How Do I Fill Out My Net Worth Statement? – Part III – Assets
A Statement of Net Worth is required to be exchanged in all contested divorce actions and in some uncontested divorce actions as well. In Part I, I gave you some tips on how to fill out the “family data” and “expenses” section of the form. In Part II, I gave you my thoughts on completing the “income” section. In this post, we move on to completing the “assets” section of the form.
OK, what’s an asset? An asset is something of value. It can be money in a bank account, the Van Gogh on the living room wall, or your winning smile. However, for the purposes of a divorce, we are going to limit the meaning of the word “asset” to something of value that can be reduced to cash or which can be valued. Put on your seat belts for the ride. I am going to follow the items as they appear on the Net Worth Statement. Deep breath…
One note here… and it applies to all assets… you may believe that your spouse has accounts you don’t know about or have very little information about. You should list and describe these assets to the best of your ability (Example: “Citibank account(s) – in Wife’s name, information in possession of Wife, value unknown” or “Husband’s Stamp collection, value unknown”).
Cash Accounts – this includes, “cash” (as in, green, cabbage, dough, loot, wampum, moolah and smackers) and money in bank accounts. Some people don’t keep much cash. Others stash it away in their safe under the floorboards or in their mattress. Regardless of where you (or your spouse) keeps it, list it. We aren’t really concerned here with what’s actually in your wallet or pocket book (if it’s less than say $500), but if there is a stash of cash that you or your spouse has, list it. By the way, if your spouse has the cash (or if you think your spouse has the cash) make a note on the form to that effect (i.e., “estimated”).
Cash in the Bank – including savings accounts and checking accounts. Time to pull out those bank statements and fill in the form for each account. It’s a pain but at this point it’s important that you provide all the information requested: the name of the bank, address of the bank branch, account number, type of account (savings? checking? Money market? CD?), when the account was opened (as best as you can tell; some statements actually show the date), all of the sources of where the funds came from that went into the account (earnings? inheritance? gift? lottery?), the balance as of the day you are using to complete the Net Worth Statement (and if the statement gives a month end date, use that date, but note on the form “as of….”).
Security Deposits – this includes the kind you give to a landlord for a rental apartment, possibly for a car or boat lease, a time share, or even a country club membership (sometimes called a “bond”). It would also include any deposits you or your spouse may have made on the purchase of new property or a business. You may have to do some digging for this information or call the company involved in each transaction, but it’s important information to have and to list.
Securities – also known as stocks, bonds, notes, stock options, and brokerage accounts. Today many people own stocks and/or bonds. Most often they are held in a brokerage account and monthly or quarterly statements are generated. You can get a statement from your broker and simply list the entire account as one asset, using the value contained in the statement for all of the stocks and bonds. If you own multiple accounts you need to list each one. If you believe your spouse has accounts, do the best you can to identify these as well and if you are missing information, make a notation to the effect “husband/wife has information”. As with all of the work you are doing in preparing the net worth statement, keep copies of the account statements upon which you relied.
Loans to Others and Accounts Receivable – If you or your spouse are owed money from friends, family, customers or third parties, the details go in here. This includes formal loans as part of a business and informal loans (usually to family). List the amount of the loan, to whom it was made (including addresses), the date of the loan and indicate any interest rate attached to each loan.
Value of Any Interest in Any Business – This is important and may be one of the biggest marital assets. You may not have any idea what the business is worth, and it’s perfectly acceptable to simply list the business and insert “to be determined”, however it’s critical that you list the business. An interest in a business includes anything from the hot dog stand owned by a spouse to a partnership in a law firm. If you or your spouse is an “owner” of any business, it needs to be identified and listed here.
Cash Surrender Value of Life Insurance – This applies to so-called “whole life” insurance and also to some “variable” insurance policies. It generally doesn’t apply to “term” insurance. If you aren’t sure what kind you have check the most recent statement. If you don’t have that, call the insurance company or your insurance broker and ask if any of your policies or your spouse’s policies have a cash surrender value. Ask them to send you a statement. Keep a copy of these statements for your records and for your attorney.
