Getting Your Financial House in Order

This article originally appeared in Aldrich Community, a client experience offering from Aldrich Wealth.

Inevitably, estate planning falls into the taboo topic category by virtue of our reluctance to address the prospect of a loved one’s (or our own) passing or incapacitation.

It can sometimes be the case that even when we think we are prepared for this sort of event, the devil does indeed turn out to be in the details.

Our client found themselves in this unfortunate circumstance when their elderly grandfather unexpectedly passed away this past year. For all intents and purposes, their grandfather had done what he believed would be adequate preparation in case of emergency: He had worked with an attorney many years before to prepare his estate-related documents. However, once completed, those documents were stored away and forgotten.

He’d chosen his grandchild, our client, as his estate’s executor. Still, he’d never provided them lists or locations of his various accounts, assets, logins, documents, or debts, nor had he talked through his intentions for his legacy with his grandchild or other family members.

When the time came to execute their grandfather’s wishes, our client had a difficult job ahead of them. Over and above managing and dividing estate assets, our client had to take extra steps to track down the estate documents and review complex legalese to learn their grandfather’s wishes.

They also had to track down accounts and assets, identify creditors to pay off debts, and dig up contact information for some of their grandfather’s interested parties, all at a time when their number one focus should have been mourning the loss of their grandfather.

The truth is that estate planning and the accompanying financial housekeeping are easy to push down towards the bottom of the to-do list because it never feels urgent until it is or because it is challenging to address the accompanying topics.

We’ve heard from many clients since the pandemic began who have now reprioritized their to-do lists to include these tasks at the top. To help you accomplish these tasks, we’d like to share some straightforward ways to get your financial house in order.

Create your estate plan
Estate planning development can feel like a drain. A basic estate plan generally costs a few thousand dollars and valuable time spent outlining contingencies for morbid circumstances, whether it’s selecting guardians for your minor children, or dividing up your assets among heirs. That said, having the tough conversations now could spare you from having your wishes left unmet and your loved ones left unequipped. Having an estate plan in place for the unexpected is beneficial to everyone regardless of your age, marital status, or net worth. We recommend working with an estate planning attorney to draft your estate plan documents. We are also happy to partner with your estate planning attorney to help you implement an estate plan that accomplishes your wealth transfer goals.

Keep your plan current
It is tempting to conclude that estate planning can be crossed off the to-do list once documents have been created. Unfortunately, many of these documents have a limited shelf life. They become outdated as our life circumstances, and the laws, change. Maybe your family has grown since your last estate update, or you’ve become more charitably inclined, for example. Additionally, lifetime exemption limits change over the years, and an updated estate plan may be necessary. Whatever the case may be, these essential documents need to be ready when the time comes. As a result, we recommend that you have your estate plan reviewed at least every 5-7 years or when circumstances dramatically change to make sure it’s reflective of your wishes.

Track your financial information
In addition to keeping estate documents current, it’s important that your loved ones and trusted parties can locate them. If you’re unable or unwilling to keep your records in one physical location, we suggest at least keeping a current record of where each item can be found. If you can hardly remember where you put your passport, how will your loved ones find the necessary documents when the need arises? If it’s not recorded, they’ll have to expend their efforts tracking various financial accounts down at a time when they are grieving the loss of a loved one.

In that respect, we wanted to create something that would help our clients. This personal financial organizer provides a convenient place where you can store all your vital financial data. It will also provide valuable information for the personal representative of your estate if something happens to you. (Just be sure to print it off and store it in a secure location like a safe.)

Adopt password protection software
Our digital lives continue to expand, whether it is our email, streaming services, etc. Adopting password protection software allows you to have one place for you or someone else to manage your various accounts. If you choose to adopt this software, once you have created your account and password, you will want to share the master password with someone you trust or your chosen personal representative.

If this sounds like familiar advice, it’s because we’ve shared it before. Maintaining your logins and passwords for websites like Netflix, Apple, or Gmail will enable your loved ones to manage the cancellation of accounts that can prove challenging otherwise.

In conclusion, getting your financial house in order is a smart step to take in case of an emergency. Some of the strategies outlined above will empower you to feel confident in having your wishes met in the future. As your advisors, we are here to help you navigate the complexities life presents and provide advice to help you prepare.