Preparing and organizing your financial information will bring peace of mind to you today and relieve your loved ones’ burden in the future.
The goal is to make and maintain an accurate list of accounts and passwords and relevant contact names at financial institutions. Whether you are a parent, near retirement, or both, informational instructions will spare your family a lot of work and heartache. I can assure you the stress that occurs when children are sorting through the boxes of paperwork left behind trying to figure out where to even start sorting out their parents’ affairs and assets.
The assumption is that you already have an estate plan with necessary documents such as a living trust, will, durable power of attorney and advance health care directive, etc. If this is not the case, then retain an attorney to create these most important legal documents. Many people assume that you only need an estate plan if you have greath wealth. This is not true. There are basic documents that every person over the age of 18 should have in place.
Once you have your basic estate planning documents in place, or even if you do not, you should focus your attention on the written steps your family should take if something happens to you. These steps should include a list of all salient information: names (think bankers, lawyers, insurance agents) and their contact information, digital and hard assets, accounts, bills, debts, credit cards, insurance policies, annuities, pensions, PINs, and passwords. Include a list of all companies and invoice types (monthly, quarterly, annually) that automatically debit money from your checking account. This list is about anyone and anything that is part of your financial life.
Digitize your information in a word editor or spreadsheet and store it on a flash drive. Print hard copies of your instructions and information and store them with other important documents like your living trust, will or the deed to your home. Are you low-tech? There is no shame in a binder or spiral notebook containing this information. It is a bit more cumbersome to update, but many people choose to leave instructions to family members in handwritten letters, notes, and notebooks. Be certain your handwritten instructions do not vary with multiple papers that are scattered and undated. Stick to a standard methodology and throw out old documents that are outdated or no longer relevant. They are likely going to cause more confusion.
Keep these records accurate with annual updates or any fundamental shift in how you (or another person) manage your finances. Be sure your trustee or executor and other relevant family members know the location of this information. If you want your wishes to remain private until you are incapacitated or die, seal flash drives and hard copies in envelopes.
Preparing your financial records for your family can be time-consuming, but it is not complicated. The true goal of this task is organization and consolidation. And it is a very important financial task to undertake.
Ensure you are not overlooking anything by consulting an estate planning attorney, who will make sure you have all of the necessary legal documents in place. We provide these services and would be happy to talk with you about your planning needs.