No one wants to think about what happens when they're gone. It's natural to push it aside. Yet, 2020 has given us a vivid, stark window into the "life can change on a dime" perspective. If you were to pass away or become incapacitated, your loved ones may be responsible for making challenging decisions about your health or estate. During a time of emotional distress or grieving, it’s difficult to think about money and how to find critical documents. That’s why it’s important to put your documents in one centralized place. By doing so, you’re not only ensuring your wishes are understood, but also planning to help loved ones make arrangements in your absence.
Start Getting Organized Today
First, find a secure location, such as a password-protected online vault (like Adviceworks), fireproof home safe, or bank safe deposit box. Having documents in both a physical and digital location is ideal. Next, decide which documents should go into the secure locations. If you want to minimize clutter, you may consider printing out a list of websites to online statements with their corresponding passwords. Make sure to include any documents containing crucial financial information. Be sure to tell your loved ones where to find your documents and provide them with password information or permission to access to your safe deposit box or digital vault.
- Quarterly and annual statements: IRAs, 401(k)s, funds, brokerage accounts, statements from last quarter, and statements from the end of the previous calendar year (that is, the last Q4 statement you received).
- Healthcare benefit information: Medicare or Medicare Advantage Plan, group health plan, individual health policies, long-term care policies and contact information for insurers, HMOs, your doctor(s), and your insurance agent.
- Life insurance information: Listing of when level premiums on straight term policies end, the death benefit, the required premiums on any policy, and the present cash value on any permanent life policies.
- Beneficiary designation forms: Beneficiary designations often take priority over requests made in a will when it comes to 401(k), 403(b), and IRA plans. Retain copies and review them with a financial planner, CPA or attorney so they can help you gauge the tax efficiency of the eventual transfer of assets. Recent law changes like the SECURE Act will have a significant impact on your beneficiaries.
- Social Security basics: If you haven’t claimed Social Security benefits yet, include your Social Security card and W-2 form from last year (or Schedule SE and Schedule C plus 1040 form). Also include certified copies of your birth certificate, marriage license, divorce papers, military discharge paperwork, and proof of citizenship, if applicable.
- Social Security statements: Take a screenshot or print a copy of the statement that tracks your accrued benefits.
- Pension matters: Collect special letters or bulletins from your employer, your individual benefit statement, your summary plan description, and contact information for someone at the employee benefits department where you work.
- Real estate documents: These include deeds, mortgage documents, property tax statements, homeowner insurance policies, and a list of the contents in your home and their estimated value.
- Estate planning paperwork: Your estate plan, any trust paperwork, a will, and a durable power of attorney or healthcare directive.
- Tax returns: At a minimum, have a copy of your 1040 and state returns from the prior year.
- List of digital assets: Contents of a cloud, a photo library, social media pages, and all corresponding passwords.
Planning ahead for the unexpected is a way to show your loved ones you care. Don't hesitate to reach out if you have questions or thoughts to share. And if you find this information helpful, feel free to pass it along to someone you think might need it.
One final thought - if it's been more than three years since your estate plan was last reviewed, now is the time to revisit and make sure it's all in order. A lot can happen in three years.