When someone we love passes away, the grief can be overwhelming. And it can be compounded by paperwork. Piles of it.
Sorting it all out amid the grieving process can be doubly daunting. Is there a trust or even a will? Where did Mom want to be buried — or cremated? What happened to Dad’s military pension? Who’s their attorney? Where are their bank accounts?
It doesn’t need to be that way.
To avoid the financial and emotional chaos, a number of families and money-management professionals rely on a one-stop system: a document, a binder — even a single desk drawer — that contains all the financial paperwork we inevitably leave behind.
“It makes it so much easier (at a time) when people are under emotional stress that’s off the charts,” said John D. Winters, a Sacramento investment adviser. Having one designated place containing a list of all the essential documents and contact information “is the best tool a financial planner can deliver for families. I have one for my family.”
The documentation should cover your financial life, everything from an inventory of your stocks, bonds and IRAs to insurance policies and military pensions — even your airline frequent flier miles.
You can also include specific details such as what you want written in your obituary, who should take your pets and where you’ve hidden the key to the safe-deposit box.
For most parents, the goal “is to make it as painless as possible for their children. You don’t want your kids to struggle to look for things when you’re gone,” said Sacramento estate planning attorney Trudy Nearn. “By getting it all in one place, they get their kids ready to take over.”
And it can go far beyond monetary possessions.
“It’s not only what’s in your bank account, but what’s in your heart,” said Donna Pagano, a certified financial planner and co- author of the “Family Love Letter,” (www.familyloveletter.com [3]), a financial planning booklet that includes sections to jot down your family history and remembrances.
Pagano, for instance, recommends leaving letters to your children. In the late 1990s, the Westlake Village, Calif., resident and her husband were devastated by the unexpected heart attack of a close friend, a father of two young children who would never know their dad. That prompted the couple to begin writing letters to their three children — all now in their 30s — during various stages of their kids’ triumphs and struggles. Pagano said her letters, which are intended to be read after she’s gone, recount her pride in who her children are and the choices they’ve made in life.
On the practical side, the documents can include funeral arrangements – or if you even want them. The Family Love Letter, for instance, includes space to insert the inscription you want on your tombstone and who you don’t want at your memorial service.
“I’ve had clients say they want their ashes scattered in the sand trap on the 17th hole of Pebble Beach,” said attorney Nearn, who puts everything in a binder for clients.
Even if that instruction isn’t legal in California, Nearn said, she includes it in the person’s advance health care directive so the family knows what the parent wanted.
Rashida Lilani, a Roseville, Calif., certified financial planner, created her own checklist for clients that documents everything from investments to passports.
By filling it out now, parents can prevent the loss of valuable information due to dementia or forgetfulness. “What if Dad bought a $500,000 life insurance policy but never told Mom about it?” she noted.
The process of sorting and documenting your financial life can ward off potential problems and yield unexpected benefits.
For instance, without a list of magazine or satellite radio subscriptions, those contracts could continue dinging bank or credit card accounts for months after you’re gone.
Pagano knows a woman who discovered her mother had inadvertently renewed numerous magazine subscriptions through 2020. After her mother’s death, she called and got nearly $1,000 refunded.
It also can be a good time to double-check details, such as whether the correct beneficiaries are on your life insurance or pension accounts.
In one instance, Pagano said, an elderly widow whose husband served in World War II as a young man had a small military pension. When he died, decades after his military service, his widow discovered that she and their children weren’t listed as beneficiary; his first wife was.
The process also can be a reminder to jot down where cash and valuables are stored.
Financial advisers love to recount clients’ stories of where they’ve found cash left behind by parents or relatives. The woman whose uncle had stashed money in his prosthetic leg. The relative who kept cash in a sealed pipe against his house. The elderly woman who lined up paper bills under her living room rug. Or a parent who left wads of bills stuffed into the attic insulation.
“The sad thing is, the elderly often forget where they’ve hidden money,” said Pagano. “Tell somebody: your kids, your attorney. Write it down and lock up (the information). At least let somebody know.”
The longtime financial planner said she learned that lesson herself. When a wildfire forced an evacuation of their Southern California home a few years ago, she was in New York on business. By phone, she frantically sent her husband scurrying around their house, pulling out her secret stashes of cash from drawers, closets and clothes.
Today, she keeps her extra cash in a single place: a bedroom safe.
While filling out the paperwork can feel tedious, it doesn’t have to be exhaustive. You can take shortcuts, like putting all your credit cards — front and back — on a copier. Or compiling the inventory on your computer and storing it on a memory stick.
On his personal finance website, Dave Ramsey suggests organizing it “in a way that anyone can find a specific document in 30 seconds. All files should be clearly marked, in order, and easy for a grieving family member to find.”
To ensure that your financial documents or file folders don’t wind up in the wrong hands, it’s best to keep them in a safe or a locked, fireproof filing cabinet. Tell a trusted friend or family member where to find the key or combination.
For many clients, it’s a triggering event, such as the death of a spouse or parents, that focuses the survivors on gathering their own financial paperwork.
And quite often it’s women who initiate it, says financial planner Lilani.
“Women think about the emotional side of making sure it gets done right,” said Lilani. “Moms know their children are busy and want to make it easier. It’s another act of love.”
YOUR FAMILY LEGACY: EVERYTHING IN ONE DRAWER
Financial guru Dave Ramsey recommends what he calls a “legacy drawer”: a place to keep the essential documents of your life so your family can easily find things after you’re gone. Here’s his list of 11 essentials:
1. Cover letter — Nothing fancy, just a single letter to introduce loved ones to the drawer’s contents.
2. Will or trust — Copies of your will or trust, including names of the executor and person with power of attorney.
3. Financial accounts — List anything in your name, including account numbers and amounts. This includes credit card, bank, retirement accounts.
4. Funeral plans — All instructions should be noted so family can fulfill your wishes. If married, include both spouses’ wishes.
5. Insurance policies — List all health, life, auto, homeowners’ policies, etc. Include who is covered, policy numbers and contact information.
6. Vital documents — Include birth certificates, divorce papers, military and Social Security records, car and boat titles, mortgages and property deeds.
7. Legacy letters — Since the intent is to guide your family after you’re gone, include personal notes or letters to loved ones.
8. Monthly budget — Add a copy of your budget, including bills to pay, so your family is prepared to handle household expenses.
9. Tax returns — In case of an IRS audit, your state and federal tax returns can be like an insurance policy.
10. Safe-deposit box — Indicate where it’s located and who has access. As backup, keep a copy in your box of the legacy drawer’s contents.
11. Passwords — Write down all passwords, user names and PIN numbers so family can access computer, cellphone and financial accounts.
Source: MCT Information Services
