Let someone know where your money is
A few weeks ago, I received a call at 8:30 a.m. from a stressed-out woman in Florida. Her brother, a retired Delta Air Lines pilot, was in a coma. Bills needed to be paid but no one in the family, including his wife, had any information about his savings, investments, debt or other finances.
She believed he had approximately $800,000 in investments. All he ever told them was that he “put his money with an adviser who specializes in working with Delta pilots.” After calling several financial advisers, they had yet to find any money.
Fortunately, they had found three local bank accounts, and her brother had signed a power of attorney document, which helped secure money from the banks.
But even that turned out to be a frustrating experience, since the woman and her siblings needed to work with three different banks to get access to the money or close the accounts.
Meanwhile, the bills were piling up and there wasn’t enough money available to sustain his expenses much longer. When he was admitted to the hospital in August, the relatives had no idea his health would deteriorate so quickly.
To provide some immediate help, I recommended his loved ones obtain his latest tax return. This document likely has the name and contact information of the accountant who prepared the tax return, if he had a professional provide that service.
In addition, the tax return will document his income. “If you find the income, you can find the assets,” I told her. That’s because earned interest, dividends, pension income and withdrawals from retirement accounts will be reported on the tax return.
I also encouraged her to call the Delta Air Lines human resources department. There could be a lingering life insurance benefit or 401(k) balance there.
Don’t let it happen to you
This is a heart-wrenching example of why everyone needs to have their estate plan updated and make sure their financial affairs are in order at all times.
In addition, someone — a spouse, siblings, adult children — needs to know all of the financial details and how to access the money, life insurance and other important documents. Sadly, in this situation, even the pilot’s wife had no knowledge of her husband’s financial affairs and accounts.
None of us wants to be caught in this situation. Here are some recommendations to consider taking now to ensure this situation doesn’t occur with you or a family member:
—Collect key financial documents. Ask your loved one to gather copies of the following documents:
- Will, revocable trust and financial power of attorney;
- Bank, brokerage accounts and Social Security statements;
- Cost basis of all investments in taxable brokerage accounts or stock certificate form;
- Website log-in credentials for any financial assets and insurance policies;
- Estimate of monthly living expenses;
- List of all beneficiaries for Individual Retirements Accounts, annuities and life insurance policies, including names, dates of birth and addresses;
- A list of any other assets and debts, such as house, car and jewelry.
- Most recent tax returns.
As you begin collecting documents, the most important one to help uncover current assets is the tax return. It can help nail down what assets your loved one owns, as well as the income they have coming in from pensions, annuities, real estate investments, business interests and Social Security.
The tax return’s Schedule B is key. This document is filed to report the interest and dividends received each tax year. A few years ago, this document led me to discover that one of my older relatives owned $300,000 in a bank stock — hard to believe, but true.
If you can’t find any paper statements or log-in information to financial websites to track down each asset, start by asking the tax preparer for a copy of the 1099 form for each asset so you will know which companies to contact.
Once you have a full list of assets, debts and current statements, including all insurance policies and the tax return, set them aside in a large envelope marked “Important Documents: Tax and Financial.” If you refresh this package once a year, it should take less than one hour to maintain.
—Make certain key documents are signed.
These include current copies of a will, financial power of attorney, healthcare power of attorney and any trust documents.
Put these documents in an envelope marked “Legal Documents.” A copy of the Social Security card, as well as birth and marriage certificates, can be placed there, too. This envelope only needs to be refreshed each time an update is made to the will or other legal paperwork.
—Make copies for advisers and others
Provide copies and access to files to people who serve as professional advisers — including attorneys, accountants, financial planners and insurance agents.
In addition, share contents of your envelope with your relative’s executor, financial and healthcare agent, and/or another relative who lives nearby.
Spending a few hours getting organized now can save hours of time-consuming searches and expenses should a loved one become ill or incapacitated.
It may seem like an awkward and difficult task, but all of us must be prepared in case of a sudden turn of events. Doing so will allow the family to focus on who and what matters most in a difficult situation.
© 2021 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.