Statement of Net Worth: Definition, How to Calculate
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Quick Facts — Statement of Net Worth Lawyers
- Lawyers available: 13 estate planning lawyers
- Clients helped: 19 recent statement of net worth projects
What is a Statement of Net Worth?
A statement of net worth provides a snapshot of a person’s or business’ financial wealth. Statements of net worth are calculated by adding the value of all non-financial and financial assets owned by them and then subtracting the value of all its outstanding liabilities.
A statement of net worth is essentially a snapshot of a person’s or businesses’ financial position at any given point in time.
You can read more on net worth here .
How To Calculate a Statement of Net Worth
There are four steps to writing a statement of net worth:
- Calculate value of your assets : List your assets on a net worth statement. Using the current market value for each item, calculate the total value of all assets owned by you. Items like insurance policy also have a cash value which can be found on a schedule in the policy. Similarly, mutual funds, stocks, and bonds also have cash values that can be found on their quarterly reports.
- Calculate your Liabilities : Your liabilities should also be listed on your net worth statement. The balance owed on debts or credit cards, principle owed on a mortgage or real estate loan is considered a liability.
- Calculate the value of assets after subtracting liabilities: You will need to subtract the value of your liabilities from the value of your assets to determine your net worth. A negative net worth occurs when the total debt is more than the total assets. It is a sign that the company or individual needs to reduce their debt.
- Monitor your net worth annually: Complete a net worth sheet annually as your assets and liabilities might change or the values might change over time.
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What’s Included in a Statement of Net Worth
A statement of net worth largely includes assets and debts of an individual or business. Here are some types of assets and debts that might be included in a net worth statement:
- Savings & Checking Accounts
- Investments
- Life Insurance Policy
- Retirement Funds
- Personal Property
- Real Estate
- Credit Card Bills
- Mortgage Balance
- Car Loans
- Unpaid Taxes
- School Loans
A statement of net worth will include balance sheets, income statements and cash flow statements.
- Balance sheets : Balance sheets provide detailed accounting of a company or individual’s assets, liabilities and shareholders’ equity. Shareholders’ equity refers to the value that will be left if a company sells all its assets and pays off all its liabilities. This leftover money will belong to the shareholders of the company.
- Income statements : An income statement shows how much revenue a company made in a certain time period. In the case of an individual, it shows the amount of money earned by the individual in the time period.
- Cash flow statements : Cash flow statements report on a company’s inflows and outflows of cash. Cash flow statements can help determine if a company generated any cash. Cash flow statements can reflect the changes over time in income statements and balance sheets.
You can learn more about preparing your own statement of net worth here .
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Types of Statements of Net Worth
Types of statements of net worth can differ by entity. Companies, individuals, governments and countries use net worth statements in different ways. Here are how net worth statements are used by different entities:
Companies
Net worth in businesses is also known as equity. It is based on the value of assets and liabilities at the value expressed on financial statements. If items on the balance sheet do not express their true value, the net worth will also be inaccurate. If the accumulated losses exceed the shareholder’s equity in a company, the net worth becomes negative. Net worth here doesn’t express market value of the company as it may still sell for more if traded.
Individuals
For individuals, the net worth statement refers to the net economic value or the individual’s total assets minus the liabilities. Net worth statements can help individuals determine their financial status and plan for their future financial goals.
Governments
A government’s net worth, or a balance sheet of all assets and liabilities, is used to measure a government’s strength. Most governments use an accrual-based accounting system to provide transparency. Some might utilize cash accounting to better predict future fiscal events. Consistent accounting is necessary to determine the total net worth of a government.
Countries
A country’s net worth is the total net worth of all companies and individuals residing in the company plus the government’s net worth.
You can read more on types of statements of net worth here .
When Do You Need a Statement of Net Worth?
A net worth statement can help you measure progress towards long term financial goals. It can also help you keep track of your debts. If you are building wealth, you will also see your net worth statement changing. Having multiple savings, investments and debts can be difficult to manage. A net worth statement can help see your total financial situation.
A net worth statement also contains the value of your home and contents and can help you decide the homeowner’s insurance you will need to purchase. The total of your liquid assets can also provide information on how prepared you are for an emergency. A statement of net worth can also help you analyze your retirement savings or create future financial plans.
Companies use statement of net worth to assess the value of the company. Governments and countries also use statement of net worth to assess government debt.
Statement of net worth can often be required by lenders or investors to assess risk in providing an individual or business a loan. Scholarships and financial aid applications can also require net worth statements to assess eligibility. For the deceased, net worth statements can be used to assess value of their estate when in probate.
You can read more on net worth statements here .
Get Help With a Statement of Net Worth
Do you have any questions about statement of net worth and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from estate planning lawyers and probate lawyers who specialize in statement of net worth.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Meet some of our Statement of Net Worth Lawyers
Tim E.
I am a business attorney focused on providing practical, targeted legal services for small businesses, startups, contractors, consultants, and service providers. I help clients efficiently review, draft, and improve everyday business contracts, including service agreements, NDAs, independent contractor agreements, vendor contracts, commercial leases, and purchase documents. My approach is straightforward: identify the terms that matter, explain risks in plain English, and deliver clear, usable edits or drafts without unnecessary complexity. I regularly handle fixed-fee, quick-turnaround projects such as contract reviews, agreement drafting, and demand or termination letters. While I offer streamlined, project-based services for routine matters, I can also assist with broader business legal needs as they arise.
