The Paperless World Can Leave Heirs In The Dark

As people increasingly go “paperless”, using the online features of banks and brokerages to manage their accounts, it’s complicating the process of helping your heirs sort out your finances once you’re gone.

The problem:  If you don’t keep careful records, your family might not even know where to start looking for accounts.  In a worse‑case scenario, some assets may never be found.

But at the same time, you don’t want to recklessly list all your private financial‑account passwords somewhere for a bad guy to find.  That would be an invitation to theft.

There are several smart steps to take to build a roadmap to your assets.  The five key components: information about your assets, names of advisers, details about safe‑deposit boxes, your estate planning documents, and a few other important documents.

For starters, provide details about banking and brokerage accounts, insurance policies, real‑estate and retirement plans, and list account numbers.  Explain where to find your will, trust, power of attorney and other estate documents.  If you have a safe‑deposit box, give the bank’s name and address, and where you keep the keys.  If you have a life insurance policy, provide the name and phone number of the agent, and a copy of the policy or its number.  Consider listing all the people your heirs will need to contact, including lawyers, accountants, executors or guardians you’ve named to care for any minor children.  Do NOT include your passwords to online accounts.  Listing all your passwords in one place, no matter where it’s stored, is risky.  And anyway, your heirs won’t need them.  With assets like bank accounts, heirs can usually gain access by showing a copy of a death certificate and proof of named beneficiaries.

Do include computer passwords, if you keep back copies of potentially important paperwork (like old tax returns) on your PC.  Your financial planner or estate‑planning attorney can provide guidance in putting together a file meeting your needs.

Lastly, think carefully about how to store the list.  Heirs need to be able to locate it when needed but it shouldn’t be generally accessible.  One option: a fire‑resistant home safe.  After all, you can’t take it with you B but you wouldn’t want someone else to take it from you.

Next: A Letter of Instruction Can Spare Your Heirs Stress

While it is important to have an updated estate plan, there is a lot of information that your heirs should know that doesn’t necessarily fit into a will, trust or other components of an estate plan. The solution is a letter of instruction, which can provide your heirs with guidance if you die or become incapacitated.

A letter of instruction is a legally non‑binding document that gives your heirs information crucial to helping them tie up your affairs. Without such a letter, it can be easy for heirs to miss important items or become overwhelmed trying to sort through all the documents you left behind. The following are some items that can be included in a letter:

  1. A list of people to contact when you die and a list of beneficiaries of your estate plan;
  2. The location of important documents, such as your will, insurance policies, financial statements, deeds, and birth certificate;
  3. A list of assets, such as bank accounts, investment accounts, insurance policies, real estate holdings, and military benefits;
  4. The location of any safe deposit boxes;
  5. A list of contact information for lawyers, financial planners, brokers, tax preparers, and insurance agents;
  6. A list of credit card accounts and other debts;
  7. A list of organizations that you belong to that should be notified in the event of your death (for example, professional organizations or boards);
  8. Instructions for a funeral or memorial service;
  9. Instructions for distribution of sentimental personal items;
  10. A personal message to family members.

Once the letter is written, be sure to store it in an easily accessible place and to tell your family about it. You should check it once a year to make sure it stays up‑to‑date.

 

Robert M. Slutsky, Esq.
Robert Slutsky Associates
Plymouth Meeting, Pennsylvania

Helping Your Heirs Sort Out Your Finances Once You’re Gone was last modified: May 1st, 2018 by Phil Sanders