SENIORS: ADDING UP ASSETS AND LIABILITIES

Mar 15th, 2012 | By Dr Jerry D Elrod | Category: Senior Moments Blog

Good Financial Records Are Essential

Periodically, it is useful to add up one’s financials in order to determine where you are. Doing so with some regularity enables one to head off being surprised, ill prepared or down right shocked. Going along, assuming that all is well is a very dangerous strategy. A sudden wake up call can be debilitating to one’s frame of mind, particularly if the revelation includes a downturn you weren’t prepared for.

Just as one is ordinarily aware of how much cash he/she has on hand, knowing the value of assets and the predictable health of those assets makes for a healthier frame of mind.  If you are partnered, you and your partner should stay in touch with the big picture, be aware of any unanticipated expenses or downturns that may affect your situation.  While it is not essential to have a review down to the penny, it is helpful to keep in mind the trends, e.g. bank account balances, totals in portfolio investments, anticipated lay outs, which will impact balances, and so on.

For example, if during the next 12 to 18 months a significant outlay will be required, e.g. purchasing a new car, that needs to be introduced to the dynamic of shifts in economic circumstances.

Keeping apprised of costs, downturns, losses or increases and changes in your overall financial health should be done at least quarterly and certainly no less than semi-annually.  If your situation is quite healthy and unusually large, you will, of course, want to keep aware of its picture more regularly.

Don’t Make Assumptions

Assuming all is well is ill advised. If your financial assets include coins, stamps or other collectibles, you will need to stay aware of their inflationary value, both for insurance and recovery costs. A frequent update and inventory of such items needs to be on the schedule at least annually.  Having some record of valuables is always essential. This may include an appraised value statement or other means.

Usually there are unusual miscellaneous items in a household that are not included in an inventory of assets.  For example, if someone in your household works with wood and has a large collection of woodworking tools, those should be recorded and verified as to their worth.

You will want to include items, for purposes of worth and insurance, that may be included in your estate distribution, i.e. promised to a relative; you should have a record of the disposition of those items as a part of your estate plan.

Assets and liabilities need to be clearly defined to avoid misunderstandings and conflict. The more precise and well defined any information related to your total estate, the better.



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