"Excellent experience with Tim on my relatively complex EULA for a suite of network appliance products. Tim was very fair with pricing, responsive, diligent, thorough, technically knowledgeable, took the time to address all my questions and concerns, and finished (with revision) on schedule and budget. Great experience overall and I'll definitely be using Tim for more work in the future with my business. I'll also be using Contract Counsel and recommending it to everyone I know as well! THANK YOU! -Devin"
Donya G.
Donya G.
I am a Contracts and Mergers & Acquisitions Attorney with more than 25 years of diverse legal and business experience. My practice focuses on mergers and acquisitions, commercial contracts, contract dispute resolution, and a broad range of business-related legal matters. I have extensive experience managing and closing transactions across a variety of industries, including SaaS, IT, eCommerce, franchises, agencies, and food services. I take a practical, business-oriented approach to transactions, helping clients efficiently navigate complex deals from initial structuring and negotiation through execution and closing. My combined legal, litigation, financial, and business experience allows me to deliver strategic, efficient, and practical solutions tailored to my clients’ objectives, whether in deal negotiations, contract structuring, dispute resolution, or complex business transactions
"Donya was an amazing partner and was very patient and diligent in dealing with the APA and OA. I highly recommend her as she knows her stuff, is confident, and always has your back."
Jane C.
Skilled in the details of complex corporate transactions, I have 15 years experience working with entrepreneurs and businesses to plan and grow for the future. Clients trust me because of the practical guided advice I provide. No deal is too small or complex for me to handle.
"Jane was fantastic. She caught real gaps and fixed everything quickly and accurately. Highly recommend!"
Alexander N.
Having overseen over $1.2 billion in transaction value, we are able to provide top-tier service at affordable rates, with much more personalized attention and fast turnarounds. After working for a AM Law Top 100 firm, I started my own firm and have been lucky enough to represent numerous conglomerates (FOX, Endeavor, etc.), promising startups, small businesses and private individuals. Our areas of expertise - Business Formations and Operating Agreements; Capital Raises and Debt Financing; Commercial Transactions; M&A; Real Estate; Intellectual Property; Employment and Hiring; Outside General Counsel; Corporate Agreements and Governance; Litigation and Dispute Resolution. We have been featured in The Wall Street Journal, Marketwatch, Yahoo Finance, Variety, Business Insider, Los Angeles Magazine, the LA Times, and others. We are driven by an unwavering commitment to our clients, going above and beyond to deliver results.
"Great time, very responsive and receptive to revisions and clarifications to documents"
Samuel R.
My career interests are to practice Transactional Corporate Law, including Business Start Up, as well as Real Estate Law, Estate Planning Law, and Intellectual Property Law. I am currently licensed in Arizona, Pennsylvania and Utah, after having moved to Phoenix from Philadelphia in September 2019. I currently serve as General Counsel for a bioengineering company. I handle everything from their Business Transactional Agreements, Private Placement Memorandums, and Corporate Structures to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. Responsibilities include writing and executing agreements, drafting court pleadings, court appearances, mergers and acquisitions, transactional documents, managing expert specialized legal counsel, legal research and anticipating unique legal issues that could impact the Company. Conducted an acquisition of an entire line of intellectual property from a competitor. In regards to other clients, I am primarily focused on transactional law for clients in a variety of industries including, but not limited to, real estate investment, property management, and e-commerce. Work is primarily centered around entity formation and corporate structure, corporate governance agreements, PPMs, opportunity zone tax incentives, and all kinds of business to business agreements. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I was selected to the Super Lawyers Southwest Rising Stars list for 2024 - 2026. Each year no more than 2.5% of the attorneys in Arizona and New Mexico are selected to the Rising Stars. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, and also trademark registration and licensing.
"Thanks Samuel for your thorough review of my materials. I'm incredibly impressed by your prompt turnaround in drafting my letter. The letter captured the facts perfectly and struck exactly the right tone."
Sara S.
With over eleven years of intellectual property experience, I’m happy to work on your contract problem. I am very diligent and enjoy meeting tight deadlines. Drafting memoranda, business transactional documents, termination notices, demand letters, licenses and letter agreements are all in my wheelhouse! Working in a variety of fields, from construction to pharmaceutical, I enjoy resolving any disputes that come across my desk. I will prioritize your project, big or small. Please be ready and prepared with all relevant documentation so we can get started as soon as you click HIRE! Hourly rate projects will be billed hourly in accordance with the timesheet. Flat rate projects will be billed in segments. Choosing an hourly or flat rate is up to you. Absolutely no refunds.
"Sara was responsive and knowledgeable about prenup specifics. Thank you so much!"
July 16, 2023
Thomas G.
After graduating law school in 2015, I practiced for a few years in LA, then becoming a contractor for large litigation projects. Now working from home in Kansas, I can offer LA service at Midwest prices.
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