This is a guest post from Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the adviser for The Motley Fool’s Rule Your Retirement service. He contributes one new article to Get Rich Slowly every two weeks.
I hate to get all morbid on you, but if something happened to you today that temporarily or permanently (or immortally, depending on your religious persuasion) put you out of commission, would your family be able to locate all the necessary papers, people, and passwords necessary to continue or settle your affairs? Documenting this information is one of the 10 steps that I consider important to any estate plan.
What should be in this collection of sensitive material? Here are some ideas.
Where to Go for Help
Include the phone numbers and addresses of professionals you’ve worked with. This will help in sorting out your affairs, and give you the opportunity to recommend professionals whose services you think your family may need. This list could include:
- Financial advisor
- Insurance agent
- Real estate agent
Instructions and Legal Documents
Your family may have to make some big decisions in the event of your incapacitation or expiration. It will be much easier for them if they can locate your important legal documents, as well as any other instructions, including:
- Will, living will, health-care directive, powers of attorney
- Instructions for your final arrangements, as well as documentation of any pre-paid funeral arrangements
- Your obituary (if you want to save them the trouble)
- Trust documents
- Marriage license
- Past tax returns
- Deeds to property
- Vehicle registrations (car, boat, motorcycle, plane)
- Permits for firearms or other regulated items
To make sure your assets go to the people you want (and don’t become long-forgotten dormant accounts), provide the account numbers, access information, beneficiary information, and even copies of statements from these accounts:
- Checking, savings, bonds
- Credit cards
- IRAs, 401(k)s, and other retirement accounts
- Employer-provided benefits
- Disability insurance
- Life insurance
- Brokerage accounts
- Mutual funds
Taking Care of the Goods
You’ll likely leave behind lots of Stuff. That Stuff will be more valuable if your heirs know where to find:
- Owner’s manuals
- Warranty information
- Items you’ve loaned to others
- Documentation substantiating authenticity or history
Passwords, Combinations, and Secret Stuff
In our security-minded world, we have come up with many ways to protect our assets and privacy. Unfortunately, this heightened security can prevent loved ones from accessing important information. Be sure to document:
- Computer passwords
- Account logins and passwords
- Location of safe deposit boxes
- The combination to the safe
- Where to find all the keys
- Any place you’ve hidden valuables
Recurring Bills and Payments
Increasingly, Americans use automatic bill paying and automatic transfers to cover monthly bills. Some of these should be kept in force after you pass; for example, the mortgage should still be paid. Other regular bills, on the other hand, should be canceled. Indicate any recurring bills that your family might now know about, such as:
- Gym membership
- Club fees and dues
- Cable TV or satellite radio
- Entertainment services
- Magazine and newspaper subscriptions
- Any other automatic transfers, such as to a favorite charity or investment account
Hide, Update, Repeat
Obviously, you don’t want all this information on your coffee table or your Facebook page. Find a good hiding place, and let just a few trusted people know where it is. When my wife and I went to China to adopt our daughter, we put one copy of our list (and legal documents) under our bed and another in one of my desk drawers at The Motley Fool, and told two people where to find the copies in case anything happened to us. (I’ve since removed both copies, so don’t bother rooting through my stuff!)
Also, this doesn’t have to be an impersonal or boring document. One of the longtime subscribers at Rule Your Retirement has put all his important information in what he has called “A Letter From Your Dead Husband,” which he described thusly: “It is both an act of love for my wife and a personal statement to my dead father, who I loved very much. But Dad was a lawyer who never prepared for his own death at 63, and who created tremendous problems because of his lack of preparation. I hope not to make his mistakes.”
He begins the letter to his wife:
I want you to know that I’ve enjoyed every minute that I’ve been able to think about our future together as I’ve done this financial planning. But, if you’re opening this letter something has happened. That makes the planning all the more important, and please know that you are well cared for.
He then describes where all everything can be found, and offers advice about what to do with their assets, who to ask for help (and who not to ask), and other nuggets, such as, “I hope that you find someone else and are happy. Having said that, I also suggest that you establish a pre-nuptial agreement to protect your funds.”
Finally, an observation from another Fool reader:
Review the list at least annually, with a final once-over when you figure the time is near. My mother’s list was 20 years old. We tore the house apart looking for the favorite nightgown she wanted to be buried in until Dad finally told us she’d worn that out years ago. The two [surviving] requested pall bearers wouldn’t fit down the aisle of the church with their walkers and the casket. Thank God for cousins.
So do your family a favor and leave behind a folder that contains all the important information. And do yourself a favor by sending this article and the other on estate planning to your relatives.
After all, the family that plans together…pays fewer lawyers.
J.D.’s note: Ohmygoodness. This article is so timely for me. In fact, I put off running my “I’m back!” article today just to run this. Kris has been asking me for months to create a Death List — a collection of the info she’d need if I were to kick the bucket. “I’ve been bugging you to do this for six months, and then you go off on a potentially fatal trip to Alaska,” she told me this evening. I’m bookmarking this article for the coming weeks.
Also, I should note that two Get Rich Slowly readers offer services to help collect this sort of information. Charlie Park from PearBudget has a free service called Emergency Binder. If you’re looking for something a bit more robust, check out the affairs organizers from reader Mark Gavagan.