8 crucial documents your loved ones need if you died

I thought about what if I died today.

Morbid, yes, but trust me it was practical.

I wanted to know if my wife could find where I kept everything financial and support everything herself, if I was off playing the harp.

As an aside, I do everything financial in our family.

Perhaps you are the same, hmm?

People get insurance for when tragedy strikes. But what good is the treasure if you don’t have a map to find it, right?

So here comes your map.

 

WILL

This one should be obvious, but if you have assets and dependents, you should have a will. If you own your business and your net worth is large, you should consider a living trust.

If you’re not sure what is right for you, consult an attorney.

Legalzoom charges $69 – $149 to prepare a will. The more expensive package includes a power of attorney and a living will (healthcare wishes, end of life decisions…).

If you see a local attorney, it will likely cost you a little more.

When I looked into a living trust, it would have cost me about $1500-$2000. I opted to wait on this as you have to put all your assets (bank accounts, businesses…) into your trust name and it wasn’t worth it to me now.

I went with the “do it yourself” route and purchased Nolo’s “Willmaker Plus 2016”.  Amazon had a special for $29.99, normally $54.99. This will do everything Legalzoom will do.

I like it as it walks you through everything with an interview. I did a couple of questions each day and finished it in a week. Then moved on to the power of attorney, living will…easy peasy.

After you complete it, you print it out and follow the instructions for your state. You may have to sign it in front of witnesses, have it notarized, file it with your county…If you feel squeamish, you can have a lawyer look it over.

Me, I feel fine about my new creation.

Now, where to put it so it is easily found if I meet my demise.

Wal-Mart sells a SentrySafe that is fireproof for $19.88. They also have safes for as little as $49.

All of my documents can fit in the cheapo one and all I needed to do was tell my wife where I stashed the thing.

ACTION STEP: Get your will made using a local lawyer or a program like Willmaker. Print it out and take care of any steps required to make it legal. Purchase a safe or lock box and keep a copy of your will in it.

 

INSURANCE

If you have a spouse and/or children and your net worth is small, you need to have life insurance.

Get it while you’re young and it’s cheap.

Get the cheap term insurance and don’t let the agent talk you into something pricier. You’d just be helping him out and not yourself.

How much should you get?

A rule of thumb is $500K for your spouse and $500K for each kid. So a wife and two kids would need $1.5 million.

Sounds like a lot of moolah, but if you died young, think about how much money you would have made over your life. Do you really want to leave your spouse and kids in dire straits?

After you buy your insurance, you should receive an agreement with all the terms of your policy, who to call…

Keep this in your document box too.

If you have multiple policies like a free one through work, note all of them on a piece of paper with the amounts, company name, phone number to call…

NOTE: If your employer supplies you with life insurance you should also get your own policy. You never know if you could be without employment and as a result, without insurance.

ACTION STEP: Buy term life insurance if you don’t have it already. Make sure you have the proper amount, use the guideline above if you’re not sure. Summarize all your insurance information on a document and keep it in your lock box.

 

BANK & RETIREMENT ACCOUNTS

I have too many accounts.

I know it.

I have a 401K, three IRAs, nine savings accounts, a checking account and two trading accounts. Sheesh.

It’s on my to do list to combine them.

This topic would be a mess for my wife if I died today. You may have the same issue.

The problem is easy to resolve though. Just list out all your accounts, web site urls, userid passwords, estimated balances. Many accounts allow you to find a beneficiary, which makes the transfer process easier.

ACTION STEP: List out all bank and retirement accounts with name, url, account number, beneficiaries, reference your password file for login credentials (make sure this is safe). Check if you have beneficiaries named on each account.

 

PASSWORDS

How do you keep track of your passwords?

Do you use the same one for everything?

Years ago, I did that mistake of using the same password for anything that asked for it. Later, I switched to typing them in a document and printing it out and keeping it by the computer.

Both bad mistakes. I was ashamed.

I switched to using LastPass. Now, I only need to know the password to LastPass and it keeps tracks of the website passwords and user IDs.

There are other password managers. PC magazine tested and ranked them. Here are their top three picks:

1. LastPass 4.0 Premium

2. Dashlane 4

3. Sticky Password Premium

All of these offer a free and a premium version with prices from $12 – $35.99 per year.

If you’ve never used a password manager before, here’s the basics. You install the password manager or sign up for an account. Then, when you go to a website that requires you to login, your password manager will fire up and offer to save your credentials, or if it is new create you a random, secure password. The next time you login, you can click on an icon in your browser and the password manager will populate the credentials for you.

