Note: This post was written in 2012 by the previous owner of this blog.
Nothing is certain, but death and taxes. Sorry to be so morbid, but it’s a fact and just a matter of time. And if you’re like me, you want to ensure that the ones you love are taken care of and prepared.
You’ve worked long and hard to accumulate your assets, and keeping them safe also takes effort. You want to ensure that you protect your assets. And, if you’re like most families, there is typically one person who handles the finances for the family.
In my case, I handle the finances and my wife is aware of where we stand, but the day-to-day transactions are not clear to her. We have a lot of transactions that occur at fixed times of the month, variable times of the month, fixed expenses, variable expenses, some expenses paid with one credit card, some with another, some that we pay through our online bank, some directly at the company’s website, it can get quite confusing.
So here are a few tips to help you prepare for the worst:
Gather all account usernames and passwords
We have an online document that houses all usernames, passwords, and answers to key questions on a password protected spreadsheet. A printout of this document is kept safely in a secure place in our home. You can also put this in a safe deposit box at your bank.
Inventory all transactions
I have another document that shows what day of each month all expenses and incomes occur. For instance, I show that our cell phone bill is always due around the 5th of each month, is a variable expense, the bill is sent through the mail, and the bill is paid manually.
On the other side of the spectrum, I show that our mortgage is a fixed amount on the 1st of each month and the bill is paid out automatically from our bank. You may also need to include all other expenses that are not monthly…car insurance is a good example.
Take inventory of all assets and liabilities
I’ve mentioned this before in a previous post, but you need to get a single page shot of all your assets and liabilities. Mine is done electronically through Fidelity.
Plan your estate
I haven’t done this yet, but is on my list of things to do. If you don’t have many assets, this may not be worth your time, but if you have significant assets, planning how to structure these assets can be a key activity in securing your families future. Meet with a tax attorney or estate planner to begin the process
Protect electronic assets
You need to do this regardless, but your pictures, videos, and documents have invaluable and losing them can be devastating to your family. I use an on-line back-up company like Carbonite or Mozy and prefer this over an external hard drive for many reasons.
The first is that you don’t have to worry about backing up new documents on an external drive..the online systems automatically back any new files. Secondly, if your house were to burn down, you lose both your computer AND your back-up drive. If files are backed up online, your files are secured in a remote location.
Make sure that your families are well insured in case of an issue that may arise immediately upon your death. Umbrella insurance is key, but also have all the information on your life insurance, home insurance, and car insurance.
Instructions upon your death
This would include life insurance policy documents, what policies to cancel, and HR contacts at your employer. I currently have all instructions typed on a single page document in a sealed envelope that is only to be opened upon my death.
I know this is a difficult topic because no one wants to discuss immortality, but let’s be real. There are many other things for families to worry about immediately following a death, but eventually, they will have to deal with your estate and finances.
You do not know how long you’ll be here on this Earth and it is only your responsibility, particularly if you have a family, to ensure that they are secure financially. The good thing is that you think about this once, take action, and you don’t have to think about it much again outside of regular updates to the documentation.
But being prepared will give you peace of mind that your family can focus on more important things and not worry about the financial impact of a loss.