I found this article helpful and I think you will too. Originally published in Kiplinger, by Lisa Brown, on 11/1/21, it is a great reminder of the consequences of putting off planning for the future and protecting our loved ones.
Ms. Brown writes: 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 has 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. But even this knowledge 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. He also had a power of attorney document, which helped secure money from the banks. Still, the bills were piling up and there wasn’t enough money available to sustain his expenses much longer.
To provide some immediate help, I recommended his loved ones do the following:
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.
When he was admitted to the hospital in August, the relatives had no idea his health would deteriorate so quickly. This is a heart-wrenching example of how 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 has no knowledge of her husband’s financial affairs and accounts.
None of us wants to be caught in this situation. Lots of Gen Xers and Baby Boomers with older relatives may need to know about a loved one’s finances to ensure all is in order during trying times.
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 a house, car, and jewelry.
- Most recent tax returns.
Recent Tax Returns are Critical
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.
Schedule B Is Key
This document is filed to report the interest and dividends received each tax year. 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 company 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, health care power of attorney, and any trust documents. Put these documents in an envelope marked “Legal Documents.” A copy of the Social Security card, birth and marriage certificates can be placed here, 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, such as attorneys, accountants, financial planners, and insurance agents. In addition, share the contents of your envelope with your relative’s executor, financial and health care agent, and/or another relative who lives nearby.
Final Thoughts
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate, or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate, or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
David H. Lefton is an Estate Planning and Probate Attorney. He is a partner in the law firm of Barron, Peck, Bennie & Schlemmer.
Reference: Kiplinger 11/1/21