When it comes to important documents, some people are detailed filers who know where every bit of information is. Others are “organized pilers” who may know where their own documents are—but does anybody else?
In an emergency or the event of incapacity, could those who need to know—adult children, caretakers, or others given power of attorney—quickly find the documents and information such as bank account numbers, house deeds, wills, and tax returns that they need in order to continue taking care of business?
Scavenger Hunt
Now is the time to have the conversation with spouses, loved ones, and/or designated caretakers to set them up for a smooth and successful transition when needed especially after everything that has happened in 2020.
Listen to their concerns. Make sure they know all the little things are taken care of as well as the big issues. Start keeping lists of all the things that could help if they need to take over your responsibilities. Sit down and record the names and phones numbers of the first people to call and note how they could help. Record the website addresses and login credentials of the sites used for planning, the locations of copies of wills, tax returns, insurance policies, and other important documents. Your caretakers might know about these sites and documents, but could they find and access them?
This kind of scavenger hunt—looking for legal documents, bank accounts, insurance policies, credit cards, online accounts, and the like—is very difficult for a person is grieving or dealing with a multitude of caregiving issues. That is why you should take the necessary steps now, before a potential crisis arrives, to get your records together.
Plan Ahead
Whether you choose to go electronic or stick with paper, there are steps to follow to organize your financial documents.
Focus on three questions. Who should know about your documents? What does each document do? Where is each document located; is it easy to find when the time comes?
Who? This is about proactively designating someone to manage your affairs as power of attorney or executor, allowing them to legally act on your behalf. Once you have chosen someone, be sure to ask them before designation. If the topic is too uncomfortable to discuss in detail but they are agreeable, at the least tell them where to find all the key information, whether it is simply in an envelope or file folder in your home or another site, on your computer, or available online.
What? Develop categories for bank accounts, insurance policies, investments, online accounts/passwords, credit cards, etc. For each category, think of the specific information you want to collect. This can be managed in spreadsheets or in a Word document, but you do not need to use a website or even a computer. You can manually write it all out and compile a binder.
Leave a roadmap of documentation for insurance policies, credit cards, bank account numbers, investments, IRAs, 401(k) or 403(b), wills, power of attorney, trusts, custodial accounts, Social Security, and guardianship designation. In this digital age, remember to document online accounts and passwords. For pensions, include contact information including the firm handling distribution, person in charge of account, and the job or union where the pension was earned. For insurance policies, specify what type (long-term care, home, vehicle, life) along with contact information for agents and policy numbers. For 401(k)/IRA retirement accounts, leave contacts for brokers, financial institutions, and financial advisers’ names.
For bills, include utilities, cable, department store, and credit cards. Log the amount and due date for state and local property tax (with number for tax adviser) and the contact information of the property tax bureau to which they are paid. Note which payments are automatically withdrawn from a checking account or charged to a credit card, such as gym memberships, subscriptions, and charity donations. File unexpired warranties for items such as appliances, windows, roof, kitchen cabinets, sprinkler system, security cameras, electronics, medical equipment, exercise equipment, etc. (Toss any that are no longer valid).
For legal documents, specify the location of your will, trust, power of attorney, information about ongoing lawsuits or settlements, attorney fees paid and due, and contact information for attorneys.
For mortgages, include receipts, updated documents such as the sale of the mortgage, monthly due date, balloon payment due date, payoff date, and your customer service number.
For loans, both personal and student, specify location of the payment book if paying by mail. Include any signed agreements and payments made, customer service number, loan number, and account password if paying online.
Where? Think about where your critical information is stored. Can it be found easily? In addition to passwords, you should make other personal information readily accessible. These items include:
- Instructions in case of death: Be sure to include details such as burial arrangements or living-will wishes.
- Important logins or security codes: Outside of website logins, list your computer password, your phone PIN, the code to the fireproof safe, and so on.
- Important contacts: Indicate who to contact at your workplace, as well as your lawyer, accountant, will executor, and insurance agents.
- Locations of valuables and critical papers: Note the whereabouts of wills, passports, Social Security cards, birth certificates, and any other legal documents that are difficult to get copies of.
Cloud, Bank?
If you shift to paperless documents, ensure that your home network is secure and that the documents and your personal computer are password-protected. Be sure to quickly update the password that is automatically assigned to you during a new internet installation. Use a password generator or manager. Periodically update your antivirus software and make sure you have a firewall. If you receive account statements and notifications electronically, consider changing your password every six months to a year, and never access your financial information on a public network (i.e., coffee shop, hotel)! When storing documents electronically, you can either save them locally on your computer or research websites that offer services to store and organize your important documents in one place.
As digital records and cloud storage become the norm, the use of a safe deposit box seems to be disappearing. However, you may still need to produce certain original documents. Note that access to your safe deposit box could be even more limited during emergencies. The COVID-19 pandemic has reduced operating hours for some bank branches. The best advice: use both cloud storage and safe deposit or home safe. Hard-to-replace items that you might need frequently, such as your passport, are best kept in the home safe, while other important items you rarely need can stay in a safe deposit box.
It’s fine to keep copies of your own will, your spouse’s will, and any wills in which you’re named the executor in a safe deposit box. However, do not store the original copy of your will there—especially if you are the sole owner of the safe deposit box. Here’s why: after your death, the bank will seal the safe deposit box until an executor can prove he or she has the legal right to access it. This could lead to long and potentially costly delays before your will is executed and your heirs receive their inheritances. This can also be true for living wills.
These are the documents you could put in a safe deposit box:
- Birth certificates and adoption papers.
- Social Security cards.
- ID cards and naturalization papers.
- Marriage and/or divorce papers.
- Copies of your will and living will.
- Power of attorney papers.
- Title papers for vehicles.
- Deed to your home.
Whichever method you choose, having all your vital information in one easily accessible place can be comforting for both you and your loved ones.
One more thing: remember that this is not a one-time effort. You need to review things periodically to keep your financial information up to date.
As always, if you have any questions about this article or any financial questions in general, please reach out to Bowen Asset at info@bowenasset.com or (610) 793-1001.
Disclaimer
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