If you were to become incapacitated or die, how easy would it be for relatives or someone else to take over your financial affairs? Would they have to search through a mountain of paperwork? If you don’t receive paper statements, would they even find out about all of your accounts?
No one likes doing funeral planning or other things that remind us of our own mortality. But death and injury are a fact of life. Creating a personal financial directory makes it easier for someone to cancel your accounts or otherwise manage your finances if you are not able to. You may also find yourself using it if, for example, your wallet is stolen and you need to notify financial institutions and creditors or you forget an online password.
Make a list
All you need to do is set aside a few hours one day. Think about all of the accounts and obligations you have, including a mortgage or rent, loans, credit cards, utilities, checking and savings accounts, investments, retirement funds, and insurance. On a piece of paper, list the following information about each one: the account number, who it is with, company contact information, online username and password, location of statements, and monthly payment and due date (if applicable). You might want to also include the name and contact information for any financial advisors, such as an accountant or insurance agent. Periodically revisit the list to make sure it is up-to-date.
Put the info in a secure place
In order for your financial directory to be helpful, someone has to know it exists. You may have no problem giving it to a trustworthy relative or friend, but it is completely understandable if you are worried about handing over your account information while you are still in good health. One option is to leave the list in a safety deposit box or fire-proof safe in your house. (Just make sure that whoever will be handling your affairs will be able to access it). Another option is to give it to a lawyer or other financial professional. (Once again, make sure the designated person knows who to contact).
Take legal precautions
Besides creating a financial directory, another way to protect your financial affairs is to assign someone durable power of attorney for finances. This specifically gives him or her the legal right to make financial decisions for you if you are unable. You can create a durable power of attorney document with the help of a lawyer or computer software. Make sure to choose someone who is trustworthy. If you have no friends or relatives who are appropriate, you can use a professional, such as a lawyer or accountant.
A little bit of planning can ensure that your finances are taken care of even when you are not able to manage them yourself.
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Our Family Survivorship Guide will help steer you through some of the uncertainties around putting your loved one’s financial affairs in order. Some of the topics covered include settling accounts, documentation you'll need, how to establish an estate account, and more. Download your free copy here.
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