One of the most difficult things we ever have to face in life is the death of a loved one. Even if you are confident that your loved one is now in a much better place, that doesn’t lessen the loss you feel of just missing their company.
While there is little we can do to spare our loved ones from that pain when the day comes that we pass away, there are some things we can do to make the life of those we leave behind at least a little less painful from a financial standpoint.
Have a “Legacy drawer”
One of the things that everyone should have is a “legacy drawer”. So what is a legacy drawer? Essentially, this should be one safe location where you keep all of your important financial records and documents that your loved one would need if you suddenly weren’t here anymore. This would include information on insurance, investments, bank accounts, loans, wills and estate plans etc.
Generally for most couples one spouse tends to handle the financial matters more than the other. If you are that person it is especially important for you to have a drawer like this where they can easily find this information in the event something were to happen to you.
What needs to be recorded?
For all accounts you should list what type of account it is and where. Account or policy numbers. Phone numbers and addresses. Contact information for agents or advisors. Pin numbers. If you have online access to the account any needed usernames or passwords. Recent statements from your accounts. Basically, anything your loved one would need to know to access that account after you are gone.
What types of things should be included?
- Bank accounts
- Life insurance
- Health insurance
- Wills or other estate plans
- Retirement investment accounts
- Pensions or other retirement vehicles that might have a death benefit
- College investment accounts
- Other non-retirement investment accounts
- Information on rental properties, special collections, or any other non-stock related investments.
- Other insurance information besides life and health (homeowners, renters, auto, disability etc.)
- Social Security information
- Copies of recent credit reports
- Mortgage info and/or deeds
- Titles to vehicles
- Copy of monthly budget
- Information on any outstanding debts
- Bill pay accounts
- Information on any bills that are auto drafted from your accounts.
- Information on financial management systems used (like Quicken, Mint.com, Mvelopes, others)
- Power of attorney documentation
- Birth certificates/Marriage certificates
- Recent tax returns
- Information about safe deposit boxes or any other storage locations
- Usernames and passwords of e-mail and other social media accounts
- Any other computer related passwords.
- Funeral instructions
- Letters to loved ones that you are leaving behind
Obviously not all of these items will apply to everyone and you may have other financial documents that are unique to your situation that you would want to include.
Where to keep it
First, understand this packet will contain all of your most sensitive financial information. This isn’t a packet you want to leave sitting on your coffee table. You’ll want to make sure this is kept in a very secure location. It does need to be accessible though and the location needs to be known by your spouse and perhaps a close trusted friend. The executor of your will probably should know in the event that something should happen to both you and your spouse.
Some of this information you may want to store on printed copies. Some you might want to store electronic versions. If using electronic versions just make sure you keep things very generic. Text files or PDF files are good. You want to make sure that your loved one will be able to open the document from almost any computer. It’s also not a bad idea to make copies of everything in your legacy drawer and keep them in a safe deposit box.
Don’t forget to update
It may take you some time to create this initially, but it is an act of love. Once you have set it up, you should also revisit it once a year to make sure that everything listed is still accurate. Have you opened new accounts? Changed insurance providers? Made major purchases? Changed employers? Any other significant life events?
A good time to do this might be when you complete your taxes each year. You can then include a copy of your most recent tax statements. You could also at this point include copies of any year-end statements from your bank accounts or investment accounts.
One final act of love
Some people call the legacy drawer a “love drawer”. This is one final way you can show your love to your surviving family members. Understand that your loved ones will probably not be thinking very clearly. Grief clouds our minds and so you want the items in your drawer marked as clearly as possible. It’s a good idea even to include a cover letter explaining clearly the contents and even giving step by step instructions on the things your loved one should do.
None of us like to think about our own deaths, but we know this is one of the sureties that we will all face some day. Even if you are not married you should still consider putting this information together as a parent or someone will need the information to help conclude your affairs when you pass away.
By taking the time to do this you can at least help make the financial aspects of your passing a little easier for those you leave behind.
Photo credit: Ken_Mayer