Friday, July 8, 2011

A "Bucket List" of Documents

This past weekend, the Wall Street Journal featured a great article by Saabira Chaudhuri in their Weekend Investor Section on "The 25 Documents You Need Before You Die" and how they can impact you and your estate after you're gone.

They broke the documents into 6 categories
  • The Essentials
  • Proof of Ownership
  • Bank Accounts
  • Health-Care Confidential
  • Life Insurance and Retirement
  • Marriage and Divorce
The Essentials included the documents that most people are likely to have, their Will, Letter of Instruction and Trust documents (which of course, all of us have, right?).  Especially after major life events (i.e. marriage, birth of a child, divorce), it is important to review these documents and update them as necessary.  I am always amazed when in a client consultation, I am told that the prospective client has a will, from about 20 years ago, which was before they got married, had a couple of kids, maybe even got divorced, and that they never thought to update it.

Proof of Ownership also included documents that we all deal with as we acquire major property and things throughout our life (housing documents, vehicle title, loans, investments, tax returns).  The article points out the importance of having these documents and identification of assets and liabilities available to ease the distribution of your estate after you are gone.

I was a bit concerned about the suggestion of providing a "list of all user names and passwords" in connection with your bank accounts, especially in this age of online security threats and unauthorized access to supposedly secure data.  While it's important that your heirs have access to this information at some point, make sure there is an understood protocol and system to safeguard any document that would contain such information.

The health care documents are one area that I find myself clearly at fault for not having everything together at this time.  Even at my last checkup with my dermatologist, I realized how little I knew about the health history of those in my family and the impact that genetics may play in our overall health and illnesses.

Most people probably have a folder in their desk or file cabinet for their life insurance and retirement account information.  You get your monthly statements, file them away (maybe even scan them into digital format and destroy them?) and never really think about them again.  But what happens after you are gone and your perfect little filing system is incomprehensible to those who are trying to administer your estate?  Time to update that system?

Finally, the Marriage and Divorce documents (marriage license, divorce papers) are ones that people seem to underestimate the importance of.  True, your marriage license probably won't be needed for many things beyond a name-change on your accounts, but your divorce papers seem to be needed everywhere.  These days, Judgments of Divorce are readily available from the Courthouse where your divorce was granted (prices vary for "certified" copies, which are often required) and it's usually a good idea to pay for a few copies at the time of your divorce and keep them handy.  Normally you won't need them, but what else are you going to do when your ex-spouse's creditor pops up on your doorstep and tries to hold you liable for some debts that the ex ran up?  Surprisingly, they won't take your word for it and will probably need more proof from you.

Overall, this was an excellent article that is worth a read to get your mental house in order as you plan for the future.  You can generate many of the documents yourself, file away the ones that you have lying around, but most importantly, contact your attorney or financial planner if it's been a while since you've thought about your Will, Trusts, Health Care documents and retirement accounts.  What may have been the right choices for you 20 years ago may be quite a headache for your family these days.

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