Importance of organizing financial docs

Many people go about their lives in total disarray when it comes to their financial records. That can be a bit troublesome if you need to access that information quickly.

If your utilities aren’t organized, it’s not much of a big deal. If you miss a monthly payment, it will show up in your next bill. However, when it comes to your finances, it can be crucial.

If an investment is overlooked at an important time, such as when the stock market goes down sharply, it could have a devastating effect on the value of that asset. So, knowing where all the financial assets are located is an extremely important part of organizing your important family records.

Early on in my career I realized that many folks don’t really have a good system in place to identify their bank and investment assets and the various types of insurance policies that they own. One unforgettable example was when a lady came to my office with all of her financial records in a fishing tackle box! Thankfully, that’s only happened once!

On the Confidential Family Organizer (please click photo tab for preview) the basic general information is asked for, name, address, dates of birth, social security number, etc. That’s obviously very important information to have. However, another very important piece of information is also asked for; the “number of marriages?”

From a planning perspective, if there has been more than one marriage I know that I may have to deal with an estate planning situation that could possibly become complicated due to the dynamics of the two families. It’s important to know how both families interact and whether or not they get along or if there is tension between them.

Many times an easy method of holding assets, if there has been more than one marriage, is to own the assets in a Trust. This will avoid Probate Court at the parents deaths and cut down dramatically on the possibility of the parents desires being ignored relating to how their assets will be split between the two families. Having a Trust set up and properly funded is a great way to organize financial assets and records.

If there is a second, or even a third or fourth, marriage it is important to keep very good financial records. Many people in their second marriage will keep their assets separate that they brought into the marriage. In essence there can be three sets of assets to keep track of; hers, his, and theirs! Oftentimes in a second marriage the assets that each brought into the marriage are kept separate and then there is a third set of assets that this newly married couple have built up together. Typically, the husband and wife will keep those assets separate so that those assets will go to their children from their first marriage. Most typically, the assets gained while married are split between the two families at the second death.

Keep in mind that there is no single method that is right for everyone! Agreements on assets are as varied as are people. Keeping the assets well organized will help out immensely in second marriages.

Another very important question in second marriages is; what will happen to the assets at the first death and finally, at the second death? Many times when the first spouse passes away, they want the assets to remain for the benefit of their spouse until they pass away. Being organized with the financial documents will help facilitate this type of an arrangement.

This Confidential Family Organizer will also ask about legal documents such as Trusts, Last Will and Testament, Financial and health care Power of Attorney forms. We’ve discussed these forms on a prior segment. The location of those forms is extremely important for the family to know about. Again, being organized is very important to help your family help you when and if you need it.

Another important area on the Confidential Family Organizer is the ownership blocks. Knowing how assets are owned is vitally important, especially if one spouse becomes incapacitated. Obviously, jointly held assets are less of a concern. However, individually owned assets could be a real problem is the proper legal documents are not in place.

The section on Governments Savings Bonds often gets people by surprise. Many people have Savings Bonds that are beyond the maturity date which means that they are no longer earning interest! Needless to say, if you discover that your bonds are beyond the maturity date, it may make sense to cash them in and put that money to work elsewhere to can gain in value.

In addition to financial documents, you'll probably want your system to retain other types of important documents, such as insurance policies, health and employment records, property titles, birth & death certificates, and citizenship records, and perhaps product and service guarantees. Today, it is also common to videotape personal property for potential use as evidence if you have a property insurance claim due to a fire or burglary.

Finally, set up an “accordion” type file or even use individual