Gill
Recycles dryer sheets
current assets minus current liabilities = NW
key word is current, because one cannot predict the future
I believe it's total assets minus total liabilities = net worth
Gill, CPA[emoji1]
current assets minus current liabilities = NW
key word is current, because one cannot predict the future
FireCalc --and other calculator--results include taxable SWR so I use the tax deferred as the full NW amount. Out of the SWR come taxes as well as spending.
I started because I have a substantial non-qualified deferrred comp plan that will be hit with ordinary income taxes when it comes out and will come out fast enough to hit the higher brackets. Very misleading to not think about that. Once I scored that for taxes, I did it to my other accounts as well. Obviously it's an estimate but I like doing it. I've not gone so far as to accrue for unrealized gains.
I would think the house would pass to the survivor without tax. If not, it can be made so by a tax accountant. I would also realize any tax deferrals before paying estate tax.How are Estate taxes calculated?
e.g. The spouse of a married dies and has the following assets, beneficiaries set up on all accounts and will in place.
House net value after sale $1m
Tax deferred IRAs $2m
Roth IRAs $1m
After tax investments $2m
Are Estate taxes calculated on the full $6m (less the tax free allowance of $5.4m)?
current assets minus current liabilities = NW
key word is current, because one cannot predict the future
I think a more important tool is projecting and understanding cash flow components in retirement. I spend a lot of time forecasting future dividends, expenses, and taxes.
My net worth is my spouse's net worth also, so I do discuss with her periodically.
Frankly, calculating/knowing NW fairly close - it will never be perfect - is how I budget and consider how our investments are doing. If it's going up, we're not spending too much. If it's going down, need to consider if we need to cut back. By that, if it's dropping less than the market & it doesn't project to our running out, I still don't worry.
Right, but it's a lot simpler just to look at your broker accounts and not include your real state , pensions, other assets, etc that would make up your true net worth. My spouse is aware of all our assets but doesn't bother to add them all up.
I am not an accountant so I will caveat what I am about to say with that fact.
I don't believe one should calculate pension, or SS for that matter, in determining NW. Each of those streams end if you die and, therefore, aren't calculable at a point in time, which NW, of course, represents.
That is not to say that obviously Pension and SS play a real role in estimating future cash flows.
Are Estate taxes calculated on the full $6m (less the tax free allowance of $5.4m)?
Given the high end possibilities laid out by FIRECalc this would be good to know. I believe anything earmarked for charity via will or trust is ignored when figuring estate value for Estate Tax purposes.
I thought it's double that for a couple. It's $10 million plus.Given the high end possibilities laid out by FIRECalc this would be good to know. I believe anything earmarked for charity via will or trust is ignored when figuring estate value for Estate Tax purposes.
Whatever the exemption amount is, once exceeded does federal estate tax apply from the first dollar or only to the excess?
When we are talking about estate taxes, it is defined as that of the decedent. So not double.I thought it's double that for a couple. It's $10 million plus.
Yes we always include the NPV of pension to make our projections. We also exclude real estate.Yes, I'm aware of the issues surrounding pensions, it's just that my pension is so big that to ignore it for net worth calculations would make any calculation of net worth meaningless. And after all, net worth calculations are really only useful (once retired) for making you feel good and comparisons, so..... Also, I have elected for full survivor benefits so the pension does continue till my spouse dies. Agree about not including SS (Canadian equivalent) as this would not be material.
I thought it's double that for a couple. It's $10 million plus.
Yes, I'm aware of the issues surrounding pensions, it's just that my pension is so big that to ignore it for net worth calculations would make any calculation of net worth meaningless. And after all, net worth calculations are really only useful (once retired) for making you feel good and comparisons, so..... Also, I have elected for full survivor benefits so the pension does continue till my spouse dies. Agree about not including SS (Canadian equivalent) as this would not be material.