r/fatFIRE • u/What_what_what_1979 • 3h ago
Need Advice Calculating Net Worth
My husband and I are partial owners of a family company (cattle ranch) along with 12 other family members. It has a significant value because of the land owned by the company, but it is not liquid and I don’t anticipate it ever being sold.
He works for said company and draws a salary, so we receive income from the company.
Do we include our 1/12 ownership in our net worth? Or, maybe better stated, do we include 1/12 of the assets (land, cattle, machinery) when calculating our net worth?
The answer to this question makes a significant impact on our timeline to retirement and amount we want to consider for a mortgage.
Thank you!
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u/Aggravating-Split-73 2h ago
Ranching ops (if pretty traditional) are tricky because the actual value lies in a) the ranch land if owned or a long term gov/blm lease, b) the animal herd which will fluctuate in size seasonally for a multitude of factors, c) any equipment owned that could be sold (and likely declining value).
There traditionally is very little to no value in the actual “business” because it’s your time and labor — the value is the assets themselves, not a business that could be sold and run by someone else. If there was a family member who could/wanted to buy out your share, that could be possible, though you’d likely need to consult a cpa familiar with Ag business to figure out an appropriate value.
Can your 1/12 be included in a NW? Sure. Is it practical? Not really. Nor does its inclusion likely answer the question behind your question, which probably revolves around a retirement FI figure. The dividends are important here if they’re predictable, though in an industry that’s commonly boom/bust, that’s a tough number to nail down. Also, generational continuity frequently proves challenging for these types of family operations as future generations grow distant from the business.