Net Worth and Estate Planning – What You Need to Know
Here at Rich Life Lawyer we aren’t all about giving away your money when you die. We want you to build it up and spend a little of it on yourself while you’re here.
Before you can do either of those things you need to have a baseline. You need to know where you stand right now. You need to know your net worth.
Calculating your net worth actually isn’t that tough. You just have to compile some information about your finances, information you should know anyway and information that will help you plan and execute the life of your dreams.
One thing before we get going – at this time you’ve got to have an individual net worth of $5.43 million before you are going to start paying federal estate taxes.
Here’s what I want you to think about though – I want you to have to think about how to beat those taxes. I want you to create significant personal financial wealth. I want you to crush life.
How to Calculate Your Net Worth
Okay, here’s how you calculate your net worth.
First, add up all of your assets:
- Liquid assets, such as certificates of deposit, money market funds, and bank accounts;
- Fixed assets, including bonds;
- Stocks and mutual funds;
- Retirement plans, such as 401(k) plans, profit-sharing plans, and so on;
- Personal assets, including your home, cars, and other property;
- Insurance on your life; and
- The value of your business, rental property, or other real estate.
Second, add up all of your debt, including mortgages, credit cards, loans, and anything else you owe money on.
Third, and finally, subtract figure one from figure two. This is your net worth.
The Importance of Knowing Your Net Worth
Knowing your net worth is important for several reasons, but for me it’s most important not because it shows me where I am, but it shows me where I want to go.
What I mean is, I hope my net worth today isn’t as high as it will ever be.
I want my net worth to grow each and every year. And I want it to grow by at least 10%.
I know if I do that then in a few short years I’ll have built up a significant wealth, wealth I can use for myself and to give to my family later.
What is your goal net worth?
P.S. Do you have kids? Have you completed guardianship paperwork? Have you done it correctly? Click here to find out what happens if you don’t do anything: Are you okay with a judge choosing the guardians of your children?
P.P.S. Do you own a business? Do you have a plan so the business, and your family, can survive if something happens to you? If not, click here to learn how simple it is to protect your business and your family from tragedy: 5 Ways to Protect Your Business from Catastrophic Failure.
P.P.S. Do you have no kids and think you don’t need an estate plan? Single and think a will is only for married couples. You couldn’t be more wrong. Click here to learn more: 5 reasons estate planning is a must have even if you don’t have kids.
Christopher Small is a Kirkland estate planning attorney who helps people get rich and live forever. He is also the owner of CMS Law Firm LLC.