The first step in creating a solid, dependable estate plan is determining your own net worth. This calculation can include your bank accounts, investment funds, the value of your personal property and retirement accounts. One way to determine your net worth is by listing your items and their value in columns.
Creating Your Net Worth Chart
Your net worth chart should have a column for assets in your name, assets in your spouse’s name (if applicable) and assets you jointly own (if applicable).
Then you should list the amount of each of these assets in categories such as:
- Bank account totals
- Investment account totals
- Stocks and bonds you own
- Personal effects (jewelry, clothing, etc.)
- Life insurance policy amounts
- Retirement plan balances
- Sole proprietorships, LLCs and partnerships you’re in
- Closely held stock amounts
- Debts that are owed to you
- Value of any property or real estate
Total up the columns to come to your individual, joint and your spouse’s net worth.
Once your net worth has been calculated, you’ll have to move on to determining whether or not your estate will owe estate tax. If you’re liable, you can meet with an estate planning attorney to plan out your estate better so that you avoid harsh tax penalties. You’ll need to consult with your estate planning attorney regardless to assess your estate, your assets and any estate tax or inheritance tax your beneficiaries could encounter.