Balance Sheet - What is it and How to Build One

Balance sheet: financial snapshot that outlines the assets, liabilities, and net worth of an individual or couple

What the Balance Sheet Provides:

• Comprehensive overview of the financial landscape
• Insights into the distribution of assets and debts
• Helpful in property division analysis

There are three key components to a balance sheet:

1. Assets: the valuable resources owned by an individual or couple. Examples: real estate properties, vehicles, bank accounts, retirement accounts, stocks, bonds, jewelry, artwork, and business interests
2. Liabilities: the debts and financial obligations owed by an individual or couple. Examples: mortgages, loans, credit card balances, tax liabilities, outstanding bills, and any other forms of debt.
3. Net Worth: the difference between total assets and total liabilities.

Benefits of Balance Sheets

• Provides clarity on their assets, debts, and overall net worth
• Helps with understanding the financial implications of divorce and determining the distribution of property
• Aids in the identification and valuation of assets so nothing is overlooked
• Helps categorize assets and liabilities that are marital/joint and non-marital/separate
• Helps make informed decisions about which assets to retain, sell, or distribute
• Highlights existing debts and financial obligations
• Provides transparency and accountability

It is helpful to gather supporting documents for all of the assets and liabilities listed to provide evidentiary evidence if needed.  This information can provide assurances to your spouse and help your attorney, if you have one, gain a full understanding of the financial picture.

May become evidence in litigation, used in mediation or be submitted with settlement.

See the downloadable Balance Sheet Template and Example to help you create your own.