Creating an organizational system for important documents will help the planning process go smoother and provides peace of mind at tax time and end of life. 

A prospective client recently told us, “I just need someone else to know what I know.” He was the only one in his family to handle anything related to finances. He paid all the bills, made sure the insurance was in place, and made the investment decisions. And he was the one with the relationships with his trusted advisors.

This gentleman was concerned that if something happened to him, his wife and kids would be lost. They wouldn’t even know where to start to get their financial lives on track. Being the only one in his household with this knowledge was a burden, and he wanted to make sure somebody else had his back, so he could devote more time to enjoying life. He decided to take steps to protect his family. How?

Getting a process underway may seem daunting, but it doesn’t have to be. In this article, we will discuss how to get started in organizing your documents.

Step One: Make a list of everything you have in place.

Common items include:

  • Bank accounts, including checking, savings, lines of credit, and loans
  • Investments, including brokerage accounts for stocks and bonds, IRA, 401K, CDs, and annuities
  • Property ownership, including real estate deeds, closing documents, and title insurance policies
  • Insurance, including life, homeowners, umbrella, auto and health
  • Estate planning documents, including your will, power of attorney, and end of life wishes

Step Two: Decide how to organize your documents.

Are you tech-savvy enough to have a digital system on your computer, or are you more comfortable with paper? There are benefits to both.

Proponents of paper insist it’s more efficient than digital. If you choose paper storage, keep the items on your list in one location, and let your loved ones know where it is. Sometimes called a Legacy Box or Love Drawer, the designated spot is often a filing cabinet drawer. Wherever you choose to house important documents, make sure your loved ones can easily find it in your absence.

If you use a digital filing system, choose one folder in a safe, password protected, location to keep everything together. Keep it on a thumb drive in a safe place, such as a safe, or store it in the cloud, where it can be accessed from anywhere with the right security credentials. Once you’ve selected the location, create subfolders with clear labels of what to find inside. Use your original list as titles for the subfolders.

Step Three: Gather documents.

Bank accounts

  • One statement from each account showing the bank name, location and account number
  • Phone number and email address you use when you need help
  • Login information for any online accounts

Investment accounts

  • One statement from each account
  • Personal representative’s contact information
  • Login information for any online accounts

Real estate holdings

  • The package you took home at closing/closing documents
  • Statements for any mortgages (first and/or second)
  • Login information for any online accounts

Insurance policies

  • Original policy and any updates that have been added or removed over the years
  • For life insurance, the contact information of the company providing the policy and agency
  • Login information for any online accounts
  • Statements for homeowners, umbrella, auto, and health, including company and coverage amounts

Estate planning documents – when needed, these must be original documents. You should also keep the digital or paper copies, but ensure your loved ones know where to find the originals.

  • Your last will and testament, including any codicils
  • Your revocable/living trust if one has been prepared. These are often used in place of or in conjunction with a will.
  • Any other trust created by you
  • Durable financial power of attorney
  • Advanced directive also called a living will
  • Medical power of attorney

If you don’t have these documents in place, take time to get them drafted now. Designate who should make decisions for you if you are incapacitated, and be clear about your wishes.

Step Four: Let your loved ones know.

Once your system is in place, explain it to your loved ones, including the purpose and what’s included. Direct them where to find the documents and how to gain access. If it’s a physical drawer, include a key or provide instructions for finding it. If it’s an online file, include the master password. Offer a list of your trusted advisors, including your current attorney, the attorney who drafted your estate planning documents, accountant, investment advisor, banker, and insurance agent with contact information. Put everything in writing.

The most compassionate thing you can do for your family is to give them one less thing to worry about as they grieve. Make sure somebody else knows what you know. When you’ve created a legacy, it’s a relief to know you have done everything you can to preserve it for years to come. If you need help putting a system in place, contact us.

Services offered by LBMC Family Office

  • Put a document system in place
  • Maintain your file from year to year as your situation changes
  • Pay your bills
  • Store records
  • Keep up with vendors
  • Create a household budget
  • Track investment activity and report market value changes on a monthly financial statement
  • Work with LBMC’s tax team to organize your taxes