Getting Your Financial Affairs in Order and Leaving Instructions for Family

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 may even have worked with a financial advisor to get a solid financial plan in place to help you weather difficult times.

Communicating Your Financial Affairs and Decisions 

You've done your best to put all the pieces together, but have you taken that last step? Have you communicated with a loved one (or another responsible person) about how to access the benefits and resources you've gathered?

If you were no longer competent to manage your affairs, how would you ensure that you received all the money you are owed? When you die, how can you ensure your loved ones receive all of your assets?

This article discusses what you can do today to make it easier for your family to access your personal retirement accounts, investments, insurance, and workplace or government benefits if you become disabled or die.

It's Your Money: Don't Leave It on the Table

According to the National Association of Unclaimed Property Administrators, $3 billion in unclaimed funds are returned to their rightful owners each year. And yet there are tens of billions of dollars in unclaimed cash and property that remains untouched from:

  • Unclaimed insurance policies
  • Uncashed dividend checks and payroll checks
  • Tax refunds
  • Security deposits
  • Tax-deferred annuities
  • Royalty payments

This money should have been part of an estate, passed along to beneficiaries. Or it could be a much-needed boost for the budget of a forgetful senior or disabled person. But no one knew to collect it and so it sits unclaimed.

Simple Actions to Pass on Your Financial Information

You can take some simple actions today to ensure someone else can access your information. It can be essential to pass on information about the federal government and the work-related benefits available to you. You also want to pass on investments, retirement accounts, insurance, and assets intended for your heirs.

These simple steps can help:

  1. Organize your account information
  2. Give someone authority to act on your behalf, and on behalf of your loved ones and heirs
  3. Safely store your will and financial information
  4. Securely share access to information

Organize Your Account Information

The organizing process can be as simple or as thorough as you want. At a bare minimum, create a master list of account information (see bulleted information below).

You may also want to create files for each account so you can drop information into the file if you don't have time to update the master list.

Organize Financial Accounts and Investments

We all have many different kinds of financial accounts. It's easy to forget all the types, such as:

  • Bank accounts
  • Mutual funds
  • Brokerage accounts
  • Health savings accounts (HSA)
  • Flexible spending accounts (FSA)
  • Healthcare reimbursement accounts (HRA)
  • Childcare savings accounts

Some accounts allow the account holder to set up a POD account, which is Payable On Death. Other accounts can be set up to Transfer On Death (TOD). Both of these are ways to transfer assets in the account to a named beneficiary.

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
  • Is it a POD account or a TOD account? 
  • 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 from this account?

Don't forget credit card and loan information. If someone needed to step in to handle your financial affairs it would be helpful to know these liabilities.

Stock Options and Workplace Profit Sharing

  • A description of this benefit
  • The name and phone number of your employer's HR department

Pension Plans and Employer and Individual Retirement Accounts

There are many types of retirement plans you could be invested in. 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 traditional IRAs, Roth IRAs, Keogh, and 401(k). Don't forget tax-deferred annuities that provide income.

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

For some retirement accounts, the law requires that you name your spouse as your beneficiary unless they 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 of the money in the retirement account that you earned while married.

For other accounts, such as IRAs and deferred profit-sharing retirement plans (DPSP), you are free to name any beneficiary that you wish.

You will need the following information:

  • 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.

Social Security Benefits

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

  • 60 or older
  • At least 50 years old and disabled
  • Caring for your child and that child is under the age of 16
  • Caring for your child and that child is disabled

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.

There are other people that 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:

  • List the amount if you are receiving social security benefits
  • Social security number
  • Contact information

Military/VA Benefits

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

  • Survivor compensation
  • Money for burial costs
  • Will preparation services
  • Financial advice
  • FSGLI life insurance coverage

You will need the following information:

  • Contact information for the provider
  • Military ID
  • A description of the benefit and its monetary value (if it has one)

Other Benefit Programs

If you are employed, you may be eligible for a number of useful benefits through your workplace. You could also gain eligibility for benefits through membership in:

  • Fraternal organizations
  • Alumni groups
  • Professional associations
  • Interest groups

For example, you may have access to legal services, a financial advisor, or retirement planning through a workplace plan. If you were disabled, these may be useful to you or the person caring for you.

Collect the following information to share with your family:

  • Contact information for the provider
  • Account number
  • A description of the benefit and its monetary value (if it has one)

Insurance Products

You may have different types of insurance such as:

  • Employer-paid insurance
  • Self-paid medical insurance
  • Dental insurance
  • Vision coverage
  • Supplemental medical insurance
  • Short-term and long-term disability insurance
  • Life insurance
  • Pet insurance

Keep policy information in one place for easy access, such as:

  • Insurance provider and contact information
  • Name of the entity providing this benefit (if you are not paying for it yourself) and contact information
  • Account number
  • A description of the benefit and its monetary value
  • If you are paying or receiving money for this benefit

Property Stored Elsewhere

Don't forget about property and assets stored in various locations. This often includes:

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

Gather this information to share:

  • Contact information
  • A description of the property in each location
  • Its approximate value

Money Owed to You

Be sure not to forget about any money owed to you or eventually coming your way. Common examples of this include:

  • Tax refunds
  • Loans owed to you
  • Security deposits you've paid and should get back
  • Royalties owed to you

Give Someone Authority to Act

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 on your behalf.

You can accomplish this with a financial power of attorney document. An estate planning attorney can help you with this, or you can create a legally valid power of attorney in the FindLaw Estate Planning section.

Safely Store Your Will and Financial Information

Whether you have file folders or just a master list of information, it's important that it be updated occasionally and stored securely. Look at this list at least once a year to be sure that it is up to date. Store it in a lockable, fire and water-proof file cabinet or safe.

After you store it, be sure to tell at least one person about your storage place. Ideally, tell the person you have named as your executor and the person who holds your Financial Power of Attorney.

Securely Share Access to Information

To access many of these personal assets, your executor or the person with power or attorney will likely need your security information.

FindLaw has an excellent resource on how to share secure passwords, PIN numbers, and security questions.

Do You Need Help With Financial Planning or Estate Planning? Talk To a Lawyer.

From the discussion above, you can see how many pieces of a financial plan can work together to maximize long-term income and financial security. 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.

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.

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