Asset Protection Laws are legal strategies to safeguard personal and business assets from seizure as a result of adverse events such as divorce, bankruptcy, and judgments.
We've recently published a comprehensive article on the types of assets a company may own.
An accrued asset is a debt or expenses recognized and coming on the business' balance sheet because it has occurred. For example, an accumulated rent is identified on the business' balance sheet but not yet due for repayment; an accrued dividend is a share of the net earnings of a corporation not yet paid out to its shareholders.
A fixed asset is an asset that is set or isn't liquid. They are not intended for sale and must be long-lived. Meaning they're used in the operation of the business. An example of a fixed asset would be a server you buy to run your website with.
An asset that's frozen cannot be easily converted into cash (like real estate when there is little to no demand), or an asset that cannot be accessed due to a legal restriction (such as being tied up in a spend-thrift trust).
Intangible assets represent valuable resources to an organization but lack any physical manifestation or means of valuation other than an arbitrary dollar value estimate.
Taxpayers may hold a property for several different reasons. Some taxpayers use the property for personal enjoyment, others for investment. Capitalization of gains occurs when an asset is sold at an increased price. Capital gains = (sale price purchase price) minus basis = capital gain.
A current asset is a resource converted into cash within one year. Examples include cash, accounts receivable, inventory, and raw building materials. Some companies use existing assets as loan collateral since they are relatively easy for banks to repossess in the event of default.
In bankruptcy, an asset is any property owned by a borrower that is not used to repay debts.
Asset protection is a way of guarding your property against creditors and lawsuits. It is similar to asset safety in that you don't need to worry about losing the property if a lawsuit or creditor claim occurs. However, asset protection often relies on legal strategies.
The objective of asset protection is to shield each asset from legal forfeiture by creditors, like lawsuits and judgments. For example, a creditor cannot force the sale of real estate or stocks when the owner has appropriately structured ownership.
Asset protection is a complex field. If you're interested in learning more, don't hesitate to contact a professional in the industry.