Getting Your Financial House in Order for Your Family and Yourself

If you're reading this article, you probably want to do everything you can to ensure your family is well taken care of when you die. Yet the facts show that only a minority of households create documents to help loved ones deal with financial accounts and other assets.

What can you do today to make it easier for your family to access updated information about your financial life? Read on to learn how to create order from the uncertainty.

Finish the Race Strong

You've done your best to put all the pieces together. But have you taken that last step? Have you communicated with your loved ones about how to access:

  • Estate planning documents, i.e., living will, health care proxy, revocable living trust, or last will and testament
  • Other legal documents
  • Account information
  • Life insurance policies

Further, if you become legally incapacitated, you may no longer function to be able to claim and manage your benefits. You will want to ensure that someone can act in the best interest of you, your heirs, and your designated beneficiaries.

You can accomplish this with a financial power of attorney document. An estate planning attorney can help you with this. If you want to put together a legally valid power of attorney on your own, you can create a form and find more information in FindLaw's Estate Planning section.

Communicating Your Financial Information

You can take simple steps today to ensure someone else can access all information relevant to your financial life. A trusted individual will likely need your security information to access many of these assets.

Given the pervasiveness of criminals who use personal information for financial gain, you may be concerned with creating such a treasure trove of personal information. Don't worry — FindLaw has you covered. You can make plans now for how to securely share passwords, personal identification numbers (PINs), and security questions.

The following simple steps can help you communicate your financial information to those who need to know:

  • Organize your account information
  • Prepare a checklist of documents
  • Safely store your estate planning documents and financial information

No one can predict life expectancy, so it's imperative to do what you can today to make handling your affairs as stress-free as possible.

Organize Financial Account Information

The organizational process can be as simple or as thorough as you want. You likely have many different kinds of financial accounts. It can be easy to forget everything that's in the mix. These elements may include:

  • Bank accounts
  • Mutual funds
  • Brokerage accounts
  • Health savings accounts (HSA)
  • Flexible spending accounts (FSA)
  • Health care reimbursement accounts (HRA)
  • Child care savings accounts for minor children

Identify all your accounts. Gather relevant information for each account that you would need to access your accounts. You should compile information such as account numbers, passwords, and the most recent statements available.

Some accounts allow the account holder to set up a payable-on-death (POD) account. You can set up other accounts as transfer-on-death (TOD). Both are ways to transfer assets in the account to a named beneficiary.

Beneficiary designations make it easy to ensure your assets transfer to your loved ones after your death. When you name a primary beneficiary, these assets are not part of your estate. They are excluded from the probate process.

You will need to be aware of the following information:

  • The name of the entity that offers or manages the account and contact information (phone number, address, website)
  • The account number or account identifier
  • Who will it transfer to? Who is the beneficiary?
  • How much money do you have in this account?
  • Are you currently receiving any distributions or retirement income or making regular withdrawals from this account?

Don't forget information tied to credit cards, loan information, or any other liabilities. At the owner's death, these liabilities remain. When the estate is solvent, the personal representative or executor must pay creditors in the order required under state law.

Prepare a Checklist of Documents

Thoughtful preparation includes compiling a checklist of documents and other important information. Create a master list of account information. You can create files for each account. This allows you to drop information into the file if you don't have time to update the master list.

It is critical to provide an updated document containing all relevant financial information. In the event of your death or incapacity, someone else might need to access that information. You should include details about your personal retirement accounts, investments, insurance, and workplace or government benefits if you become disabled or die.

Disability and death could happen at any time. Chances are you've already taken some steps to plan for these eventualities. Perhaps you bought long-term disability insurance through your workplace or invested in life insurance.

Likely you've put money into an employer-sponsored retirement savings plan up to the annual contribution limit. You know when you must begin taking required minimum distributions (RMDs). You may have even worked with a financial advisor to develop a solid financial plan.

Don't forget to include information in your checklist about property and assets stored in various locations. This often includes:

  • The location of safe deposit boxes
  • Storage units
  • Property stored with someone else

It's important to finish well. Confronting death isn't easy. But neither is leaving family members and loved ones in a bind. It's helpful when you do your part to reduce confusion and anxiety at the end of life. Set your loved ones up for a smooth transition following your death. Prepare a checklist of important financial information.

