Tuesday, July 12, 2011

Definition of the Week: Asset

Asset: In our estate lawyer practice, we use the word "asset" to mean "real property" (not just "real estate" narrowly but all types of "real property" generally). In this regard, an asset is assumed to be something of value described in a legal document, which legal document is on file outside your home at a private company or government agency. The legal document may be called a deed, a title, a certificate, or a contract. This legal document describes the asset and who owns, controls, or is entitled to the asset.

The word "assets" includes, by way of example, the following real estate, water or mineral rights, stock, bonds, life insurance, promissory notes, financial, investment, or retirement accounts or benefits, or automobiles. The term "assets" also includes ownership interests in partnerships or closley-held businesses or in other complex arrangements or structures. Cash in the bank is clearly an asset. Cash in hand-though it does not have a document of ownership attached to it--is still considered by law to be an asset.

Valuable art, books, or musical instruments are also categorized as assets, but only if they have legal documents of ownership on file at a private company or insurance company. An asset can often be insured separately and specifically by name.

Finally, an asset is defined by the fact that if ownership of the asset ever changes hands, the legal document of ownership must be changed to reflect the name of the new owner.

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