Is Organizing My Financial Information Necessary?

Financial information organization
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It is important for someone to know your financial information.

The right to privacy is a value with many benefits.

Even so, there are times where failing to share information can prove problematic.

One such area involves health concerns.

If the physician providing you with medical care does not know your medications or your health history, then he or she could fail to treat you appropriately.

Another area where this is true is with money.

According to a recent Kiplinger article titled “Someone Needs to Know Where Your Money Is,” keeping your financial information from anyone could prove devastating.

Financial information should be organized.
Gathering and organizing financial information is will help your loved ones.

If you were incapacitated by a sudden illness or injury or died, would your loved ones be able to access the details of your financial information?

If no, then your loved ones will be in crisis mode to take care of business for you or administer your estate.

So, where would they start?

Most likely your most recent tax return.

If you had a CPA prepare your tax return, this he or she will be listed on the document.

Income and some assets will be include in the financial information.

Your loved ones will be able to see dividends, earned interest, withdrawals from accounts, and pension income.

Although they likely will not find all of your financial information in the tax return, your loved ones could call your last employer and request to speak with someone in the Human Resources department.

An individual in this department may have information on the existence of a 401(k) account or life insurance benefits.

Obviously, this leaves your loved ones with a lot to do in an already challenging situation.

What can you do to help prevent your loves ones from experiencing the struggles of recovering your financial information?

Prioritize creating and organizing the appropriate documents.

These include your last will and testament, trust documents, and a general durable power of attorney.

You will also need to gather your investment, bank, and Social Security statements.

Assemble online account information for financial assets, cryptocurrency, business accounts, and websites.

List your annuities, life insurance policies, and retirement accounts.

Include the cost basis of stocks and taxable brokerage accounts.

Assets like automobiles and real estate should be listed.

Outline your debts and other liabilities because these are important financial information, too.

Finally, include your most recent tax returns.

By organizing this information and keeping it in safe locations, you can give your family or executor access to vital data.

Because the Schedule B on your tax return can surprise your loved ones, gather important information in advance.

You can do this if you have paper records or can log onto your financial websites.

If you cannot, you should request a Form 1099 for every asset from your CPA.

Compile this list, the tax return, and all insurance company information to place in an envelope.

Review and update these documents every year.

Storing your estate planning documents, birth certificate, Social Security card, and marriage certificate in a secure and accessible location will help you family navigate your potential incapacity or eventual death.

Your executor, trustee, and attorney in fact (i.e., under your general durable power of attorney) should know the location of this legal and financial information to handle your affairs when needed.

Bottom line: think (and act) like a Boy Scout. Be prepared.

Reference: Kiplinger (Nov. 1, 2021) “Someone Needs to Know Where Your Money Is”

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