There are instances where it’s important to find out what a person is worth. For example, if you’re seeking the creditworthiness of someone or if you’re looking for a potential business partner. However, it’s unfortunately not always the simplest of processes. Below, we’ll explain how you can calculate net worth of a person, either out of curiosity or for business purposes.
The first thing you should do when finding out someone’s net worth is to write down everything you know about the person at hand. However, make sure everything you write down can be verified. Over time, you’ll be able to get a better understand of what the person’s net worth is. At the same time, if someone’s assets do not match up, you’ll be able to inform them in case they’re offering misleading information about their financial status.
Where to Look For Assets
Below, are the top 13 helpful records you can use to search for someone’s assets:
1. Vehicle Registrations: Motor vehicle registrations can tell you what a person is driving, as well as what they own, such as other motor vehicles.
2. Watercraft Registrations: Boats or small watercraft registrations are usually done in the state the person you’re looking into lives in, but larger boats are generally done with the U.S. Coast Guard.
3. Real Property: Property is one of the most important assets a person can own or purchase. However, you can also find out about vacation homes and vacant land, besides a person’s primary home.
4. Divorce Proceedings: Although not every divorce filing is openly available in every state, such as New York, some states allow it to be publicly available, such as California, Florida, and Connecticut. Usually, divorce proceedings contain a list of assets that the person owns, such as bank holdings, expensive collections, and retirement funds.
5. Civil Litigation: If a person has either a federal or state litigation, they may have a large financial award from a lawsuit or settlement from a past business partner.
6. Aircraft Registrations: Any and all aircrafts have to be registered by the Federal Aviation Administration.
7. UCC Filings: These filings are deemed public information and must be filed with the secretary of state. However, UCC filings are usually backed by expensive collateral, such as costly equipment or business proceeds.
8. Probate Filings: Often, an inheritance from wealthy relatives can be located in probate filings. Additionally, identifying distant relatives or family members who are recently deceased can help you locate an inheritance.
9. Corporate Filings: In case there are assets not in a person’s direct name, they may be held by a corporation, LLC, or limited partnership. However, you can find this out by viewing corporate filings. But, it may be more challenging if you’re looking up a private company because they file based on private entities, that might not be available to the public.
10. SEC Filings: Companies that are traded publics are required to make specific disclosures. These kinds of disclosures include stock holdings, executive’s stock options, agreements, etc.
11. Patents and Trademarks: You should also check to see if they own any patents or trademarks. Many of these are worthless but other still are worth millions. Be sure to check to see if he or she owns any trademarks or patents of high worth.
12. Nonprofits: First, determine whether or not the party is involved with running a nonprofit. Though this is not the first place people look to gather information about a person’s assets, it can surely play a part. Some individuals have even used a nonprofit as their personal wallet. They may be diverting funds from the nonprofit to themselves through expense payments or a salary.
13. Small Business Retirement Funds: If the person you are investigating owns their own small business, they may have placed a large amount of their earnings in their company run retirement fund. You can see how much money is in their retirement account on the business’ Form 5500. The IRS requires all small business to submit this form which contains information about the retirement plan, assets it contains, and its operation.
How to Calculate a Net Worth
After you find out what someone owns, you can begin to calculate their worth. Keep in mind, however, that this will only be an estimation. Ordinarily, you would calculate net worth by adding together the value of all of the assets (things they own) and the liabilities (things they owe). Then, you would subtract the total of the liabilities from the total of the assets.
When you are trying to determine someone else’s worth, however, you won’t know exactly how much they have or how much they owe. This makes it difficult to determine their exact worth. You can use the same formula mentioned above to determine a close estimate, however.
What to Avoid When Determining Net Worth
When you are searching for financial assets and calculating net worth, there are a few things that you should not do.
– Do not use false pretenses to find someone’s income or other personal information. Avoid making phone calls and misrepresenting yourself as a financial institution. Doing this or hiring a private investigator to do this task is a federal crime and could get you in a lot of trouble.
– Don’t use illegal means to locate a person’s hidden assets. This could cause you to wind up in jail and it much more trouble than it is worth.
– Refrain from assuming that an asset listed in the subjects name belongs entirely to them. They may share the asset with a spouse, family member, or another partner. Try to assess how much equity they have in it first.