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.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

A trust is essentially a “box” that can hold your assets. Instead of having the deed to your house titled in your name for example, the deed would be in the name of the trust, such as the Smith Family Trust.

This small change in how your assets are titled can provide some extensive tax breaks and can also protect your estate from going to a non-family member during a divorce or being seized in a lawsuit.

And here’s how it works:

There are three basic parties to a trust:

• The Trustor (also called a “Settlor”) who establishes the trust and provides the assets it holds
• The Trustee who manages the trust and its assets. This can be a person, a business or an organization.
• The Beneficiary who receives the benefit of the assets in the trust.

Now, these three parties do not have to be different people – quite the contrary, you can be the Trustor, the Trustee and the Beneficiary, allowing you to have complete control over your assets while still protecting them from a variety of third party claims.

The trust can be revocable, meaning you can change or even cancel it at any time, or irrevocable, meaning that once the trust is established, it’s there for good.

Trusts can also be used to provide for disabled dependents after you’re gone, by allowing them to benefit from the assets in the trust without affecting their eligibility for government-assistance programs.

Trusts can also help you avoid probate, a lengthy and often costly process of distributing assets after you pass on.

To learn more about trusts and decide if there’s one right for you, give us a call today.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.