Transfer of Assets Definition

July 15, 2016

What does ‘transferred assets’ mean? The official definition is the conveyance, or transfer, of something valuable from one person, situation, or place to another. It’s a term that crops up frequently when preparing taxes or engaging in similar activities, and something the Los Angeles tax consultants at Wallace & Associates know much about. Let’s take a deeper look at this legal term, including common examples.

Wishes and Reasons

The law recognizes people as entitled to transfer their assets as desired, regardless of reason. Usual examples include gifts, trusts, and wills, however bad faith transfers also occur, such as those that allow the individual to sidestep paying IRS creditors. People also transfer assets to qualify for government- funding nursing care. It is illegal to transfer assets in bad faith, as it’s a form of fraud. Transfers are voided when this is the case.

Wills

A will is perhaps the best-known way to transfer assets. It involves the person writing the will detailing who or what will receive estate assets following said person’s demise. If the individual dies before writing or completing his or her will, state statutes are used to determine division of assets among family members.

Gifts

Gifts in the legal sense include inter vivos gifts, which are irrevocable once made. It is allowed under federal law to make gifts of $14,000 per year to each receiver without paying gift taxes or filing gift tax returns. Gifts that exceed $14,000 are subject to taxation.

Trusts

Trusts are frequently used by those whose assets are many. Transfers are made using trusts, with some part of wills and become available following the testator’s passing. However, trust assets are transferred to a trustee rather than to the person they’re meant for. The former distributes assets based on the guidelines specified by the testator. Assets are also transferred to trusts to reduce income tax payments.

Schedule a consultation with your Los Angeles tax consultants by contacting Wallace & Associates today.