At death or disability, does anyone know where your money is?’
We often counsel people in such circumstances. I see it as someone walking into the middle of a movie and figuring out what is going on. Discovery is a process that takes time. This proves to be true often.
A woman’s brother is in a coma. No one in the family, even the man’s wife, knows anything about his savings, investments, debts, or financial matters. The family doesn’t know his financial advisor if he has a will or how much money is available to pay bills, which are piling up rapidly. When they did locate bank accounts, the family had to work with three different banks to access the money. At least there was a Power of Attorney in place so that bills could be paid. However, what else did he own?
The family’s story, as related in the article “Someone Needs to Know Where Your Money Is” from Kiplinger, is not unusual. An estate plan with preparations for incapacity and death, shared with his wife or a family member, would have prevented many of these problems. What can you do if faced with this exact scenario?
Finding the most recent tax return will yield a lot of information. This document would have the name of the person who prepared the return if the person used a CPA. The tax return will also document income (See Schedule B) and possibly list some assets. The tax return will include information like earned interest, dividends, pension income, and withdrawals from retirement accounts. If you know the name of the person’s employer, call the human resources department since they may be aware of a life insurance benefit or a 401(k) account.
The person in this example was admitted to the hospital, and their health deteriorated so rapidly that there was no time to make any proper arrangements. We never know what the future will bring. Having an estate plan and gathering information on finances and assets—and sharing this information with loved ones—should be done by everyone.
Here are the documents most people need in case of incapacity:
- Will, Financial Power of Attorney and Trust Documents, if any, exist
- Bank, Investment and Social Security statements
- Information for all online assets, including financial assets, websites, business accounts, and cryptocurrency
- List of all Retirement Accounts, annuities, and life insurance policies
- The cost basis of all investment in taxable brokerage accounts or stocks
- A list of any assets of value, including real estate and automobiles
- A list of debts, and
- Most recent tax returns.
Schedule B on a tax return can reveal some surprises for family members. If there are no paper records or log-in information to financial websites, ask the tax preparer for a copy of the 1099 form for each asset. Once the list is complete, put together the data and all insurance company information and the tax return into a large envelope to be reviewed once a year.
Some estate planning attorneys keep original wills for clients, but not all do. Contact your estate planning attorney to find out what would happen if you become incapacitated. Be sure to have the necessary documents created or updated, including a will, financial power of attorney, health care power of attorney, and any trust documents. A copy of your Social Security card, birth and marriage certificates, and your estate planning documents can go into a big envelope marked “Legal Documents” and be placed in a secure location, also to be reviewed annually.
Tell your executor and trusted family members where these documents are, so they can be accessed when needed. They will be able to act on your behalf in the event of incapacity, and you will have spared them unnecessary stress and expenses.
Reference: Kiplinger (Nov. 1, 2021) “Someone Needs to Know Where Your Money Is”
