homes. 
During this period, people lost their motor vehicles, homes, monetary savings, and retirement funds. An economic bubble can destroy an individual’s estate. An individual should prepare for the possibility of an asset bubble occurring as best as he/she is able, so that in the event that this does occur, he/she is able to maintain his/her estate. 

Asset Protection Trusts At A Glance

Asset Protection Trusts At A Glance

One way in which an individual can protect his/her asset is by establishing an asset protection trust. There are a number of different types of asset protection trusts that an individual can establish, and a variety of different purposes behind the creation of these trusts. A trust is a legally binding agreement that transfers the title of assets or the right to assets from one individual to another. 
The individual who is named as the trustee of a trust will obtain the responsibility of overseeing the assets, usually monetary funds, which are specified within the agreement. When a trust is created, the granter must specify what purpose the included assets are to be used for. In addition, he/she will likely be able to delegate the use of these assets during his/her life. In many instances, an asset protection trust can help to protect an individual’s assets from creditors.
An asset protection trust can also be established by an individual, for a loved one. In most cases, a parent will establish a trust for his/her children, so that in the event that he/she dies, the children will have access to the monetary funds necessary to attain support. 
The granter will name an adult to be the trustee. The individual who becomes the trustee is responsible for managing the funds until the beneficiaries reach the specified age. Subsequently, the children will gain control of these funds. Trusts are often used to ensure that large sums of money left in inheritances remain secure until the beneficiaries gain the experience necessary to manage these funds responsibly.

What are Toxic Assets

What are Toxic Assets

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.

Impairment of Assets At a Glance

Impairment of Assets At a Glance

One of the many events that can adversely affect an individual’s estate is impairment of assets. Asset impairment occurs when the recoverable amount of an asset is less than the carrying amount of an asset. The impairment of assets results when the value of specified assets declines significantly, and therefore, these assets are no longer worth what an individual initially paid for them. 
Though, in theory, asset impairment can occur with any type of asset, it is most commonly used to describe adverse changes in the value of motor vehicles and real estate. There are a number of different circumstances that can cause a sudden decline of an asset’s value. For example, if an asset is damaged, the value of that asset will likely decline. Assets can also experience impairment if substantial technological advances render these assets unnecessary or undesired. The impairment of assets can have a detrimental effect on an individual’s estate. 
In most cases, when an individual purchases an asset, he/she will hope that his/her investment yields a profit, in order to help his/her estate increases in value. For example, when an individual purchases a home, and spends years investing in the maintenance of the home, he/she will expect to receive an adequate return on his/her investment, in the event that he/she must sell the home.
However, if housing costs drop dramatically, as occurred during the credit crisis of 2008-2010, an individual may not recover the money that he/she invested in the real estate. As a result, he/she will lose financial assets that contributed to his/her total estate. 

What are Total Assets

What are Total Assets

When an individual dies, his/her estate will be subject to asset inventory, which will determine his/her total assets and the value of these assets. This procedure is necessary for taxation purposes. In the event that an individual’s estate exceeds a certain value, it may be subject to estate tax when it is inherited. This depends upon the state in which the deceased individual lived prior to death. It may also be necessary to file a tax return on total assets. 
The laws and regulations regarding estate taxes vary from on state to another. Therefore, it is important that an individual review the taxation laws in his/her state. In addition, an individual may also need to file a federal tax return on total assets, depending upon the value of the deceased individual’s estate. 
In the United States, if the estate of a deceased individual exceeds $2 million, a federal tax return on total assets must be filed with the Internal Revenue Service. In 2010, laws regarding estate taxation lapsed, and therefore, a federal Estate Tax Return is not necessary for the estates of individuals who die in 2010. 
Other taxation regulations vary by state. For example, if a deceased individual lived in the state of New Jersey, and his/her estate is valued at more than $675,000, then it is necessary to file an Estate Tax Return for New Jersey. Therefore, a deceased individual’s total assets will be assessed. This includes all property, such as motor vehicles, real estate, jewlery, personal property, pensions and funds located in savings accounts, banks accounts, retirement funds.

Asset Protection at a Glance

Asset Protection at a Glance

Asset protection is important if an individual wishes to ensure that his/her loved ones are properly cared for following his/her death. Often, individuals will leave large inheritances to their children and their spouses, to help guarantee that these loved ones have access to the funds necessary to live a comfortable life. 
However, in many instances, an estate will be subject to taxation by the federal and state government, significantly reducing the assets obtained by intended loved ones. It is often difficult to avoid taxation on these funds, however, there are some techniques and laws that can allow an individual to acquire all or most of the intended inheritance. It is important to not that offshore asset protection is not necessarily effective, as even offshore assets are evaluated during asset inventory. 
One way in which an individual can distribute his/her assets free of taxation is by providing the intended recipients with funds over an extended duration of time. In the United States, an individual is able to give a recipient up to $11,000 every year, free of gift tax. If he/she is looking to distribute his/her estate and avoid taxation, he/she can distribute this sum of money to loved ones annually. 
However, if he/she attempts to avoid taxation by giving an individual his/her entire estate prior to death, the estate will be subject to gift tax. Trusts can also be successful in diminishing the amount of money taken for taxes. For example, if an individual establishes an AB trust for his/her spouse and children, the trust will be subject to significantly reduced taxation. Q.T.I.P trusts, Charitable Trusts, and Life Insurance Trusts may also be helpful. 

Asset Tracking at a Glance

Asset Tracking at a Glance

Asset tracking and asset recovery are two important concepts when discussing probate law and the distribution of assets following an individuals death. Each of these terms can be used to describe a variety of different events and circumstances. When an individual creates a will, he/she establishes specific guidelines regarding the distribution of his/her estate following his/her death. Often. these individuals will work with an estate lawyers to help create a plan that will help him/her to avoid estate taxation, so that his/her loved ones can inherit the total intended amount. 
However, if asset tracking does not occur, and if his/her will is not regularly updated, his/her extensive plan may be useless. Over time, the market value of items change and legislation regarding estate taxation also changes. Therefore, it is vital for an individual to remain up to date on these laws, in order to ensure a successful protection plan, and to track the fluctuation in asset market value. When considering the allocation of assets, he/she should also consider asset recovery. 
Asset recovery refers to an individual’s or a company’s right to obtain the assets of a deceased individual. When an individual is appointed to acquire an inheritance, he/she is able to recovery the specified assets. However, he/she may not be the only individual who is able to attain the deceased’s assets. For example, companies such as Medicaid, who provide low cost health care for elderly individuals, may have the right to partake in asset recovery.
As a result, the company may be permitted to acquire a deceased individual’s assets, in order to cover the cost of the health care that was provided, and subsequently, Medicaid will be able to care for other patients. 

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