Talking about death sounds morbid I know. No one wants to think about the inevitable. But as the saying goes, “No one escapes death and taxes.”
When that time comes, there will be nothing that will replace the hole that’s left, however, ensuring that important documents are organised to help those grieving sort out the finances (yours and possibly theirs) will alleviate stress, avoid costly legal fees or even prevent the denial of your inheritors’ access to money.
So, get your paperwork in order. Set up that “death file”.
The idea is to have all important papers and key financial information your heirs will need to settle the estate in one place. These can be physical documents that are safely guarded (fire safe box), electronic files on a shared drive on a computer (password protected), or a combination of both.
Here’s a list of what you should have:
A copy of your will
This is of utmost importance as it is a legal document that states your wishes on how you’d like your estate distributed, who you’d like to facilitate your wishes and who will be guardian of your minor children (if any). It will also prevent having a lengthy probate process.
Be sure to keep the most recent version, as well as the details of the attorney who drew it up and the executor(s) named in your will.
* Your will may be accompanied by a Power of Attorney and/or Trust, and if so you’ll want to keep those documents together with the will.
Your insurance policies
Gather information on all the life insurance policies you own (personally and from work) with a list of the beneficiary (beneficiaries). The beneficiary will be required to present a copy of the death certificate in order to make a claim, and they can expect the death benefit to be paid within 30-45 days.
* You may have other insurance policies in your name such as car, health or property insurance. Keep detailed information on those as well as these will need to be cancelled or transferred into a different name.
Your financial accounts
Keeping a file or spreadsheet of all your accounts will help your executor/heirs manage them – whether that is closing the accounts (if it’s solely in your name), changing the account (if in joint name), or consolidating the accounts.
Typically, the financial accounts you’ll want to track are the following: bank accounts (chequing/savings), investment accounts (at banks, advisory firm or self-directed), annuities (at life insurance cos, banks or advisory firm), pensions (with the government, advisory firm or work), and mortgage (broker or bank).
Make note of the location of these accounts, the account numbers, the name/names it’s under, the beneficiary of the accounts and contact details of the account representative or advisor.
Tax filing information
Because one final tax return will need to be filed on your behalf, it’s important to keep the necessary papers and slips together. These include slips for salary or business income, property income, government support (i.e. CPP, QPP, GIS, OAS if in Canada) and investment income, charitable donations, and medical receipts. Most people keep copies of tax returns from previous years (as required) so they can serve as a good reference.
Loans & Bills
When one dies, the estate is responsible for paying credit card balances and other debts. Keep a list of the account details for your utilities, all your credit cards, and loans. Note that if these accounts are in joint name (co-signed), the surviving member will very likely be responsible for paying the balance.
Many people I know have discovered a nasty surprise when they learn their deceased spouse had a pile of “secret” debt. Having a file with statements in advance and being transparent with each other can avoid such a shock.
Records of Assets
Proof of ownership of hard assets such as your car, home or business etc., will be needed to change or cancel titles.
Identification cards & records
Closing accounts is important to help prevent fraud. Such things as health insurance coverage, passports, government identification (drivers license, social insurance or security card) must be cancelled so keep photocopies of all these in a safe place in case your executor can’t access the originals.
If you are married or divorced, be sure to keep your marriage certificate, divorce decree and custody papers as well.
Once you’ve set up your “death file”, you’ll need to tell your loved ones you’ve actually done it and where to find the information. Note that while many believe a safe deposit box is a good place to keep these documents, it’s not always easy to access unless you’ve set up joint access.
Rather than sharing your password with your spouse or trusted family member, you may want to consider naming another person on important accounts (as joint or otherwise). This way, if they need to make a bill payment, they can do so without delay or disruption. An account in your name alone typically will not be accessible to the executor until the will is probated.
Do you need a coach to help you get your finances organised? Send me an email for a free introductory call.