If you were to become incapacitated or die, how easy would it be for relatives or someone else to take over your financial affairs? Would they have to search through a mountain of disorganized paperwork in your dresser? Would they not have a clue what accounts you have because you receive all of your statements online and there is no paperwork? Or would they have a handy directory that lists all of your account information?

No one likes doing funeral planning or other things that remind us of our own mortality. But death and injury are a fact of life. Creating a personal financial directory makes it easier for someone to cancel your accounts or otherwise manage your finances if you are not able to. You may also wind up using it yourself if, for example, your wallet is stolen and you need to notify your financial institutions and creditors or you forget an online password.

To get started, set aside a few hours at a time when you won’t be distracted. Think about all of the accounts and obligations you have, including a mortgage or rent, loans, credit cards, utilities, checking and savings accounts, investments, retirement funds, and insurance, and gather your statements. Using a piece of paper or computer program, list the following information about each one: the account number, who it is with, their phone number, address, and website, online username and password, location of paper statements, and monthly payment amount and due date (if applicable). Also include the name and contact information for any financial advisors, such as an accountant or financial planner, and login information for your personal email and social networking accounts. Whenever there is a change (e.g., you open a new account or change a password), remember to go back to your list and update it.

For your personal reference, keep a copy of your financial directory in a safety deposit box or fire-proof safe. Don’t leave it in a desk or dresser drawer because it could be easily swiped by visitors or robbers or destroyed in a fire or other natural disaster (ironically a time when having such a list comes in handy). You also want to let someone know that your directory exists – after all, the reason you created it in the first place was so that your finances would not be a mystery. You may have no problem giving your directory to a trustworthy friend or family member or you may feel uneasy about giving someone your personal financial information while you are still in good health. (There could be a risk of identity theft or just benign monitoring – perhaps you know your busybody sister will view your checking account history online, and you don’t want to explain why you spent $300 on shoes.) If it is the former, physically hand it to the relevant person (don’t email it) and emphasize the importance of keeping it in a secure place. If it is the latter, make sure he or she knows where your directory is and has a way to access it in case of an emergency.

Besides creating a financial directory, another way to make it easier for your financial affairs to be taken care of is to assign someone durable power of attorney for finances and executor of your estate. (You can use the same person or two different people.) Durable power of attorney allows someone to make financial decisions for you when you are incapacitated. The executor of your estate handles your financial affairs after your death. Creditors and service providers will typically take payment from anyone, but they may not speak to someone else about your account if he or she does not have the legal authority to act on your behalf. You can create a durable power of attorney document and will (which assigns an executor) with the help of a lawyer or computer software. Make sure to choose a person (or people) who is trustworthy – if you do not have a relative or friend you feel is appropriate, you can use a professional, such as a lawyer or accountant.

A little bit of planning can ensure that your finances are taken care of even when you are not able to manage them yourself.

1. Is there anyone, such as a parent, whose finances you expect to take over if he or she becomes incapacitated or dies? If so, ask him or her to create a personal financial directory so that you will not be scrambling when the time comes.

2. Check your account statements when you receive them – and don’t forget about ones that are issued online. Doing this allows you to catch errors or evidence of identity theft and contact the financial institution promptly.

3. When you go on vacation, take a list of your financial institutions’ phone numbers. That way, if a credit or debit card gets lost or stolen, you can cancel it quickly.

4. To protect yourself from identity theft, when disposing of documents containing sensitive information, shred them instead of just throwing them in the recycle bin.

5. Create a filing system for important paperwork. You can get compact organizers if you don’t have room for a full-sized filing cabinet.

6. Put important documents in a fire-proof safe. Besides your personal financial directory, other things you may want to put in a fire-proof safe are your passport, titles to any cars you own, lease agreement or mortgage documents, and Social Security card.

7. If your computer, smartphone, and/or other devices contain sensitive personal financial information, make sure they are password protected. Choose a password that is not easy to guess – avoid your date of birth, pet or child’s name, or Social Security number.

8. Before renewing your auto, homeowners, or other insurance policies, get quotes from other companies. Even if your current insurer gave you the best deal six months or a year ago, that does not mean they are offering you the best deal now.

9. Whenever you call a creditor or service provider, keep a notebook by the phone and write down the main points of the conversation. You don’t know what notes the customer service representative is putting in your file.

10. If you keep important financial information on your computer, make sure you back it up regularly. That way, if your computer breaks down, the information is not lost forever.

Get It Together: Organize Your Records So Your Family Won't Have To
By Melanie Cullen and Shae Irving (NOLO 2008)

If you want a tool that can help you get started in creating a personal financial directory, look no further than Get It Together. It provides a step-by-step guide on documenting and organizing a wide range of important financial concerns, including final arrangements, insurance policies, tax records, retirement accounts, custody arrangements for children and pets, wills/trusts, health care directives, and real estate records. Each chapter contains a section on where to get help (books and/or organizations to contact for more information), what specifically should be recorded in your directory, and situations in which you made need to update your directory. At the end of the book, there are easy-to-fill-out forms you can use to record your information. (They are also available on the included CD-ROM.) Get It Together makes organizing your finances as easy as taking a trip to the bookstore.

Copyright © 2010 CCCS
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