Would your family be able to locate important financial documents in the event of your death or serious illness?
Most people don’t plan for their own illness or death because it’s an issue that makes them feel uncomfortable. But, failure to plan may cause your family and business associates unnecessary stress in the event of an emergency.
As an example, the mother of a client passed away recently. She had lost her husband about two years earlier, but remained on the farm. Family members checked on her regularly. Then, she suffered a stroke and entered a nursing home because her family could no longer provide the appropriate care.
In this case, the mother had not planned well for her illness. She had not taken the time to discuss finances with her children. The children respected their mother’s privacy and felt uncomfortable prying into her personal matters. Unfortunately, the family had no idea where to start when their mother became ill.
So, they called me. We started by contacting her tax preparer to obtain a copy of her previous year’s return. The tax return provided us with the names of the 12 banks where she had money deposited. We also found that she had some stocks and mutual funds located at a local brokerage house.
Because she had not given power of attorney to any of her children, the family had to retain the services of a lawyer. Only after one of her children was named guardian was the family able to access her funds, which she needed.
The children never did find the necessary life or health policies, but were able to look through canceled checks to find policy numbers for the health policy. The tax return also provided information about the mother’s life insurance, since she had some whole-life policies that paid dividends.
The family was surprised by some of the other findings. Their mother had made several contributions to organizations soliciting donations with the promise of entering her
name into a contest. Her credit-card statements were loaded with unusual charges. It appears that she had been victimized by several companies that prey upon the elderly.
What should you do to avoid some of these problems?
Sit down with your family members and tell them where you keep all of your financial documents. They need to be able to sort out your finances if you become incapacitated.
Get organized. One client has actually prepared a three-ring binder that he updates annually with copies of his financial statements, including the most recent tax returns, a listing of all financial accounts, a listing of insurance policies, and a list of his financial advisers. This client appraises his spouse of the binder and makes sure that she is aware of all financial transactions that have occurred during the past year.
Meet with your attorney. Review your will and bestow a power of attorney for health and finances. Your attorney needs to be involved since each state handles death and disability differently.
Talk to your family members. You don’t need to disclose detailed financial information, but they need to be aware of the basics of your financial plan.
For more information, go to your local bookstore and find a publication called “Everything Your Heirs Need to Know.” The book also is available for $19.95, plus $3.75 shipping and handling per copy, from Ag Executive at 115 East Twyman, Bushnell, Ill. 61422. Illinois residents must add $1.35 sales tax.
This type of planning and attention to detail is time well spent, and once it’s organized it can be updated easily. Ultimately, these actions can provide piece of mind to everyone involved, including yourself.
This column was produced by Darrell Dunteman, who is an agricultural financial consultant and accountant with offices in Bushnell, Ill.