We all work very hard during our lifetime to accumulate money to take care of ourselves and our families. It is not easy.
Too often I hear of people who talk about the passing of a parent or spouse and say they did not know where to start regarding what the deceased person owned, where they had money invested, or who to contact about an account. Unfortunately, I have experienced that myself, and it was overwhelming.
As with most things in life, no one is working on your behalf but you. You are responsible for keeping up with your own business transactions. The best way to do this so that it makes it easier on your loved ones is to create some form of documentation system.
Here is the plan I started for my family after my dad’s passing. Maybe it will work for you.
1. Plan your own funeral. Write it all down and keep it updated. Many funeral homes will provide your with a form to complete to leave for your loved ones. I believe in getting a pre-need, cemetery plot, and outlining what you want to occur at the funeral (i.e. who will speak, pallbearers, songs, etc.). It helps the family so much to not have to worry over these details when they are broken-hearted.
2. Have an attorney prepare a will, an advanced directive and durable power of attorney for health care, and a financial durable power of attorney. I do not recommend preparing any of these yourself unless you are an attorney. By the time an error is discovered, it will most likely be too late to correct.
As important as having these documents prepared is knowing where the original is kept. I use an important papers notebook, which I will describe below. Wherever you decide to keep these documents, think through what makes sense. My sister has a copy of the will, and I have one as well. In my experience, an original will is needed when survivors meet with the attorney following a death. Due to this, and because someone other than myself also has access to the lockbox, I keep the original will in the bank lockbox.
My original financial power of attorney and my original medical power of attorney are kept by the person to whom I have given this power. If I have a car accident in the middle of the night, my POA is going to need to provide my original medical POA to the hospital immediately. I have copies of each document in my important papers notebook, with a note written on each saying who has the original and where that person has it stored.
3. Keep an important papers notebook. I have one on each family member. My notebook contains all my important papers or the location of the document, if not in the notebook. I literally keep an old-fashioned notebook in a safe place known to my family. You may choose to keep this information on a computer with scanned images and a note as to the location of the original document. If so, make sure your family has the password for the computer. You could do the same with a thumb drive.
This notebook is reviewed once a year and updated as needed. The information in it is a bit static, meaning it rarely changes.
Items included or referenced in my notebook include:
Will and any Codicils to Will
Financial Durable Power of Attorney
Advanced Directive and Durable Power of Attorney for Health Care
Photocopy of the Front and Back of Each Credit Card
Copy of Driver’s License
Copy of Passport, with reference as to where the original is kept
Anything related to my home: Deed, Homeowner’s Insurance, Loan information, Copy of Title Policy, Copy of Survey, Closing Papers, Loan Documents, etc.
Documentation such as appraisals on jewelry, art, etc.
Anything related to investment properties: Deed, Homeowner’s Insurance, Loan information, Copy of Title Policy, Copy of Survey, Closing Papers, Loan Documents, etc.
Anything related to Automobiles, Boat, Motorcycle, RV, etc.: Title, insurance policy, loan documents, etc.
Personal Insurance Papers, such as Life Insurance Policy, Health Insurance Cards and Benefits, Supplemental Insurance Policies, Medicare/Medicaid Information, Umbrella Insurance
Social Security card and statement
Pension plan information such as annual statement, summary of benefits, etc.
Any investment statements and original documents such as CDs, stock certificates, annuities, investment account agreements, and a list of assets
Copy of tax returns for last three or four years
Copy of any documentation being gathered for the current year’s taxes
4. Keep a folder of current investments and balances. This folder is more dynamic in that it changes often. Each time I get a new balance for a bank or investment account, I update the folder. The folder includes account location, balance, number and beneficiary. It is a great tool when you need to access money or provide a financial statement for a loan. I update the folder every month or two. My family knows where I keep this folder.
5. Tax notebook. As tax related expenses come up through the year, I log them in my notebook and file the receipt in the appropriate envelope. Read here for more information on how to make your tax preparation easy. If you die, your survivors will be preparing your tax return, so they need to know where you keep this.
6. After my sister and I had cleared out all our mother’s books following her passing, a neighbor told us she liked to hide her mad-money in books. We never knew. I have also heard a couple of folks mention that their mothers kept their mad-money in sewing patterns. Make sure your family knows where you keep your mad-money. You would hate for it to be thrown away or sold at a garage sale.
7. A colleague told me a story of buying a sewing machine at a garage sale and finding a diamond ring in a drawer. If you have hidden important things around your house, tell your family, or make a list and put it in your important papers notebook. If you have valuable things that you are not sure your family would know are valuable, tell them and write it down and put it in the important papers notebook. If you have family heirlooms, tell your family and write it down and put it in the important papers notebook.
Additionally, I keep a home notebook. It details how everything works, stores owner’s manuals and any warranty or guarantee information. It is not as vital and important to your survivors when you die, but it would help them be able to complete any seller’s disclosure regarding age of roof, age of air conditioner, etc.
This system or a system you design, will take a bit of time to accumulate and document, but once it is up and running, it won’t take much to maintain. However, it will be useful for you and your family in the future. A system such as this will help them hang on to the money you accumulated during your lifetime. Please don’t put it off!
Bonus Information: If you have a safe deposit box at a bank, make sure someone other than yourself can access it in the event of your illness or death. Often access to safety deposit boxes are frozen when a person passes away until a court allows entry. If someone else is on the signature card, that person would still be allowed access.
Please note: I am not an attorney or estate planner. Please seek the advice of a professional for legal documents and estate planning. I am just sharing information that has worked for me.