7/15/2011 7:07 AM ET|
Documents you need before you die
Your family members will need to know how to handle your affairs after your passing. To do so, they'll need essential documents that you've prepared for them.
It isn't enough simply to sign a bunch of papers establishing an estate plan and other end-of-life instructions. You also have to make your heirs aware of them and leave the documents where they can find them.
Consider: At least 10 states have been investigating whether some of the country's largest insurers are failing to pay out unclaimed life policies to beneficiaries. California and Florida have held public hearings on the issue recently.
Insurers say they are behaving lawfully. Under policy contracts, they aren't required to take steps to determine if a policyholder is still alive, but instead pay a claim when beneficiaries come forward.
You can avoid such problems by securing important documents and telling your family where they are stored.
Jean Parr is grateful that her mother obsessed about the subject. "I really didn't want to think about it," says Parr, 54, a manager at the American Chemical Society in Washington, D.C. But when her mom died in 2005, she knew exactly where to look for the will, the key to a safe-deposit box and documents indicating her mother had paid and arranged for her own funeral.
The financial consequences of failing to keep your documents in order can be significant. According to the National Association of Unclaimed Property Administrators, state treasurers currently hold $32.9 billion in unclaimed bank accounts and other assets. (You can search for unclaimed assets at MissingMoney.com.)
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.
You can store the documents with your attorney, lock them away in a safe-deposit box or keep them at home in a fireproof safe that someone else knows the combination to.
That isn't to say you should keep everything. Sometimes people hold on to so many papers that loved ones can't find the important ones easily.
In 2008, Jane Bissler, a counselor in Kent, Ohio, approached her then-87-year-old mother about organizing her documents. Because her mom was a widow with relatively simple finances and two homes, Bissler, 57, says she figured it would be a relatively simple task.
Instead, it took an entire year for Bissler and her mother to go through all of her papers, which included documents from eight bank accounts, utility bills from the 1950s and reams of canceled checks.
The two of them pared down the stash from four four-drawer filing cabinets to one two-drawer cabinet, shredding anything extraneous. Bissler and her mother visited banks and brokerages to ensure she was listed on all of her mother's accounts. Her mother died in May 2009.
"It would have been a total nightmare if we hadn't gone through it all with her," Bissler says. "It was that Depression-era stuff where you keep everything and hide other things." Bissler estimates that having the documents organized ahead of time spared them from ordering an additional 15 copies of the death certificate, and "years" of time.
Here is a rundown of the most important documents you'll need to have signed, sealed and delivered. You should start collecting these as soon as possible and update them every few years to reflect changes in assets and preferences. Some -- such as copies of tax returns or recent child-support payments -- need to be updated more often than others.
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 debts 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.
Rick Law, founder of estate-planning firm Law ElderLaw LLP in Aurora, Ill., says estate planners increasingly recommend revocable trusts in addition to wills, since they are more private and harder to dispute. "Every will is like a compass that points toward the closest courthouse," he says.
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.
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Thanks for the article. It reminded me to check with the Neptune Society to verify that my policy is still in effect and good.
Nothing torques my jaws more than watching and listening to those vultures at the funeral and burial businesses try to con and conjure every dollar possible out the relatives when there is a dead body to dispose of.
My solution was a Neptune Society cremation policy, which cost me $400 years ago and is still there waiting for the inevitable. My sister and I did a pre-paid funeral and burial plan for my mother, too.
Just be sure you buy from a business that will still be there when you aren't.
All of this is great advice with one omission and one exception. First the exception - the fire proof safe - they are not worth the money unless they are first class units - NOT the
Wal-China brand. Those safes are rated for 30 min. For a quick fire who knows, but for a devastating fire where lives are lost? The safe will make it, but not the contents - happened with my Dad and I know of others. Get a bank box at your bank - lots of banks give them for free if you are a member.
The omission is electronic passwords and pins. Obviously your executor is trustworthy, or simply write them down and put them in the Bank Box. You would be supprised what may be needed from emails.
In addition to the documents in this article, my estate management file includes information for all my key service provider accounts, e.g., utilities, phone and cable, home, auto, and health insurance, landscapers, property tax authorities, property owners associations, membership clubs, etc. There’s a lot more for an executor to manage than just financial accounts while settling and distributing an estate. The stuff the lawyers and financial managers charge you for is the easy part.
I was the executor of my mother's estate. I "assumed" her life insurance policies were in order. When she passed we found out the beneficiaries were my brother & grandmother who had both been deceased more than 2 years. I had to prove I was related to both of them before getting the "pay out".
Her 2nd life insurance policy named her sister & I know my mother would rather her kids have gotten the $$ but when she took out the policy they were all underage. She never updated that one either. We lost out on $25,000 while her sister laughed all the way to the bank. The sister who I quote "I conducted all my business over the phone w/your mother". And while my mother lay dying in the hospital she came to see her only if she had errands to run in town. NICE!
Lost both of my parents, unfortunately my mother had nothing in place, so at my brothers urging my father set everything up with an attorney--in addition, all bank accounts and investments had TOD's (transfer on death) attachments. When my father passed it saved us a lot of time & trouble--everything I have is now set up the same even though I do not have a will (still need to do it : ( ) Edward Jones is the company my parents had and they have been the BEST! Still work with the same advisor even though I live in a different state... Best to all that have to go through this. Hard enough to deal with the loss and then fight the state!
Spoken like a true insurance salesman. Every change is an opportunity to sell more insurance.
I bet you like selling any kind of policy instead of term life.
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