What if Today is “The Day”?

Gerald D. FaheyAugust 6, 2015

Estate Planning

Our most recent blog provided some useful information regarding consumer credit, credit reports and identity theft protection – we hope you had a chance to read it (and in the case of obtaining a free credit report, act on it)!

Our firm spends a great deal of time educating clients on various financial planning matters, but recently one of our clients educated us through a question worth asking all of our readers:

That question is – what if today is “the day” (your last day)? 

With all of the online technology used today in banking, finance, investments, law and taxation – what about all the user names and passwords that you have created over the last 10 – 20 years? Does it make sense to have a central location to store all of this information?  What about something as simple as a password to access a laptop or desktop computer?  Our client suggested that others do as he has done and create such a file or document with your personal account information.

If today is “the day” and you had a lot of personal information stored on your phone – how could your loved ones get access to that information?  My phone has a security code that nobody else knows and is changed on a regular basis, so to obtain that information without me would be difficult.

What about your banking or investment accounts?  Many couples have joint accounts but only one is involved in the day to day activity, so the other may have no knowledge of current passwords and user names.  You could work with the bank or custodian to eventually retitle accounts, etc., to get access but how long would that take to complete and how frustrating would it be?  Speaking of which, are all of your accounts titled properly?  Legally, your estate matters will be handled by your executor and taken through the probate process but that can also be burdensome and time consuming.

For bank accounts, some may be in single name and others in joint.  If you are not listed on the account, the financial institution is not permitted to provide any information to you.  Where do you store your checks for your single account and are they in a different location than the joint account(s)?  Are you comfortable leaving behind a box of blank checks that nobody can find?

What about debit charges that are done automatically through a bank account?  How about cancelling credit cards or club membership cards with annual fees?  Are there outstanding secured and unsecured loans, Social Security benefits, estimated income taxes, real estate taxes or any other items needing attention – the list seems to go on and on and everybody has a different list, of course.  If you rent a safe deposit box at your bank, what is the lock combination or where is the key located?  If you have a fireproof safe somewhere in the home, how could someone get into it when necessary?

Would anybody know where all of your important documents where located?  Do you have estate planning documents located in one place, tax in another, investment/retirement in a third location and banking products somewhere else or are they all together?  Where are the property deeds located?

These questions are relevant even for those who do not use or have resisted today’s technology such as smart phones, laptops and tablets.  A notebook containing this handwritten, pertinent information including details of where documents are stored or account numbers could be an invaluable tool for your loved ones, as long as it is hidden in a secure location where others can find it!

For our “techie” readers, there are also phone applications available in the marketplace which will store all of this account information (but you’d better know the username and password for the phone)!

What about life insurance or long term care (LTC) policies?  When you contact the insurance carrier for policy information or to submit a claim, they will ask some security questions and for you to provide evidence to substantiate a death or LTC claim.  If you do not have a dedicated insurance agent, submitting a claim or speaking to a “live” person can be difficult.  Isn’t the emotional impact in dealing with the loss of a loved one a serious enough challenge to overcome, without having to deal with the hassle of searching for all of these account details?

Some people have insurance policies for life, disability, health, long term care, homeowner, boat, jewelry, etc., all of which contain their own account numbers.  In talking with clients, it seems that most are using several different insurance agents for each particular type of coverage.

Also, the reality of aging introduces additional risk of cognitive impairment for families to manage. When is the best time to bring others (children, siblings) into the equation so that website access and account information is current, in the event of declining health?

There are many other professionals who need to be included in this discussion; attorney, doctor, funeral home, and accountant – the contact information of this group is very important!

Generally, all of us put forth some degree of effort to protect ourselves and manage risk.  We can choose to avoid risk completely (choosing not to buy a bike or car, which might be stolen), transfer risk through an insurance solution (in effect, sharing risk with insurance carrier) or choose to self-insure, where the consumer is aware of potential risk but chooses not to buy insurance and assumes all financial risk.

Personal Financial Inventory-page-001At HFA, we provide many services including the storage of our client’s important documents in our electronic vault called Tamarac.   Financial advisors should help clients organize their affairs and manage financial matters after the death of a loved one, this is another service we provide to many families.

We have focused today on yet another type of risk, the “What if today is the day” risk – for lack of a better description.  For your convenience, we have also created a Personal Financial Inventory document to use as a guide in gathering this important information.  We hope you have found the topic to be worthwhile and are grateful to our client for asking the question. Please contact our office if you have any additional questions.