ACTION STEP: Sign up for a password manager if you don’t have one. Keep track of the password for the password and keep it in your fireproof box. Type up brief instructions on how to use the password manager.

 

PAYING BILLS ONLINE

I know a few people out there that still write checks to pay bills, but I’m not one of them. Are you?

My spouse has never paid a bill online.

The scary part is almost none of our bills come in the mail anymore. Some don’t even come via email.

So, the risk is if I died my wife wouldn’t know how to pay the bills and wouldn’t even know which bills to pay, when to pay and how much to pay.

Well, that is a problem.

Here’s what I do and I’d love to hear how others do it.

I have a spreadsheet where I have expenses grouped into categories.

I have groupings for credit cards, housing expenses, insurance expenses and charity. I break the credit card cost down further into auto, food, medical…I have a column for each month.

I have a conditional format on the cells that paints the cells yellow if they are blank. So it stands out if they are empty. I fill them in when the amounts clear the bank.

I have the date each one is due (some vary each month).

At the end of each month, I log into the sites for each of these and get the amounts due and when they are due and then log into my bank account and set them up to be paid. Some of these I have to do later in the month, if the amounts are not ready from the vendor.

I add up the total for all expenses and transfer that amount into my checking account so I’m covered for all expenses for the month. The rest of my money goes into savings accounts.

It’s simpler for me to only budget/manage a few categories; credit card, auto-pay (like mortgage) and online pay. So basically all I have to watch are my credit card expenses for the month and I have emails that come to me if I approach or surpass my budget amount.

This system is super-simple for me but would probably freak out my wife. I could see her calling each company and asking them to resume mailing bills each month and then she would write checks to pay them.

ACTION STEP: Write up a document to show how you pay bills. Show how you know everything is set up to pay, how to check for amounts due, when they are due…Bonus – use software like Camtasia or Screenflow to show a video of how it works.

 

INVESTMENT ADVICE

A while back, I remember reading about Warren Buffett saying he wrote out how his wife should invest their money if he died.

His advice was simple; 10% in short-term government bonds and 90% in a low-cost S&P 500 index fund.

I worry that my wife would fall prey to con artists or sales people seeking high commissions for mediocre investments.

Warren’s advice is nice and simple and anyone could do it.

For me, I would have my wife put three years of expenses in cash and the rest in the index fund. Then, even if the market tanks she could leave that money alone and live off the cash until the market recovers.  Even better, would be to stash seven years of expenses in cash. This would allow even more time for the market to recover.

ACTION STEP: Evaluate the people who will inherit your money as to whether they could do a good job investing the money themselves. If not, come up with a simple plan, state it, print it out and put in your box. If you don’t have one, consider Warren’s plan.

 

DISPOSITION OF YOUR STUFF

Well, my will takes care of the big stuff. But what about an old watch that belonged to my dad, or my guitar collection?

It’s best to find all of these by taking an inventory of your possessions and dividing them into a couple of categories:

1. Specific items that should go to specific people. Add these to your will, if possible.

2. Donate to a company like Goodwill or Amvets. Sometimes they will pickup at your house too.

3. Discard or Don’t care.

I found that walking around the house with my iPhone, I could make short videos of each room and talk while I do the inventory. This is also a good idea for insurance purposes. Store the videos on Dropbox or Google docs.

ACTION STEP: Take an inventory by room of your stuff and sort by the three categories above. Make it a point, at least once a year, to pick a room and get rid of items you don’t use or need; sell them, give them, give them away or toss them.

 

WORDS OF WISDOM TO PASS DOWN

Surely you’ve learned a thing or two in your life, right?

I decided to summarize these golden nuggets in a document so my wife and kids and future heirs can learn from them.

Who knows, your list might be so good that you could turn it into a book.

Here’s some topics I was thinking about:

1. Saving money

2. How much to spend on a house

3. How to buy a car

4. What kind of job to get

5. How to treat your boss

ACTION STEP: Grab some paper and come up with some broad topics like money, work, relationships, health…and start writing what you know and have learned over the years on each. Store this in your box.

 

Your turn.

How about you?

How are your records? Have you taken the time to prepare a will, evaluate your life insurance? Do you have a favorite sweater you’d like to leave to your brother Frankie?

Why not take each of these steps, one-at-a-time?

I’ve prepared a checklist pdf you can download and tape to your wall or mirror to help you. Download it here.

Did I miss something? Let me know in the comments, so we all can benefit.

 

Thank you very much for stopping by and reading this post. It really does mean a lot to me.

 

If you would like a handy checklist of the eight items noted above, click the link HERE.

  • June 19, 2016
  • Admin

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