CHAPTER SIX

Getting Your Documents in Order

I help organize people’s lives for a living. But often I find my clients falling short, not in advising their families where to find the necessary documents but rather in explaining why certain decisions were made in instruments like wills and trusts and real estate distributions. This oversight (or copout) can be devastating to the family down the road.

—Carly, Certified Financial Planner

When you sit down with your kids to have the Other Talk, a number of key questions will likely come up. As a result, you will want to prepare yourself to address them intelligently and be able to discuss them at some length—questions like these:

Do your will or trust, living will, and powers of attorney (financial and medical) exist, and are they up to date?

What key elements and strategies of your financial plan are designed to ensure that you don’t outlive your money?

Is your inventory of documents, family advisors and their phone numbers, safety deposit box locations, and insurance policies readily available?

Have you made any prearrangements for a funeral service, including personal preferences, instructions, and payments?

The bottom line is that you should plan to spend some time before the Other Talk collating and organizing a variety of documents that will give your kids a snapshot of your current situation. This will also provide them with ready access to legal documents if you become incapacitated or when you reach that last sentence.

Don’t Procrastinate Because You Feel Overwhelmed

I have one caveat before you start accumulating documents.

It will become clear from reviewing the following pages that finding or requesting or generating the proper up-to-date documentation will most likely be a time-consuming and, at times, frustrating process. What I don’t want you to do is to put off the Other Talk until you get every last scrap of paper organized, duplicated, and bound into a notebook for each child.

Those notebooks (either paper or electronic) need to be produced because until you put everything together, you have not fully armed your kids to take on the various responsibilities in your last years. But the notebook is not the goal; it is merely a means to an end.

As you begin the accumulation process, I want you to stay focused on one singular objective: the more information your kids have, and the sooner they get it, the better for you and for them.

That’s why you need to commit yourself and your family, right here, right now, to having the Other Talk within the next three months with as much documentation as you can pull together.

Waiting until the binders are complete is just another form of procrastination, one with potentially serious consequences. Here’s how Darlene, a senior marketing executive, described the price she and her sisters ended up paying:

By the time we found out how sick Mom was, she went into a coma. We had no idea if she had a will, a living will, or powers of attorney, or if she did, where to find them. We had no clue about her financial dealings or situation. So we were flying blind, having to make all the decisions for her.

When you’ve got all this illness thrust on you all at once, the pressure to make the right calls (the ones Mom would have wanted but never told us) and the need to take on the day-to-day responsibilities become truly overwhelming.

What Could Go into Your Notebooks?

With that in mind, it’s time to get to work. The list of documents described in the next few pages is not intended to be definitive, nor does it represent expert advice. You should talk with your financial, legal, and accounting advisors about how to meet your individual needs.

But this list is designed to get you started thinking about the wealth of information you need to prepare and bring to the Other Talk. Further, you will want to review and update these documents annually for the subsequent Other Talks to reflect changes in your assets and in your preferences.

The Will or Trust

An original will or trust is the most important document you need to keep on file. You need to let your kids know where it is located, and I would strongly recommend that you share it with them now to avoid misunderstandings, resentments, and legal actions after you’re gone.

A will or trust allows you to dictate how your estate will be handled and who will inherit your assets, which will simplify or avoid the probate process. Further, not having the original document means that family members can challenge your wishes in court.

Medical Information

1. Advance directives. There are two key advance directive documents that you will want to fill out and give to your kids at the Other Talk:

A durable healthcare power of attorney, which allows your designee to make healthcare decisions on your behalf if you are incapacitated

A living will, which details your wishes at the end of life, often including a “do not resuscitate” (DNR) order

You should also give these advance directives to your primary care doctor so the directives can be included in your medical record. Further, if you have scheduled surgery or other planned hospital admissions, you should bring copies with you to make it part of your medical chart.

2. Doctors. You will want to create a summary list of all of your doctors and other medical advisors that includes their names and contact information, medical specialty, a brief description of your diagnosis, and the treatment plan and timeline.

3. Medications. You need to develop a list of prescription and nonprescription medications that includes the type and strength of each medication, what the medication is treating, where to obtain prescription refills (pharmacy or mail order), and the name of the physician who wrote the prescription.

Financial Information

You need to provide contact information for key advisors (attorney, financial planner, accountant, stockbroker, real estate agent, etc.). Your kids will need the name, address, phone and fax numbers, and e-mail address for each of these individuals.

