It may seem like a relic from the analog age to hang on to printed financial and medical documents, but the digital age hasn’t erased the need for original, signed papers.
Storing financial and health-care documents so that family members or other representatives have prompt access is important not only in the event of a health-care crisis but also when facing a natural disaster, an Internal Revenue Service audit, or applying for a loan.
“When it comes to documents, accessibility is key,” says Amanda Singleton, an estate attorney in St. Petersburg, Fla.
Laws and rules vary as to whether one needs to present an original document or if a copy will suffice in specific cases, so it’s important to know what your state or financial institution requires, she says.
Here are tips on document retention and document digitization:
What to keep
Among the financial and estate-planning documents that should be securely stored and easily accessible are wills; living wills, which direct caregivers how to treat you in a medical emergency; financial or medical powers of attorney, which give an individual the authority to make financial or medical decisions on your behalf; trust documents; and tax returns and supporting tax documents.
Today, such copies tend to be kept in electronic form, and many lawyers will also offer to keep the original, signed documents in their firm’s fireproof safe, says Michael Duffy, a wealth strategist at Merrill Private Wealth Management in Atlanta. If there’s a need for an original document, the client or the client’s agent can obtain them from the firm, he says.
Clients are also encouraged to keep electronic versions of their estate-planning documents and share them with the people who will act as their executors, trustees, trust protectors and agents under those documents, Duffy says.
With some documents, your financial institution will determine whether a copy or an original will suffice, but when it comes to the administration of a trust or estate, original documents will be needed, says Sheri Samotin, president of LifeBridge Solutions, a Beverly Hills, Calif., provider of trust and estate administration services.
Where to store
Duffy says there’s no reason to store any original in your home, and you should never do so unless you have a fireproof safe. “I’m a big fan of keeping originals with your attorney or at a bank,” he says.
In any case, it’s important that a trusted family member or representative know where documents reside, Duffy says. When he was practicing law, one of his clients died and her family had her body cremated. A few weeks later they discovered a safe containing her will and instructions directing that she be buried, he says. “Nobody was aware the box even existed,” says Duffy.
Those using a safe-deposit box should be certain to designate their attorney or another person who may also enter the box, says Kenneth Van Leeuwen, managing director and founder of Van Leeuwen & Co., a Princeton, N.J., wealth manager. Often when a person dies, a bank will lock a safe-deposit box until a court order appoints someone to open it, he says.
In the event that the owner stops paying rent on a safe-deposit box, but no one comes forward to claim its contents, the bank will usually let the box sit unopened for some time—perhaps a year or more, Van Leeuwen says. The bank will try to contact the owner at the last address it has on record, but will eventually turn the contents over as lost property to the state, he says.
Van Leeuwen suggests clients keep paper copies of their health-care proxy, medical power of attorney, and financial power of attorney in case they should need them quickly if they’re rushed to a hospital or going to visit a new doctor, he says.
Says Singleton, “In a medical crisis, nobody wants to stop by the bank, nobody wants to stop by the house and go through the file.”
Other financial information, such as the user names and passwords of credit card and brokerage accounts, should also be centrally stored and accessible, says Van Leeuwen.
Van Leeuwen suggests people keep a book with the most recent copy of their will, estate plan, tax return, residency deed, financial adviser’s contact information and more. Such a guide may prove invaluable to family members in an emergency, he says, as various insurers or long-term-care policies require quick action under certain circumstances.
Even those who keep paper copies of their financial and health-care documents should store them digitally as well, Van Leeuwen says, because people travel and aren’t always carrying documents with them. For security purposes, check that your digital storage provider uses encryption technology to protect from hackers.
“One of the things that’s now coming to light, especially when people pass away, is the lack of knowledge that heirs or even spouses have as to what is out there in terms of assets, credit cards, bills,” he says. “It’s important that you keep some kind of record online, a vault where you actually store everything.”
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