Vehicles – includes not just cars, but boats, planes, trucks, campers, jet skis and just about anything else that will take you somewhere. You need to be detailed here. Valuing these assets isn’t that difficult if you provide sufficient information like year, make, model, mileage, purchase price, condition and a list of features (like, air conditioning, oversized tires, etc.). For cars you can go to www.edmunds.com or www.kbb.com to get “blue book” values. If you can’t find a value, at least describe the vehicle in detail. By the way, if you lease a car, you don’t own it, so don’t list it here (it should show up under “liabilities” and it should already be in your “expenses”).
Real Estate – includes any home(s) you or your spouse own, or you own together. It also includes coops, condos, investment property, vacation homes. It also includes life estates (the right to live somewhere during your lifetime) and leaseholds. You may not be able to value your real estate. Don’t worry. There are plenty of experts out there who can do that for you. The important thing is to list the property’s location, when it was purchased and what it was purchased for. Remember, you should list all real property whether held in your name only, jointly with your spouse or in your spouse’s name only.
Vested Interest in Trusts – Here is where retirement accounts go. Whether it’s a IRA, 401k, 403b, SEP, defined benefit plan, deferred compensation plan, pension plan or profit sharing plan, they all need to be listed separately. If it’s your interest, call up the plan administrator and get the gory details. Find those annual statements; they will provide most of the information. If the account is in your spouse’s name try to get an account statement, but if you can’t, simply list the account as best you can for now. Any effort you put in to identify the accounts now will save time down the road. Many of these items are difficult to value so focus on listing them first. If you and your spouse can’t agree on a value there are experts who can do the appraisals.
Contingent Interests – this would include stock options (contingent on remaining with a company), prospective inheritances (what you expect to inherit or what you expect your spouse to inherit), life estates in the future, and future commissions or fees. As with vested interest in trusts, many of these items are difficult to value so focus on listing them first. If you and your spouse can’t agree on a value there are experts who can do the appraisals.
Household Furnishings – this includes the “stuff” in the house like furniture and things of value you could sell. Don’t go crazy here, but don’t ignore this category either. If you and/or your spouse own valuable “things” in the house (like furniture, silverware, stereos, patio furniture), at least list them. Sometimes web sites like www.eBay.com can help you approximate a value.
Jewelry, Art, Paintings, Prints, Antiques, Precious Objects, Gold and Precious Metals – this is pretty self-explanatory, but it is still necessary to make a list. Sorry guys, no engagement rings here, but you should list jewelry given after the marriage took place. Generally, if you think something is worth more than $500, you should list it.
Other Assets – What could possibly be left you ask? Here’s the catch-all section for anything else you or your spouse might own of value. This can include intellectual property like patents and trademarks, judgments against other people, tax shelter investments, potential claims (causes of action against third parties, insurance claims) and any kinds of “collections” (art, coins, stamps, memorabilia, etc.). This section can also be used to list “enhanced earning capacity”, which is a legal phrase used in divorce to mean training or schooling that resulted in a spouse obtaining a degree or license during the marriage which allows them to earn more money than they did when they came into the marriage. If you have any questions about this item, discuss it with your attorney, and don’t even try to guess the value. Just list it so you and your attorney don’t forget to have it separately valued down the line.
Do’s and Dont’s
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Do list property that belongs to either you or your spouse (or both of you).
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Do spend the time gathering receipts and any records you may have reflecting what you paid and when.
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Don’t worry if you are missing information or if you have trouble placing a value on something, as long as you list it.
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Do estimate values but be sure to note the value is estimated and be sure to make a record of what your estimation is based upon.
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Don’t guess. If you have no idea what something is worth, simply list it and write “to be determined”.
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Don’t try and do your entire Net Worth Statement in one sitting.
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Do keep copies of any records you use for items in the Net Worth Statement so you can later reflect back on how you figured out the information you listed.
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Do look at your old tax returns to see if you have accounted for all your accounts (Schedule “B” of a Federal Tax Return Form 1040 lists interest and dividends and is a good starting point). And finally,
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DO HANG IN THERE, you can do this!
In my next blog I’ll focus on filling out the “Liabilities” section of the Net Worth Statement.