It is important to keep an ongoing estimation of your net worth, and there are a number of reasons for this.
From a retirement planning perspective you have to know where you are in the present to get an idea about whether or not you are on course for where you want to be in the future. If the numbers are not working out you will have to adjust your plan, and if you don’t know how to proceed the logical course of action would be to discuss your situation with a good retirement planning attorney.
There is also the matter of incapacity planning coupled with estate planning. If you keep a net worth statement that elucidates all of your assets and debts the representative that you choose to handle your affairs should you become incapacitated or pass away will have a balance sheet to work with.
Your net worth is also very relevant when it comes to potential estate tax exposure. Not everyone has to pay the tax; but if your resources exceed a certain amount the estate tax is a very significant factor because it carries a heavy percentage.
If your estate plan was originally constructed at a time when your resources were within the exemption your attorney would have had no reason to advise tax efficiency strategies. However, if you keep a net worth statement and you come to the realization that you have entered taxable territory you can arrange a consultation with your attorney to make the appropriate adjustments to your existing plan.
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