The Financial Junk Drawer

After a loved one passes and the funeral activities come to an end, the real work for the executor and trustee begin. To simplify the handling of your estate or, should a debilitating illness strike, we recommend our SWAN Binder. Our firm is called SWAN Capital and it is because our mission is to help families Sleep Well At Night. The SWAN binder enables you to feel confident that if a disability or death plagues your household, you are prepared for it. It is one of the most beloved services we do for our clients. We want to share with you how we organize a client’s legal, tax and financial documents into one binder. We recommend you start with a 5-inch, 3-ring binder which will be large enough to contain all of your key files. If you need a larger binder, then you may need to remove and discard some files. We believe it is essential that you give serious attention to what documents you hold on to.

What to Keep

A Financial Plan – Over the past decade, I have discovered that many individuals have investments and statements detailing their current portfolios – yet very few ever have an actual financial plan. A financial plan should be the first thing in your binder, right at the front. It should outline everything, including sections on Income and Liability Protection, Estate, Tax and Long Term Care Planning and, lastly, Asset Allocation.

Protection Components

  • Home Insurance – Be sure to hang onto a copy of your most recent home insurance policy declaration pages in your binder. The 82-page insurance policy that is sent to you can be found online or requested by the carrier. Since it is easily assessable, it may be a good idea to discard the entire document for storage limitations.
  • Auto Insurance – Be sure to store a copy of your most recent auto declaration pages. In case of an accident, it is very handy to have so you won’t have to search far and wide for your policy information and policy limits. The actual insurance policy booklet often can be found online, so feel free to discard this massive stack of paper.
  • Life Insurance – Retaining a copy of all your life insurance policies will help keep beneficiaries from scrambling for life insurance proceeds. For your beneficiary’s sake, please discard any cancelled life insurance policies. Also, you will want to highlight your up-to-date list of beneficiaries. Confirm you have a primary, contingent and tertiary beneficiary. Life insurance companies are notorious for sending additional fancy brochures and buyer’s guides, but after reading through them they should be discarded.
  • Long Term Care Insurance Policies – You should keep a copy of your long term care insurance policies. Make sure you have highlighted the daily limits and policy maximums for your policy, because caregivers will need this information readily available for decision making. Please discard any fancy folder and sales materials.

Tax Returns – Many people have differing opinions, but I believe you should have two years of tax returns (at least the first 2-10 pages) in your financial binder. The most recent two tax returns will allow financial professionals and beneficiaries to understand your tax situation if something happens to you. Keep seven (7) years of your most recent tax returns in another safe location in case you are audited by the IRS. Personally, I save all of my tax returns for every year in electronic form.

Investment Statements – Sadly, I have spent hours with widows who were new clients, calling various financial institutions to ask: “Does she have money here?” The reason is because they had so many saved investment statements, with some dated more than 30 years ago. We spent hours tracing their money through history. Please don’t let this become your story. Store year-end December statements of closed accounts with your filed away tax returns. I recommend you hold onto only your most recent monthly statement for each account. Let the online brokerage firms archive your previous statements for you. Another option is to scan them and store them on your personal computer if you’d like to retain archived copies; then shred the paper versions.

Legal Documents – In the back of your binder, we recommend you store, in protected plastic sleeves, the original or a copy of your Last Will & Testament, Power of Attorney (s), Living Will and Trust. It is critical to keep a copy of all of your legal documents so your financial advisor can review the Schedule A of your trust to confirm all of your assets are funded in your trust.

Property Information – Keep a copy of your property deed in your binder. After closing on your home even if you have a mortgage, you should possess a copy of your mortgage. The reason to hold onto this is to validate that your home is titled properly. If your home is paid for, please consult an attorney about utilizing a Life Estate or having the home owned by a trust. Also, filing a copy of your mortgage statement is wise to aid your power of attorney or executor in handling your affairs.

Bank Statement – I have witnessed families that had more than 17 active bank relationships with over 32 accounts. I felt pity thinking about the painstaking process beneficiaries would have to go through to find their inheritance. It will ease their burden if you keep at least one month’s bank statement in your binder. Make sure it’s a full statement, not a simple online print out. Remember to confirm your beneficiaries for each bank account, including a primary, contingent and tertiary.

Pension Estimates – Pension estimates, Survivor Benefit amounts and Social Security statements also belong in your binder. Remorsefully, I have witnessed spouses who were unaware of how much their loved one left them in pension income. After taking considerable time to locate the correct phone number, they had to call – with fingers crossed – to see if there were any survivor benefits left for them. Retaining this information will streamline this process for your spouse or children.

Passwords – In the digital age it has become essential to maintain a updated list of all of your online login and password credentials to allow loved ones to gain access if you become incapacitated.

Your legacy is a reflection of your life. I can speak to the assurance my wife has knowing she has a binder with all of particulars of our financial activities. She doesn’t deserve our legacy to be thrown into the wind like a 1,000 piece puzzle in a hurricane. Neither does your family, so make time to assemble this binder for your family. With the binder in hand, your family can spend more time grieving and healing when you are gone. Your family deserves a SWAN binder. They deserve having everything neatly organized in a binder so they can close the book on your affairs.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM) and/or Swan Capital. AEWM and SWAN Capital are not affiliated companies. Investing involves risk, including the potential loss of principal. SWAN Capital is not affiliated with the U.S. government or any governmental agency. 00616644