Thursday, September 27, 2012

Homestudy -- Maximizing your Net Worth

Alright, so you have started the homestudy process. Odds are your agency has given you a packet of information to complete as well as a library of documents to collect. Please note, the agency that completes your homestudy may or may not be your "placing" agency, ie the agency that "places" a child in your home. However, make certain whichever agency you choose for the homestudy is acceptable to your placing agency. Some states and some countries have restrictions on the qualifications of the agency and/or the credentials of the individual conducting the homestudy. For example, China requires that the homestudy agency (not just the placing agency) be Hague Accredited, and the State of Connecticut has a short approval process required for out of state agencies involved in some interstate adoptions. There are other idiosyncrasies involved in other adoptions, so check with your placing agency. You do not want to pay for two homestudies.

Generally you will be producing the following:

1. Financial documents, including tax returns and employment verifications;
If you are self employed, you will need to have your accountant or bookkeeper prepare the verification. Be sure to instruct him or her to add back your depreciation and other like expenses. You need your income to be calculated in a manner which would be comparable to a person with who is not self employed. Otherwise, as most self employed people work to expenses as much as possible, it will appear that you do not have sufficient income to raise a(nother) child. This method is perfectly acceptable so long as you make certain that you retain a record of how your accountant arrived at the final number. If you are employed and recieve bounses, include those in your employment verification. If you need to, ask your HR department to average the last few years to come up with a prediction of future bonuses.

2. You will likely be asked to prepare a financial statement. This too can be a bit overwhelming for some. If you own a home, it is likely your largest asset. You will want to accurately maximize the value of the asset. If you do not have a recent appraisal, then look at your latest tax appraisal. If you live in an area with significantly below value tax appraisals, then contact a realtor for a market analysis or just check with local Realtors for information regarding sales in your area of similar homes. Again, be sure to document how you arrived at the value listed. The key is to make certain your number is reasonable.

Many people forget to include the contents of their home as an asset on their financial statement. One way to arrive at that number is to contact your insurance agent and ask how much the contents of your home are insured for at the time of the homestudy. Depending on the condition of the contents, you may want to use a percentage of that number. Again, keep a record of how you arrived at the value.

For vehicles values, utilize the Internet. Finally, do not forget the cash value of life insurance, annuities, retirement accounts, college funds, etc. Your goal is the legitimately maximize your net worth. Just be reasonable, and document, document, document.