Most people are aware of the importance of having up-to-date estate planning documents. What many don’t realize, however, is that where the original documents are stored can be equally important.
Estate planning documents are essential and help your loved ones organize your assets efficiently and at a low cost in the case of your incapacity or death. In either scenario, it’s important that a person is named to serve as executor in these documents, that your assets exist, and there’s guidance on where they are located and how they can be accessed.
There are a few important factors to consider when storing these documents:
- The location should be safe, secure, and logical. You can choose a waterproof and fire-resistant safe, a file cabinet at home, a safe deposit box at the bank, or even just a binder. However, you should avoid places like a basement that may flood, or in one of many boxes in a cluttered garage. You should help your loved ones by choosing a logical location.
- The location should be somewhere that others will be able to access in the event of your death or incapacity. For example, if you’re keeping them in a safe, make sure you keep extra copies of any keys and/or combinations. If you’re keeping it in a safe deposit box, make sure you work with your bank to ensure a trusted family member or friend has access to it in the event of your death or incapacity. Under some state laws, powers of attorney do not give you an automatic right to enter and remove the contents of a safe deposit box, so it’s important to work directly with the bank ahead of time. It may also be more convenient to avoid the safe deposit box altogether, but if this is the method you prefer, it can be better to have the box in the name of joint owners.
- Tell the individuals named in your estate planning documents where you’re keeping the originals. Wherever you choose to store them, it’s a good idea to notify the relevant parties where these documents are located in writing. By having it in writing, this avoids anyone forgetting this information.
- To avoid confusion, shred any old estate planning documents. You don’t want anyone to come across an outdated will or power of attorney document that no longer reflects your wishes and tries to enforce them. Eliminating any old documents on file may also help prevent misunderstandings or family conflicts.
So, not only having the documents in place, but also how and where you store these documents, are also important for an efficient and seamless wealth transfer. As a helpful reminder, here are a few must-have estate planning documents to have on file:
- Will/trust
- Durable power of attorney
- Beneficiary designations
- Healthcare power of attorney
- Guardian designations
- Medical directives
There are a few other things you can keep in your preferred secure location to ease the burden on those that will handle your affairs. As everything becomes increasingly digital, it’s easy to lose track or forget certain digital assets you have, such as different bank accounts, treasured photos, and important documents saved in social media accounts and digital storage services. The first thing you can do is include a list of all these items with your estate planning documents. For example, you would list all your online bank accounts, credit cards, digital storage services in use, and any social media accounts. For less secure things, like photos or social media accounts, you can include the login information right there on the list. For more sensitive accounts, just list the account and website and your power of attorney will be able to get access to these accounts using your estate planning documents, but it’s important for them to know they exist.
To have a comprehensive list of estate planning documents and a safe place to store them, you should work together with an estate planning attorney and any relevant parties to ensure everyone is on the same page. As always, if you have any questions or want to have a conversation about any of this, please feel free to reach out to us.
Presented by Elizabeth Schleifer, CFP®