Key Documents

Your family needs to know where to find a variety of documents (the originals and copies if applicable) because your kids won’t be able to make decisions or take actions on your behalf without them. These documents include your birth certificate, Social Security card, marriage license, passport, trust documents, and, if applicable, a divorce judgment and decree, or the stipulation agreement if settled out of court.

Insurance for Life, Health, Home, Vehicles, and Boats

Provide family members with the name of the carrier, the policy number, policy type and specifics, and the agent connected with each policy. Be sure to include any life or health policies granted by a company upon retirement.

The availability of this information is critical, especially for life insurance, since insurers are not required to determine whether a policyholder has died. As a result, a claim is paid only when the surviving family members contact the company.

This nonpayment of claims is a bigger problem than you might think. More than $400 million in unclaimed life insurance payments have piled up between 2000 and 2011 in the state of New York alone, according to the New York state comptroller’s office.

Tax Returns

The kids will need to know the location of your most recent seven years of returns. This is necessary for IRS queries, but it is also helpful, when the time comes, in determining the extent of assets in the estate and in filing a final income tax and estate return and, if applicable, a revocable trust return.

Banking Information

Your family needs the location, names on accounts, account numbers, and contact information for each of your checking and savings accounts, as well as the location and contents of your safety deposit box. Be sure to register your spouse’s and kids’ names with the bank, and have them sign the registration document so they can gain access without a court order.

Proofs of Ownership

You need to accumulate in a central location the original documentation of housing and land ownership deeds, cemetery plots, vehicle and boat titles, savings bonds, and partnership or corporate operating agreements.

Investment, Pension, and Loan Information

Your heirs will need to know the location of an inventory of current investments, including taxable and traditional and Roth IRA accounts and your 401(k) and 403(b) plans, plus the account numbers and the contact information for who handles each.

You should also let your kids know where to find your latest statement from Social Security; company pension plan details and contact information; original mortgage and any home equity loans and most recent refinancing details; a summary of the loans you have outstanding and the repayment terms; and a summary of the debts you owe. (Wills and living trusts should be written to direct how debts are to be settled.)

Credit Card Information

You should copy the front and back of all active credit cards and indicate the location of the most recent statements, especially if there are outstanding balances.

Valuable Items Information

You will want to provide your family with a summary of antiques, jewelry, original artwork, family heirlooms, and any other valuables, along with the most current appraisals.

Burial and Funeral Information

Certainly your kids will want to honor your wishes at the end of life. That’s why you need to summarize your choices on these aspects:

Cremation or burial

Type of service (such as where, what kind, who will preside, visitation, specific music and/or readings, military proceedings)

Organ donation arrangements and time frame

Location of burial plot and type of grave marker

Charity donation in lieu of flowers

In addition, you will want to let your kids know if you have prepaid for a funeral service or taken out burial insurance, and with whom. Just like the life insurance companies, these prepaid providers are under no obligation to contact the family, and they will pocket the proceeds if no request is made. (This actually happened to my family, even though both parents had paid in full.)

To conclude, I want to encourage you to schedule the Other Talk within the next three months with as much documentation as you can pull together.

Since there will undoubtedly be information gaps that will need to be filled in, however, I’d ask you to add to your preliminary notebook a page that lays out a timetable for its completion. Only then have you fully prepared your kids to take on the various responsibilities as your last years unfold.

The more information your kids have and the sooner they get it, the better for you and for them.

Next Steps

Bringing all this information, strategies, and contacts together in a binder is critical to a successful Other Talk. But it isn’t just about the accumulation of data that this binder represents. It is also important to use it to establish a framework and a goal orientation to the process.

First, it presents a rare opportunity for your family to come together to talk about what’s important to you, to sit back and think about what life has meant to you, what you would like to accomplish next, and what you would like to leave behind as your memory—your legacy.

Second, by having a thoughtful and wide-ranging dialogue before infirmities set in, your family can create a road map that will help them realize some of those aspirations.

Third, it can lead your family down the path to an open, honest conversation that clears away the underbrush of misunderstandings and wrong assumptions that often can result in resentments, anxieties, and financial missteps.

Fourth, the more you and your kids anticipate potential twists and turns, the more likely it is that all of you will navigate those last years with skill and confidence.