Every couple seems to have one person in the financial driver’s seat. This is usually not a question of power or who earns the most, but a rational response to the complexity of our lives. Today’s families deal with several financial companies, and having one person navigate the monetary minefield is natural step.
But this division of labor can be catastrophic when something happens to the financial driver — unexpected death, inability to communicate or even prolonged absence. The financial passenger in most cases has little inkling of the couple’s overall financial picture.
Do we have life insurance policies? What credit cards do we have and how do we get access to the online statement? What investment accounts, work retirement plans and pension benefits do we have? It’s hard to fathom, but there are many cases every year where the primary breadwinner dies and the dependents learn about life insurance benefits years later.
This imbalance in financial knowledge can cause tremendous anxiety for the spouse who doesn’t focus on these issues. Some clients start working with me in part to ensure that there is continuity if something were to happen to the financial driver.
While it’s one answer, you don’t need a financial planner to get going on this. You need a “When I’m Gone” file.
It may seem the epitome of financial geekdom to plan for your unanticipated death or disability. However, when you work with widows, widowers and children who were not the financial drivers, you realize this is not doomsday esoterica. For a grieving partner without an aptitude or interest in personal finances, chasing down life insurance policies can seem an impossible task.
The “When I’m Gone” file makes sorting out personal finances an easier task. This file is best kept in a fireproof, locked box hidden somewhere in your home. Safe deposit boxes have their advantages, but I’ve found that people tend not to keep their information up to date and may forget to return documents to the box.
In this file, you should have:
Insurance Documents. Life insurance companies, contact information and policy numbers should be listed. Disability and long-term care policy information is also important, as is information on insurance you have through work, which is often forgotten.
Estate Planning. Updated copies of wills, health care and financial powers of attorney, medical directives, funeral instructions and trusts should all be available here.
Investment accounts. Taxable investments, retirement accounts, work retirement plans such as 401(k)s, bank accounts, work pensions, annuities, whole life insurance policies, partnership stakes and other information related to your investments should be kept here. A net worth statement of assets and liabilities provides a critical high level view of your finances.
Bills. Credit cards, mortgages, car loans, student loans, taxes and utilities. These are bills that must be paid whether you’re here or gone.
Passwords. Countless logins and passwords must be maintained to stay on top of our financial lives. Your bank card has a PIN, but the login and password to online banking is different. Fidelity has a different username that TIAA-CREF. Detailing this information will do wonders for those you leave behind.
Other Documents. These include titles, deeds, birth certificates, LLC and partnership documents.
Of course you want to ensure this information is well hidden and under lock and key. Having copies in your safety deposit box is advisable if you can take the extra step.
It’s a morbid task to pull this together on a summer afternoon. But life insurance policies can be like the proverbial tree falling in the woods. If you die and no one knows you have life insurance, does it exist?
Dave Gardner is a certified financial planner with a practice in Boulder and is the president-elect of Alliance of Cambridge Advisors, a national organization of fee-only financial planners. He can be reached through his Web site at yellowstonefinancial.com.
