Provided by Mark K. Lund, Wealth Advisor
Who wants to leave this world with their financial affairs in good order? We all do, right? None of us wants to leave a collection of financial mysteries for our spouse or our children to solve.
What we want and what we do can differ, however. Many heirs spend days, weeks, or months searching for a decedent’s financial and legal documents. They may even discover a savings bond, a certificate of deposit, or a life insurance policy years after their loved one passes.
Certainly, you want to spare your heirs from this predicament. One helpful step is to create a “final file.” Maybe it is an actual accordion or manila folder; maybe it is a file on a computer desktop; or maybe it is secured within an online vault. The form matters less than the function. The function this file will serve is to provide your heirs with the documentation and direction they need to help them settle your estate.
What should be in your “final file?” Definitely a copy of your will and copies of any trust documents. Place a durable power of attorney and a health care proxy in there too, as this folder’s contents may need to be accessed before you die.
Copies of insurance policies should go into the “final file” – not only your life insurance policy, but home and auto coverage. A list of all the financial accounts in your name should be kept in the file – and, to be complete, why not include sample account statements with account numbers, or, at least, usernames and passwords, so that these accounts can be easily accessed online.
Social Security benefit information should also be compiled. That information will be essential for your spouse (and, perhaps, for a former spouse). If you happen to receive a pension from a former employer, your heirs need to know the particulars about that.
They should also be able to access documentation pertaining to real estate you own.
If you have a safe deposit box, at least one of your heirs should know where the key is – otherwise, your heirs will have to pay a locksmith, directly or indirectly, to open it. Along those lines, the combination to a home safe should be disclosed. If you have trust issues with some of your heirs, you can only disclose such information to the trusted ones or to an attorney.
Contact information should be inside the “final file” as well. Your heirs will need to look up the email address or phone number of the financial professionals you have consulted, any attorneys you have turned to for estate planning or business advice, and any insurance professionals with whom you have maintained relationships.
Other documentation to include: credit card information, vehicle titles, and cemetery/burial information. Be sure to include your social media and e-commerce passwords for sites like Facebook, Twitter, LinkedIn, Pinterest, Amazon, and eBay. Some social media sites may require a copy of your death certificate or obituary notice before allowing any other party to access your profile. Furthermore, you may also wish to leave a letter or note instructing your heirs on how the world should be notified of your death.1
Your heirs will want to supplement your “final file” with contributions of their own. Perhaps the most important supplement will be your death certificate. A funeral home may tell your heirs that they will need only a few copies. In reality, they may need several – or more – if your business or financial situation is particularly involved.
A “final file” may save both money & time. If documentation is scant or unavailable, settling an estate can be a prolonged affair. As National Academy of Elder Law Attorneys president Howard Krooks told Reuters, “It could be six months or longer if you don’t have the paperwork in order.” In the worst-case scenario, probate consumes 5% or more of an estate.2
One other important step may save your heirs money & time. If you add the name of an heir to a key bank account, that heir can pay a hospital bill or make a mortgage payment on your behalf without undue delay.2
Be sure to tell your heirs about your “final file.” They need to know that you have created it; they need to know where it is. It will do no good if you are the only one who knows those things when you die.
You can compile your “final file” gradually. The next account statement, income payment, or real estate or insurance newsletter than comes into your inbox or mailbox can be your cue to tackle and scratch off that particular item from the “final file” to-do list. Yes, it takes work to create a “final file” – but you could argue that it is necessary work, and your heirs will thank you for your effort.
Mark Lund is the author of The Effective Investor and provides investment and retirement planning for individuals and 401k consulting for small businesses. Advisory services offered through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm in Utah. Call 801-545-0696 for more info.
Citations. 1 - marketwatch.com/story/13-steps-to-organizing-your-accounts-and-assets-2016-03-03 [3/3/16] 2 - reuters.com/article/us-retirement-death-folder-idUSKBN0FK1RW20140715 [7/15/14] This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by MarketingLibrary.Net Inc., for Mark Lund, Mark is known as a Wealth Advisor, The 401k Advisor, Investor Coach, The Financial Advisor, The Financial Planner and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm providing investment and retirement planning for individuals and 401k consulting for small businesses. Stonecreek is located in Salt Lake City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, and American Fork City in Utah.
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