Estimate Time6 min

Avoid a financial scavenger hunt after a death

Key takeaways:

  • Just preparing documents like a will and trust may not be enough of a road map for your loved ones.
  • Somebody you trust should know where to find things like your birth certificate and other key documents.
  • Discussing your estate planning wishes with your family now will be helpful later.

When a parent or other loved one dies, how do you work through a financial to-do list when you are grieving?

I often discuss this situation with people, but I didn't realize how hard it was to handle all the details of a loved one's death until it happened to me. Recently, my father passed away at 61 from a massive heart attack. Since he was long-divorced from my mother, and I'm the oldest, it fell on me to handle his affairs.

There are really two ways this can go: Your loved one prepares everything ahead of time and makes it easy on those left behind, or they don't.

It's not just a matter of having the right paperwork prepared, like a will or a trust. Loved ones need to know where those documents are kept and what your wishes are for things that might not be spelled out legally.

It can help to have something like a cover letter to their family that points out in plain language what they want to have happen and why, because a will can provide instructions, but not the intent or emotion behind those decisions.

My dad didn't do something as formal as that, but we did have a conversation about a month before he died. He was young and had no health concerns that I knew about, but it must have been on his mind. He told me that he wanted to be buried in his family's home town in New York, next to his father, even though he was living in Colorado at the time. When he suddenly passed, I knew what to do and I could honor his wishes. Had he not told me that, I would have been paralyzed, not knowing what to do.

Cautionary tale

My dad did not have time to finish his will or any other formal paperwork, at least as far as I know. This can put your family members in a very difficult situation while they are in mourning. When a person dies without a will, the state of residence must sign off on the settling of their estate in a process called probate. It can be a complicated, long, expensive, and potentially fraught process, and all of it is then public record, so there are privacy concerns.

Instead, I started a scavenger hunt.

I grabbed a flight from Texas and that first night at the hotel, I sat down to do research. I couldn't think clearly at all. I didn't know where to start.

This checklist (PDF) was my lifeline and I now had a purpose and a plan. One thing on it that I could do immediately was forward my dad's mail. That gave me such a sense of accomplishment that it got me out of the fog.

At my dad's house, I had a hard time finding the things I needed, except his tax information and bank statements, which were all lined up in folders in boxes. His passport and driver's license were with his personal belongings returned by the hospital. My mom had a copy of their divorce decree, but I had to call up my grandmother to figure out where his birth certificate might be. It turned out it was tucked into his baby book, which she had given him a year or two back and I was able to find it in a box with his photographs. My grandmother is 83 and lives with my aunt and uncle who are caring for her in her final years. I'm lucky she was still alive, because she was the only one who knew where to look.

Back home in Texas, it may take me more than a year to settle all the financial aspects of my father's life. Once I get the death certificate and sort through the legal rules, I can figure out if his estate is small enough to avoid a prolonged probate, as the size matters in some states. Then I can settle the bank and investment accounts that did not have beneficiaries named. In the meantime, I'm digging through an old resume I found to contact previous employers to see if there are retirement accounts or pensions and waiting for account statements to show up to see if I missed anything.

How could this all have gone differently? If I had just known where to look, I'd have been better off. If there had been a folder that said here are all my accounts, here are my passwords, here is the name of my lawyer. It is so important to think: If somebody had to step into my shoes, would they know where to find things? Can I make their job easier? I didn't even know the names of his friends to let them know about the funeral—luckily his phone had no passcode, but he had no stored contacts.

One thing I did find in his desk drawer was an article he cut out of the newspaper about how and when to talk to your kids about money. He obviously had started to think about it, but the trouble is, none of us are promised another day.

Build your folder

Building a family folder is an invaluable practice. Make sure your spouse, children and executor all know where to find the folder should they need it. You can also use electronic cloud-based storage to keep a digital duplicate of key documents, like FidSafe®, where you can assign a designated individual to have controlled access. Be cautious placing these items in a home safe or a safe deposit box at a bank, because you need to make sure that a trusted person has the key or code to access it when needed.

Here are 8 items to include in the folder:

  1. Identification documents, which might include birth certificate, Social Security card, passport, marriage and divorce certificates, passport, citizenship papers, military paperwork, discharge paperwork.
  2. Contacts for your lawyer, accountant, financial advisor, key physicians.
  3. Digital access to your accounts, like account information and passwords—but note that this is tricky because there are complicated rules governing who can access your accounts and the rules keep changing.
  4. Will and trust documents: You will want to have a physical copy of these documents, as well as electronic copies, and make sure that anyone designated as your executor is aware of it and willing to take on the task.
  5. Instructions for pets: Some people include provisions for pets in their wills, or make a separate legal document, especially if they are leaving money specifically for the care of the animal, but many still do not.
  6. Contacts for your friends and other key individuals you want contacted if you die.
  7. A list of your wishes for your funeral and memorials, even if you have a living spouse who you think knows your wishes.
  8. The location of other paperwork: Your executor will need to know where to find things like your latest tax return, deeds to houses, cars, and cemetery plots.

Also don't forget that life changes quickly, so make sure to do at least yearly updates. One way to remember is to make a note on your calendar to revisit the file once a year, like spring cleaning.

Jessica Maloy, CFP®

Jessica Maloy, CFP®, vice president, wealth planner for Fidelity Investments, is based in Southlake, Texas.

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