Safely Store Your Information

Once you have gathered all relevant financial information and estate planning documents, put them in a safe place. Ideally, you will place the documents in a fireproof box. Important documents to include in the fireproof box may include:

  • Last will and testament (or name, location, and contact information for an attorney holding it)
  • Revocable living trust document
  • Vehicle registrations
  • Social Security card
  • Education and military records
  • Marriage license
  • Divorce decree
  • Information about any cemetery plot, funeral requests, or prepaid funeral expenses
  • Any IOUs or money owed to you from loans or other sources
  • Information about all financial accounts (discussed in this article)
  • Locations of living will and other legal documents (give copies of advance directives to your physician)

The past three years of federal and state tax returns should also go in the box or in another secure place.

Additional Financial Information to Consider

Employer-Related Plans and Benefits

There are many potential benefits you may receive from an employer. These can include:

  • Pension plans
  • Retirement accounts
  • Stock options

After putting in long days at work year after year, you want to ensure your loved ones can benefit from the assets earned through your work. Be sure to list these assets in the document you prepare for use in your incapacity or death.

You may invest in any number of retirement plans. Your union or employer may sponsor a pension plan or offer a retirement plan with employer contribution as a SEP-IRA (simplified employee pension) or SIMPLE IRA.

There are also a variety of individual retirement accounts for self-employed individuals and small-business owners. The list includes:

Don't forget tax-deferred annuities that provide income.

Naming Beneficiaries for Retirement Accounts

Most retirement accounts allow you to name a beneficiary. Your beneficiary will receive any money in your retirement account without going through probate court.

For some retirement accounts, the law requires that you name your spouse as your beneficiary. A spouse may sign a form to give up that right. If you live in a community property state, even if you choose not to name your spouse, they are entitled to half the money earned in the account while married.

In most cases, you will need the following information to access the retirement plan:

  • The name of the entity that offers or manages the retirement savings plan
  • Contact information (phone number, address, website)
  • The account number or account identifier
  • Whether you are currently receiving retirement benefits and how much
  • The named beneficiary of the account

Each financial institution or account custodian can advise you of specific account access requirements.

Social Security Benefits

Your surviving family members may be eligible to receive your Social Security or other benefits from the federal government after your death. Your surviving spouse can receive your Social Security benefits if any of the following apply to them:

  • Age 60 or older
  • At least 50 years old and disabled
  • Caring for your child under age 16
  • Caring for your disabled child

Children may be eligible to receive your Social Security benefits if they are:

  • Unmarried and under 18
  • Between 18 and 19 years old and in school full time
  • Over 18 but with a disability that started before they turned 22

Other people can qualify as beneficiaries of your Social Security benefits, such as:

  • Parents who are dependent on you
  • A divorced spouse
  • Grandchildren or stepchildren whom you support

You will need the following information to share:

  • The amount of any Social Security benefits you are already receiving
  • Social Security number
  • Contact information

Military/VA Benefits

You, your dependents, or your surviving family members may be eligible for Veterans Affairs benefits or services. This list includes:

You will need the following information:

  • Contact information for the provider
  • Military ID
  • A description of the benefit and its monetary value, if any

Don't Leave Your Money on the Table

Leaving a list of accounts and passwords with a trusted individual is essential. Leave instructions for your loved ones to check for any unclaimed assets, too.

The National Association of Unclaimed Property Administrators reports that $3 billion in unclaimed funds are returned yearly to their rightful owners. Yet tens of billions of dollars in unclaimed cash and property remain untouched. Potential sources of unclaimed funds come from the following:

  • Unclaimed insurance policies
  • Uncashed dividend checks and payroll checks
  • Tax refunds (i.e., real estate and income tax refunds from the IRS or state or local entities)
  • Security deposits you paid but didn't get back
  • Refunds for medical expenses
  • Payouts from class-action lawsuits
  • Tax-deferred annuities
  • Royalty payments

This money should be part of an estate and passed along to beneficiaries. But if no one knows how to collect it, these funds remain unclaimed. Advise your loved ones to check the unclaimed property database to ensure none of your money is left on the table.

Do You Need Help With Estate Planning?

The steps above show how parts of a financial plan can work together to maximize long-term financial security for you and your loved ones. There are so many retirement and investment options available to you that it can be helpful to talk to an expert who handles these issues every day. Talk to a tax attorney or estate planning lawyer in your area.

Was this helpful?

Can I Solve This on My Own or Do I Need an Attorney?

  • DIY is possible in some simple cases
  • Complex estate planning situations usually require a lawyer
  • A lawyer can reduce the chances of a family dispute
  • You can always have an attorney review your forms

Get tailored advice and ask your legal questions. Many attorneys offer free consultations.

If you need an attorney, browse our directory now.