Calculating your net worth every year is a good way to help keep your estate plan up to date. Knowing the value of your estate if you were to die is an important part of the planning process.
Your net worth is the total amount you get after you subtract the total value of your liabilities from the total value of all of your countable assets upon death.
You’ll need some basic financial information to calculate your Net Worth and you can easily do it by yourself. Here is a step-by-step method to calculate your net worth:
1- List all your main assets like home, vehicles, antiques, etc. Total their value in dollars and be sure to calculate the value of each as accurately as possible.
2- Collect all the financial statements of your liquid assets like savings accounts, cash, other investments etc.
3- Add in the death benefit of all life insurance. This includes policies you have personally purchased, as well as those policies you may have through your employment. If you have the right to choose the beneficiary, you must count the death benefit as part of your estate.
4- Make a list of personal items of value that may be worth at least $500 or more.
5- Now, add the value of all the assets you have listed in the first three steps.
6- List the value of all major liabilities like mortgages, car loans etc.
7-Next list the value of all your personal liabilities like loans, credit card outstanding etc.
8. Now, add the value of all your liabilities.
9. Simply subtract the total value of your liabilities from your assets and you would get your Net Worth.
You can repeat this process every year to evaluate your financial progress. If you need any help then you can easily contact a good attorney.
When calculating your net worth, always make your estimates as accurate as possible and be sure to share your new estimates with your estate planning attorney when you review your estate plan.