What is a Financial Asset? A Comprehensive Legal Overview
Definition & Meaning
A financial asset is an intangible item that represents monetary value. This includes various forms of financial claims such as stocks, bonds, and cash in bank accounts. Financial assets are often traded on financial markets and can be recognized as investment mediums. They differ from tangible assets like real estate or gold, as they do not have a physical form. Essentially, financial assets can be seen as claims to future cash flows or ownership interests in entities or properties.
Legal Use & context
Financial assets are commonly referenced in legal contexts related to finance, investment, and property law. They play a crucial role in transactions involving securities, estate planning, and corporate governance. Legal professionals may encounter financial assets in various areas, including:
- Corporate law, where shares and bonds are issued.
- Estate law, where financial assets are distributed among heirs.
- Bankruptcy law, where financial assets may be liquidated to pay creditors.
Users can manage some aspects of financial assets through legal templates provided by services like US Legal Forms, which can help in drafting necessary documents.
Real-world examples
Here are a couple of examples of abatement:
Here are a couple of examples of financial assets:
- A stock certificate representing ownership in a publicly traded company.
- A bond issued by a corporation that promises to pay interest over time (hypothetical example).
Relevant laws & statutes
One key statute defining financial assets is the Uniform Commercial Code (U.C.C.) § 8-102 (9), which outlines what constitutes a financial asset in legal terms. This includes securities, obligations, and property held in securities accounts.