When planning your estate, you want to be sure that you give your attorney your complete financial picture. One way to do this is to calculate your net worth. Doing this on an annual basis will also give you an idea of the financial progress you have made over the year. All that’s needed to do this is information on the assets you own and the liabilities you owe.
Step I: List all your assets
- Start with your big assets, such as your home, your cars, boats, rental properties and raw land. Now estimate the current market value of each asset by assigning dollar amounts. Try to be as accurate as possible.
- Next, list all your liquid assets, such as checking and savings accounts, cash, savings bonds and CDs. Investments, such as retirement accounts, should also be in this group. Against these entries, write their value by using the latest statements.
- Finally, record all the valuable personal items. You could include jewelry, antiques, artwork, musical instruments and coin collections in this list. As with your other assets, assign a value to each item.
Add the value of all the assets listed so far. The total value you get represents the worth of your overall assets.
Step II: List all your liabilities
- Start by listing all the major outstanding liabilities. These could be the balance of your home mortgage and loan you took for your car.
- Now list the loans you have taken through credit cards and store cards. Also record any student loan and debt owed by you.
Add the value of all the liabilities.
Subtract the total of Step II from that of Step I. The value you end up with is your total net worth.
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.Read More!
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