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 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. A few years ago, this document led me to discover that one of my older relatives owned $300,000 in a bank stock – hard to believe, but true. 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 in 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 contents of your envelope with your relative’s executor, financial and health care agent, and/or another relative who lives nearby.
Spending a few hours getting organized now can save hours of time-consuming searches and expenses when a loved one becomes ill or incapacitated. It may seem like an awkward and difficult task, but all of us must be prepared in case of a sudden turn of events. Doing so will allow the family to focus on who and what matters most in a difficult situation.
Lisa Brown, CFP®, CIMA®, is author of "Girl Talk, Money Talk, The Smart Girl's Guide to Money After College” and “Girl Talk, Money Talk II, Financially Fit and Fabulous in Your 40s and 50s". She is the Practice Area Leader for corporate professionals and executives at wealth management firm CI Brightworth (opens in new tab) in Atlanta. Advising busy corporate executives on their finances for nearly 20 years has been her passion inside the office. Outside the office she's an avid runner, cyclist and supporter of charitable causes focused on homeless children and their families.
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