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Estate Planning Beyond the Will

January 2, 2019 | Posted in: Insights, Wealth Strategies

If something happened to you, would your loved ones know what you have, where it is and what your wishes are? When considering estate planning, most individuals are aware that they should prepare a Will to direct the disposition of their assets and Advance Directives to state their health care wishes.  But preparing for the end of life goes well beyond these basic legal documents.  Providing loved ones with a thorough inventory of important documents, assets, passwords and even the location of safe deposit keys can ease an overwhelming task for those left behind.

Consider the experience of my friend whose husband passed away unexpectedly, leaving her to piece together their finances while mourning her incredible loss. Her husband took full responsibility for handling their financial affairs, including the payment of bills and managing investments.   He had embraced technology and was doing most of the bill paying online with some automatic drafts set up and other bills being paid month-to-month.  In an effort to “go green”, he had elected to view all investment statements, bank accounts and bills online.  When he passed away, all of the log-ins and passwords went with him, along with the location of all the different accounts he was managing online.

Not being technologically savvy, my friend was distraught over the task of unraveling the financial mystery left by her husband. She was terrified that bills were not being paid because she did not know which ones were set up as monthly drafts from bank accounts or credit cards and which were being paid month-to-month.  Since she wasn’t receiving statements, there was no notification by mail as to what might need to be paid or require her attention.  Additionally, she was concerned that investments were not being tended to properly because she was not familiar with the location of their financial assets and did not know how to access them online.

You might say that there are easy ways to resolve these issues, especially if she was named as executrix of the estate. This could be a correct assumption if you are technologically savvy and are in an emotional frame of mind to deal with the details.  Unfortunately, this was not the case for my friend.  Her husband did not intend to leave her with this undue burden that could have easily been avoided with a little advanced planning.  The simple solution to this issue would have been to leave a listing of accounts with their location, important passwords and key contact information.

After taking care of basic legal documents, consider taking the following steps to assure your loved ones have access to important information that can ease the stress of managing a difficult process:

Prepare a financial statement listing all assets and liabilities individually. Don’t forget to include information on pensions or other retirement benefits that may be paid to a survivor.  Place this along with your estate plan documents and update every couple of years to make sure it reflects current information.

Compile a financial inventory that lists all accounts including banking, investments, credit cards, insurance policies and loans. Include in this listing the company name, location, account number, contact name and phone number for each related account.  Make note of companies and services that direct-debit or draft from your bank accounts and credit cards.  In addition, list all advisors such as your attorney, accountant, financial advisor, insurance agent and banker along with their company name, location and phone number.  Provide a list of all legal documents and their location with contact information, as appropriate.  It is recommended that the financial inventory be placed along with your estate plan documents in a secure location at your home or in a safety deposit box.  It is also advisable to inform your loved ones of the location of this document and where a key can be found if stored in a lock box.

For all online accounts, including financial accounts, e-mail, social networks, blogging sites, frequent flier accounts, credit cards, shopping sites and online bill-payment accounts such as those established with utilities, create an inventory that lists log-in and password credentials, as well as answers to “secret” questions. Of course, the security of this list is critical so you may consider a password protected document stored on your computer or an online password management system that requires a master password to unlock the data.  When you have completed the inventory, document the location and master password needed to access it in your financial inventory that is stored in a secure location.

Remember to leave instructions for less obvious things such as the alarm system, sprinkler system or the location of the key to the storage shed. Last, but not least, consider documenting medical history so that children or grandchildren will know if there is a family history of allergies, heart disease, cancer or other diseases.

Taking these extra steps may seem to be an onerous and unpleasant task. However, consider the alternative of your loved ones sorting through these details without your knowledge or help.  You can rest assured that those you care most about will reap immeasurable benefits from the extra effort and time investment.