Now we all know the reality, none of us are getting out of this alive. But despite people knowing that intuitively, there’s still a lot of procrastination around this type of planning. Depending on where you look, only 30 to 40% of people don’t have an estate plan in place.
And while there are no statistics on this because it’d be impossible to determine, I can tell you from first hand experience as a financial advisor who talks to other financial advisor, that a lot of people are forgetful when it comes to their beneficiary designations. Leaving it blank, not updating it after a death or divorce, not considering what (if anything) you want to give the kids, are all topics way too common in the circles I spend time in.
But I want to talk about something on a similar level, but different than those two subjects. I want to discuss the importance of putting in place a “When I Die” folder. This is different from an estate plan because it’s not a legal document, and it’s not a place where you can designate who will receive your assets.
So what is it? It’s a set of documents that includes the most important financial aspects of your life, specifically designed to make it easier for your loved ones when you pass.
Why do you want this? I don’t think I’ve talked about this too much, but my Dad actually passed away pretty suddenly in 2017. And my dad was more involved in the day to day financial affairs than my Mom (he was also a financial advisor, so that obviously played a role in him being more involved). But, when he passed, we knew that he had put together a folder that laid everything out. So when it happened, we just pulled the folder from his office, and boom, everything we needed for all of his and my mom’s accounts was there. The trust, investments, insurance, etc.
Now: Think about this for a second. If you’re reading this post, I’m going to guess that you’re more interested in finances than your spouse. Just a guess but I think I’m right.
Okay, let’s also say that some idiot is texting and driving, swerves into you, and you die instantly. Your spouse is shocked, their whole world is literally turned upside down. They’ve got a million things on their mind. Do you really think they’re in a good position to track down all of your financial accounts? Every statement that they need? I’m sure they could get by. I’m sure they are smart enough to do it. But do you really want to put the onus on them in that time of grief?
OR, do you want to plan ahead and make it as easy as possible for them?
Now if you’re saying to yourself, “Eh, I don’t want to make it easy for em, I want them to struggle a little bit.” Friendly tip from your favorite financial advisor, DO NOT SAY THAT TO YOUR SPOUSE! Keep that thought to yourself. Just a little marriage advice from someone who isn’t married.
Okay, let’s say you are on board, and you want to put together a “When I Die” folder. Here’s what you should include:
What To Store:
-Your entire estate plan. Including Trust, will, powers of attorney for health care and financial decisions, medical directives.
-All financial statements (checking and savings accounts, all investment accounts)
-Pension and social security statements
-If you have a financial advisor, their name and contact information
-Any life and long term care insurance policies
-Loans (mortgage details, credit cards, personal loans, auto loans, etc)
-Memberships/subscriptions
-Optional: Password access to accounts. There are pros and cons to this. The pros are obviously convenience, and an easier transition. The cons include the accounts could be misused, there are increased security risks when you share sensitive info with more people, and you obviously lose some privacy. So I’m torn on this one. I’d personally want my spouse to have access to all my stuff, but the kids? I’m on the fence about that one. If you pushed me, I’d probably say no, and just keep it to you and your spouse.
I should also say that there might be more documents or more items you want to put in your personal folder. But I think these ones are the essential ones. Now the last question I want to address is…
How To Store It
Now that you’ve got it all assembled, we want to focus on where to put everything. I think you should aim for at least two, and maybe three, places.
First, this is old school, but you can print it out, put it all in a binder, and make a nice table of contents for so that it’s easy to go through. And then store that in a place in your house where you spouse and kids know where it is. If you want, you could put it in a fireproof safe, or you could just put it somewhere out of sight but known to your family.
Second, I would put this same information in some type of cloud server, like Google Drive, Dropbox, Box, iCloud, etc. I’m not preferential to which one. Obviously we want to have a company that does a good job on security and privacy. Another thing we want to think about is sharing access to that folder in the cloud with the people close to you. Also, you could also set the settings so that people with access to it, let’s say your kids, only have viewing access, so they can’t accidentally delete any files/folders.
Last, if you are working with a financial advisor, you likely have access to some kind of financial dashboard that captures and organizes all of your information. I would make sure you have everything there as well.
Alright, so that covers a lot. To recap:
-We don’t want to prastinate on getting organized for your passing the same way people procrastinate on an estate plan, or updating beneficiaries, or any of that stuff. Just because it’s not pleasant to think about doesn’t mean it isn’t going to happen. It will! So let’s just make sure we can take care of a small burden for our loved ones when that day inevitably comes
-We also have a list of things that we’d want to include in this When I Die folder, but feel free to add to it.
-And we talked about storing it in your house, as well as in the cloud, as well as with your financial advisor if you’re working with one.
And that’s all I got for today, I hope it’s helpful and I will talk to you soon.