Would your family be able to locate important financial documents in the event of your death or serious illness?
Most of us don't plan for our own illness or death because it’s an issue that we feel uncomfortable with. But, our failure to plan may cause our family and business associates unnecessary stress in the event of an emergency.
The mother of one of my clients passed away recently. She had lost her husband nearly two years earlier. She remain-ed on the farm, and family members checked on her regularly. Then, she suffered a stroke and was placed in a nursing home because her family could no longer provide the care she needed.
In this case, the mom had not planned for her illness. She had not taken the time to discuss her finances with her children. The children respected their mother's privacy and felt uncomfortable prying into her personal matters. Unfortunately, the family didn't have a clue where to start when mother became ill.
So, the family members called me. We started off by contacting her tax preparer to obtain a copy of her previous year's return. The tax return gave us the names of the 12 different banks where she had money on deposit, and we found that she also had some stocks and mutual funds held by a local brokerage house.
Because mom had not given a power of attorney to any of her children, the family was forced to retain the services of an attorney. Only after one of her children was named guardian was the family able to gain access to her funds and open her lock box. (It took visits to eight of the 12 banks to find her lock box.)
The children never did find life or health insurance policies, but were able to look through their mom’s canceled checks to find policy numbers for the health policy. And, the tax return told them about her life insurance, since she had some whole life policies that paid dividends.
The family was surprised by some of the other items. Their mom had made quite a few contributions to organizations soliciting donations with the promise of entering her name into a contest. Her credit card statements were loaded with charges for magazines and other items of questionable value. It appears that she had been victimized by a number of 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 of mine 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 wife of the binder and makes sure that she is aware of all financial transactions that have occurred over 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 is also available for $19.95, plus $3.75 shipping and handling, from Ag Executive at 115 East Twyman, Bushnell, Ill. 61422. Illinois residents must add $1.35 sales tax.
Darrell Dunteman is an agricultural financial consultant and accountant with offices in Bushnell, Ill.