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Barbara Whelehan writes Boomer Bucks for Bankrate.comPreparing your finances for death and disaster

You never know if you might inadvertently step into the path of a truck.

I recently attended the funeral services of a young man who died differently, though unexpectedly. Ten years before, at age 29, he had suffered an accident that left him with short-term memory problems. After the funeral service, his mother confided that she discovered two bureau drawers in his home filled with bills and account statements going back a couple years. On the envelopes her son had attached sticky notes with reminders addressed to himself. It was impossible for her to immediately determine the current status of the accounts.

"He left behind a mess. I'm the one who's supposed to leave behind a mess," she said, voice heavy with grief and irony.

Dealing with a close family member's death ranks way up there among emotionally traumatic experiences. Those left behind must deal with pain and loss, and in this disoriented state, must also put right the financial affairs of the deceased.

We can do much to alleviate at least some of the suffering our survivors will go through when our day comes if we take steps to put our finances in order now.

Take inventory of your assets
Creating a system for your finances accomplishes a couple of goals. It facilitates processing an insurance claim in the event of a disaster, and it makes it easier for loved ones to put their hands on important information in the event of your death or sudden incapacity.

You can organize your finances any number of ways, but here's one method:

  • Purchase a fireproof box. The box should be large enough to hold documents, precious jewelry, and important photos, tapes or DVDs of family members -- the stuff of family history that will be treasured for generations. I found a fire-safe security file that's about 10 inches high, 12 inches wide and 8.5 inches deep for $65 at an office-supply store. It has a one-half hour UL fire rating, which I hope will never be tested.
  • Set up a file system with appropriate subject categories. Reserve one file folder that you might label "household possessions" for photos of your belongings: furniture, electronic and computer equipment (with serial numbers inscribed on the reverse side), artwork, books, collectible items, etc. It would be useful to provide an estimate of their value, too. You can use other mediums -- videotapes, computer disks or DVDs -- on which to record this data if you prefer. This will speed along an insurance claim in the event that you suffer a loss due to burglary, fire or some other disaster. You might want to make duplicates of this information and store the duplicates outside your home -- in your office or a safe-deposit box, for example (just in case your fire-safe security file melts, succumbs to a flood or is stolen).
  • Reserve another file folder for "important documents." It should contain birth, death and marriage certificates, military discharge papers, divorce decrees, Social Security cards, passports, property deeds, auto titles, etc. Another file folder might be labeled "investments" with information about pensions, brokerage and retirement accounts such as IRAs or Keoghs. Obviously you won't be able to store all your statements in one folder, but include copies of a recent statement for each account, and update once a year.
  • Set aside a folder each for insurance, medical records and bank records. The insurance folder can hold policies and correspondence regarding your auto, life, disability and health policies; another might contain important medical records, and yet another, photocopies of credit and debit cards, along with a copy of recent bank and credit card statements. Originals of wills and trusts can also be placed here if space allows, or you may be more comfortable keeping a copy in the box and the originals with your attorney.
Next: "You don't want your retirement money going to your ex, right?"
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