What would happen to your family and your finances if you were to fall over dead right now? No time for a phone call, no last minute instructions, you just died.
Do you think this couldn’t happen to you? It almost happened to me several years ago. I had an unexpected brush with death where I came extremely close to cashing it all in, leaving my wife and two kids on their own. Fortunately for me (and my family) I escaped with nary a scratch. I was too dense at the time to realize the mess I almost left behind. So what, you ask, has made me finally realize the ignorance of my early thirties? In mid-April my father-in-law passed away unexpectedly, leaving his wife a puzzle of finances and life-insurance to sort through.
My father-in-law was a very nice person and very astute entrepreneur and business man, but his personal record-keeping and organization methods took a fair bit of effort to sort through. I was out of the country at the time, so I was not able to help much. Rather, my wife and one of my mother-in-law’s friends did most of the work organizing the financial records after his death. Their time wasn’t spent so much organizing records as much as it was spent searching for records.
By the time I arrived, most of the tedious work was done. Insurance policies had been found and bank records had been located. But it took several days of ups and downs before it was all sorted out. Hopefully they found everything.
I learned several financial success lessons from this experience. Some my father-in-law did well, like provide enough insurance to allow his wife to live comfortably. Others, I think he could have done better, like invest in things other than just his business and make it easy on his loved ones to pick up the financial pieces after his death.
After this experience, I made a list of several things I need to improve in my own financial plan that I think are extremely important. I’ll share them with you in future posts. My point here today is that I think you need to first focus on organizing all your information so that it can be easily found, accessed and used.
The first thing is to determine what type of information your loved ones might need in your absence. Think about what things you do almost exclusively for your family. Are you the Money Earner/Saver like I am? If so then you likely have the organizational structure of your family’s banking, investments, taxes, insurance and other similar items tucked away in the corners of your brain. Unfortunately your brain will not be around after your death. You need to get this info out of your brain and on paper or the computer where those you trust can find it. Better yet, tell them where it is! You need to organize your affairs in a manner that is clear, understandable and easily accessed.
For me this means ALL the financial and money related information needs to hit a computer screen.
Personal information is equally important. While making some phone calls on behalf of my mother-in-law I was asked several times for dates of birth, dates of marriage, social security numbers etc. Trust me, it’s not fun to have to ask a grieving widow what her husband’s social security number is. Do you know your spouse’s number off the top of your head?
I’ve begun the process of organizing this type of information. Here are the pieces I’m bringing together in a “one stop shop” document on the computer:
1. Personal Information - I’m including information on my immediate family (me, my wife and our two kids). While some pieces might seem trivial, your significant other may not be the one using the information.
- Names
- Dates of birth
- Social Security numbers
- Dates of marriage
- Location of birth and marriage certificates
2. Banking and Investment Information - For each institution where I have a bank account (checking, savings, money market, credit cards, loans, mortgages etc), investment or brokerage accounts, I’m including the following:
- Institution name - including a phone number and web address
- Internet banking log on information - User IDs and passwords
- Account numbers - including a description of its use/purpose and any “automatic transfers”, beneficiaries and ownership information (joint, individual etc.)
3. Insurance Information - For each insurance policy I have (home, auto, life, boat, etc.)
- Institution name - including a phone number and web address
- Internet access log on information - User IDs and passwords
- Account numbers
- Life insurance pay off amounts and beneficiary
- Policy documents location
4. Vehicle Information
- Title and maintenance records location
5. Professional Advisors - Names and phone numbers of:
- Realtor
- Attorney
- Accountant
- Financial Advisor
As you bring all this information together, you’ll need to make sure you safeguard it appropriately. It’s not something you’ll want to leave lying around the house or on an unsecure home network. In today’s world of internet access, letting the wrong person have access to it could cost you everything….while you’re still alive. I’ve password protected and encrypted my records to keep them safe. I’ll be adding instructions in my Will on where the file is located and how to access it.
It’s no small task and it’s not much fun planning for your exit from this world, but it’s absolutely essential work. What preparations have you made? What have I missed in my organization effort?
- Jeff
Learn to manage money and mind your own business.
1 response so far ↓
1 Manage Money at The Carnival of Personal Finance | Minding My Own Business // Oct 13, 2008 at 10:58 am
[...] Best of MMOB Personal Finance Roles Financial Success - A Team Sport Prepare For an Unexpected Death Manage Your Portfolio My Real Estate Investment [...]
Leave a Comment