List of Net Worth Requirements For Private Placement Securities

Net Worth Requirements

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List of Net Worth Requirements For
Private Placement Securities

The following is a list of net worth requirements for typical investors we encounter:

Individuals - Minimum net worth, or joint net worth with spouse, inclusive of home, home furnishings and personal automobiles of more than $1,000,000 or individual income in excess of $200,000, or joint income with spouse of $300,000, in each of the two most recent years, and a reasonable expectation of reaching the same income level in the current year.
Entities - Corporations, partnerships and irrevocable trusts must have total assets in excess of $5,000,000, and not be formed for the purpose of acquiring the investment, with an additional requirement for trusts that the person running the trust be a sophisticated investor able to evaluate the merits and risks.
LLC's - Same rules as above depending on whether the LLC is a sole member (ignored for tax purposes, so the individual net worth or income requirements apply) or has elected to be taxed as a partnership or corporation.
Living Trusts - Until the person dies, his living trust is revocable and is ignored for tax purposes so the rules for individuals apply. After the person dies, the trust rules ($5,000,000) will likely apply, but check with your tax advisor.
If the entity itself does not have a $5,000,000 net worth, it may still qualify if every owner of the entity can qualify under #1 above.
Retirement Plans - No minimum if the plan is a Qualified Plan and the fiduciary making decisions is a bank, savings and loan association, insurance company or registered investment advisor, otherwise net worth in excess of $5,000,000 unless the plan is a self directed plan with investment decisions made solely by persons who are accredited investors.

There are other entities mentioned, but we do not usually encounter them. Please refer to your advisor or Regulation D for other entities. A TIC, DST or oil & gas buyer must meet the net worth requirements to be an "accredited investor". Generally such offerings are only made available to accredited investors.