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 A few years later, Kerecz's father passed away unexpectedly. The
52-year-old environmental engineer from Harrisburg, Pennsylvania
went to the house and looked where his father and mother used to
keep their important documents, but nothing was there. It was pure
luck that he went to the computer to look up a phone number and saw
a folder on the desktop labeled "DEATH."
"Sure enough, everything was there in that folder," Kerecz says.
Armed with a copy of the will, lists of the financial accounts and
insurance policies and other paperwork, Kerecz was quickly able to
settle his father's estate and use the funds to take care of his
ailing mother, making him extremely grateful.
The difference between having your files organized or not is about
more than just stress; leave behind a mess and it can delay
inheritors' access to funds and cost a bundle in legal fees.
"It could be six months or longer if you don't have the paperwork in
order, and ... your family is in the dark, not knowing things,
jumping through hoops. It's not a fun existence," says Howard
Krooks, past president of the National Academy of Elder Law
Attorneys.
Taking care of the necessary documents is a hallmark of good
parenting, he adds, rather bluntly: "More than any kind of monetary
legacy, if you really love them, you'd do this."
HOW TO GET IT DONE
Compile a list of the financial information your heirs will need
upon your death: wills, trust information, investment accounts,
legal contacts, etc. You can keep this information in an electronic
file - in one master document or several attachments - to serve as a
road map to find all the physical paperwork.
Or, you can do what some of elder law attorney David Cutner's
clients do, and just pull out a cardboard box and start piling up
the papers.
You have to do more than just gather the information, though,
cautions Cutner, co-founder of the Lamson & Cutner Elder Law firm in
New York. You have to tell your loved ones you have done it and tell
them where to find it. You can either hand over the file immediately
or keep it in a safe place (away from the prying eyes of caregivers
and potential scammers).
A safe deposit box, by the way, is not a good place to keep these
papers, says Cutner, because it's too hard to access when needed.
THE WILL
Top of the list is a copy of your will, hopefully the most recent
version, plus contact details for the attorney who drew it up and
any executor named. Also important are trust documents, if they
exist, estate experts say.
While power of attorney and living will documents are crucial should
you become incapacitated, they will not be useful after your death,
says Krooks - your heirs will then be using a death certificate to
obtain access to accounts.
The real power in assembling all these items is that it forces you
to go through the process of specifying your wishes. Without them,
your family would have to put your estate into probate, which is
when the state determines the distribution of your assets. This can
take up to a year and eat up about 5 percent of the estate, says
John Sweeney, an executive vice president responsible for Fidelity's
planning and advisory services business.
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FINANCIAL ACCOUNTS
Your heirs will need to know all of your account information, down
to your utility bills and your tax returns. You can either create a
list or include copies of statements in the file, or just directions
to where to find them. Also useful is a list of relatives to
contact.
Knowing passwords for online accounts is not as important as naming
another person on key accounts ahead of time, says Sweeney. This
way, if the family needs to make mortgage payments or pay any
medical bills, they do not have to wait until the estate is settled.
"Children are often dipping into their own assets to pay for taxes
and mortgages when the last surviving parent has passed away," says
Sweeney.
In that same vein, make sure to sign another person up for a key to
any safe deposit boxes or home safes, says Krooks. Include clear
directions on how to access any other valuables that may be stashed
elsewhere, so that it's not mistakenly thrown out.
SURVIVOR BENEFITS
Pensions and insurance plans have many different payout rules, so
you need to leave behind detailed information about policies.
Insurance information should extend beyond life insurance to car,
home and boat insurance, says Sweeney. It is also critical to
include your Social Security benefit information, he adds.
The job of assembling all of this information can be massive, but
most people appreciate it in the end.
"At first they curse us out because it's so much to gather and put
in one place. But by the time they come into the office, they're
really glad they did this exercise," Krooks says.
(This story has been refiled to correct Krooks' title to past
president instead of current, sixth paragraph)
(Follow Beth Pinsker on Twitter at http://twitter.com/bethpinsker;
Editing by Lauren Young and Jonathan Oatis)
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