If something were to happen to you today would your family know what to do? Some 25 documents should be on file in case of an untimely incident or death. Putting these together now can save your family a lot of time, frustration and money. According to Saabira Chaudhuri from the Wall Street Journal it simply isn’t enough to have an estate plan but you also have to make your heirs aware of what you have and where it is. Saabira goes on to outline what you should have:
- Letter of Instruction (health car directive)
- Trust documents
An original will is the most important document to keep on file.
A will allows you to dictate who inherits your assets and, if your children are underage, their guardians. Dying without a will means losing control of how your assets are distributed. Instead, state law will determine what happens.
Wills are subject to probate—legal proceedings that take inventory, make appraisals of property, settle outstanding debt and distribute remaining assets. Not having an original document means this already-onerous process could be much more of an ordeal, since family members can challenge a copy of a will in court.
A revocable living trust can be changed anytime during your lifetime. After you transfer ownership of various assets to the trust, you can serve as the trustee on behalf of beneficiaries you designate. Provided you do so, there aren’t any ongoing fees.
Also, make sure your heirs have access to a durable financial power-of-attorney form. Without it, no one can make financial decisions on your behalf in the event that you are incapacitated.
Proof of Ownership:
- Housing, land and cemetery deeds
- Escrow mortgage accounts
- Proof of loans made and debts owed
- Vehicle titles
- Stock certificates, savings bonds and brokerage accounts
- Partnership and corporate operating agreements
- Tax returns
You should keep documentation of housing and land ownership, cemetery plots, vehicles, stock certificates and savings bonds; any partnership or corporate operating agreements; and a list of brokerage and escrow mortgage accounts.
If you don’t tell your family that you own such assets, there is a chance they never will find out.
File any documents that list loans you have made to others, since they could be included as assets in an estate. Similarly, keep a list of any debts you owe to avoid surprising your family. Wills and living trusts generally are drafted to include provisions for how debts should be settled, and creditors have a stipulated period of time in which to file a claim against the estate.
Make the most recent three years of tax returns available, too. “Looking at last year’s returns offers a snapshot of what assets we should be looking for this year. This also will help your personal representative file a final income-tax and estate return and, if necessary, a revocable-trust return.
- List of bank accounts
- List of all user names and passwords
- List of safe-deposit boxes
Share a list of all accounts and online log-in information with your family so they can notify the bank of your death. “If nobody ever takes any more out or puts money in, it becomes a dormant account and then becomes the property of the state.
Be sure to list any safe-deposit boxes you own, register your spouse or child’s name with the bank and ask them to sign the registration document so they can have access without securing a court order.
- Personal and family medical history
- Durable health-care power of attorney
- Authorization to release health-care information
- Living will
- Do-not-resuscitate order
Possibly the most important health-care document to fill out in advance is a durable health-care power-of-attorney form. This allows your designee to make health-care decisions on your behalf if you are incapacitated. The document should be compliant with federal health-information privacy laws, so that doctors, hospitals and insurance companies can speak with your designee. You may also need to fill out an Authorization to Release Protected Healthcare Information form.
If you are incapacitated and your family can’t locate a health-care power of attorney, they will have to go to court to get a guardian appointed.
Life Insurance and Retirement:
- Life-insurance policies
- Individual retirement accounts
- 401(k) accounts
- Pension documents
- Annuity contracts
Copies of life-insurance policies are among the most important documents for your family to have. Family members need to know the name of the carrier, the policy number and the agent associated with the policy..
Estate planners also recommend that you draw up a list of pensions, annuities, individual retirement accounts and 401(k)s for your spouse and children.
If your heirs don’t know about these accounts, they won’t be able to lay claim to them, and the money could languish.
Marriage and Divorce:
- Marriage license
- Divorce papers
Ensure your spouse knows where you have stored your marriage license.
For divorced people, it is important to leave behind the divorce judgment and decree or, if the case was settled without going to court, the stipulation agreement . These documents lay out child support, alimony and property settlements, and also may list the division of investment and retirement accounts.
Include the distribution sheet listing bank-account numbers that accompanied the settlement to avoid disputes about ownership or payments due. Also include a copy of the most recent child-support payment order. In the majority of states, the obligation to pay child support still exists after death.
You also should include a copy of the “qualified domestic-relations order,” which can prove your spouse received a share of your retirement accounts.
In conclusion: the financial consequences of failing to keep your documents in order can be significant. Most experts recommend creating a comprehensive folder of documents that family members can access in case of an emergency, so they aren’t left scrambling to find and organize a hodgepodge of disparate bank accounts, insurance policies and brokerage accounts. That isn’t to say you should keep everything. Sometimes people hold onto so many papers that loved ones can’t find the important ones easily.