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Dangerous Asset

What is 'Dangerous Asset'

An asset which, by its nature, creates a substantial risk of liability to the asset owner. Dangerous assets include commercial real estate, motor vehicles and construction equipment.

Risk of personal injury and/or property damage is higher with dangerous assets. For example, a truck, by its mere use, has the potential to cause physical harm to its occupant as well as bystanders.

Explaining 'Dangerous Asset'

Because dangerous assets carry with them a greater risk of liability for personal injuries and property damage, for asset-protection purposes a single business entity should not own more than one dangerous asset. In addition, dangerous assets should not be commingled with safe assets.

For example, if your limited liability company (LLC) owns your commercial real estate as well as your company's bank accounts, a person who is injured while on the property could sue the LLC and not only pursue the property to satisfy his/her claim, but the business bank accounts as well.

Often, it's best to place a dangerous asset, such as your business property, in a separate entity, such as a real estate trust, with your safe assets held in a family limited partnership (FLP) or LLC.


Further Reading


Financial consolidation: Dangers and opportunities
www.sciencedirect.com [PDF]
… The presence of larger institutions presents a danger to the safety and soundness of the … total elimination of the safety net would be a radical step that could be extremely dangerous … The basic theme of this paper is that financial consolidation raises some dangers because the …

Monetary Policy and Financial Assets Price <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ200203001.htm' />Monetary Policy and Financial Assets Price [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ200203001.htm'>PDF]
… The presence of larger institutions presents a danger to the safety and soundness of the … total elimination of the safety net would be a radical step that could be extremely dangerous … The basic theme of this paper is that financial consolidation raises some dangers because the …

Financial–real-side interactions in an extended monetary circuit with shadow banking: Loving or dangerous hugs?Financial–real-side interactions in an extended monetary circuit with shadow banking: Loving or dangerous hugs?
www.tandfonline.com [PDF]
… The presence of larger institutions presents a danger to the safety and soundness of the … total elimination of the safety net would be a radical step that could be extremely dangerous … The basic theme of this paper is that financial consolidation raises some dangers because the …

Confronting Financial Crisis: Dodd-Frank's Dangers and the Case for a Systemic Emergency Insurance FundConfronting Financial Crisis: Dodd-Frank's Dangers and the Case for a Systemic Emergency Insurance Fund
heinonline.org [PDF]
… The presence of larger institutions presents a danger to the safety and soundness of the … total elimination of the safety net would be a radical step that could be extremely dangerous … The basic theme of this paper is that financial consolidation raises some dangers because the …

Financial derivatives: Harnessing the benefits and containing the dangersFinancial derivatives: Harnessing the benefits and containing the dangers
papers.ssrn.com [PDF]
… The presence of larger institutions presents a danger to the safety and soundness of the … total elimination of the safety net would be a radical step that could be extremely dangerous … The basic theme of this paper is that financial consolidation raises some dangers because the …



Q&A About Dangerous Asset


What are some examples of dangerous assets?

Commercial real estate, motor vehicles and construction equipment are all examples of dangerous assets.

What do people call troubled assets?

People also euphemistically call them troubled assets.

What is a dangerous asset?

A dangerous asset is an asset that by its nature creates a substantial risk of liability to the owner.

What were some factors contributing to freezing of markets for toxic assets?

Uncertainty about economic conditions made it difficult to estimate value of these assets, and banks were unwilling to sell them at reduced prices since this would force them into insolvency.

Should you commingle your safe assets with your dangerous assets?

No, because doing so could cause someone who was injured on your property to sue both your business bank accounts as well as your commercial real estate.

Why are toxic assets dangerous?

Toxic assets are dangerous because they cannot be sold at prices satisfactory to the holder.

Where should you place a dangerous asset like commercial real estate?

Often it's best to place a dangerous asset such as commercial real estate in a separate entity such as a trust with safe assets held in an LLC or FLP.

When did the term "toxic" become common?

The term became common during the financial crisis of 2728, in which they played a major role.

What does a toxic asset refer to?

A toxic asset refers to a financial asset that has fallen in value significantly and for which there is no longer a functioning market.

Why should you not own more than one dangerous asset?

Because owning more than one dangerous asset can create a greater risk for personal injury or property damage.

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