Artwork by Donna Grethen
The number of people who are widowed each year in the U.S. ranges from 800,000 to 1 million.
Shockingly, in married couples, men die first roughly 85% of the time. The average age for being widowed is 59, according to the U.S. Census Bureau.
With many stuck at home due to the COVID-19 pandemic, it’s the perfect time to start a finance binder that will benefit the people you love.
If you are married, it will benefit the surviving spouse, regardless of who dies first. If you are not married, it will benefit your executor, children, or beneficiaries. A finance binder will help you organize many important documents into one place.
To create a finance binder, you will need a three-ring binder along with a set of dividers. Next, create eight dividers as shown in the diagram. The sections should include:
Net worth statement: If you do not have a net worth statement, simply write down a list of your assets (investment accounts, bank accounts, home). Below that, write out your debts (home mortgage, car loan, student loan). Subtract your debts from your assets, and that is your current net worth.
Investment and bank statements: Insert a recent statement for every investment account, retirement account and bank account. You can download statements from the internet, but they must include the account number. You do not need to replace the statements each month or quarter. The purpose of including them is not to keep them current, but simply to help someone understand what accounts you own and to provide account numbers.
Insurance statements: Include recent statements for all your insurance policies: homeowners, auto, and umbrella policies; and medical, dental, long-term care, life insurance policies, and annuities. The statements should include the policy number, the name of the agent, and a phone number.
Legal documents: Put your most recent legal documents in this section, including copies of wills, trusts, power of attorney, health-care directives and any other legal documents.
important documents: Insert a mortgage statement or a copy of your deed if your mortgage is paid off. Also include copies of the titles to your cars, lease agreements, advance funeral arrangements, and anything else you consider important.
Consider including a copy of your passport, marriage license, and birth certificate for you and your spouse, as well as your children.
Include a recent statement for each of your credit cards. The current balance is irrelevant, but the statement will provide the name of the credit card company and contact information.
Consider photocopying airline frequent flyer cards and hotel cards for the loyalty programs you use. If anything happens to you, these programs often allow the points you have accumulated to be transferred to family members.
Start another page and list contact information for your advisors, including your financial advisor, attorney, accountant, and insurance agent.
Cash flow and location: Write down the source and amount of money that flows into your checking account each month (such as Social Security benefits, pensions, or annuities). Include documents pertaining to these sources, such as pension and Social Security statements you may receive each year for tax purposes. List any bills that are paid automatically from your checking account each month or bills that you pay online.
Start a new page titled “Location,” and list where important documents are located. For example, if you have a safety deposit box, where is it and what is in it? Who has access to it, and where is the key? Where is the original title to your home or car? Where is your jewelry or other valuables? Where are the originals of your legal documents?
Home and technology: Start a list for the name and phone number for your plumber, heating and air conditioner repair person, the gardener and the pest control service.
Write instructions for home maintenance, such as how to turn on the heater and the swamp cooler, and how to turn the gas on and off for the fireplaces between seasons. In the winter, what needs to be done to keep the hoses and pipes from freezing? Write instructions for how the lawn irrigation system works, where the controls are, and who to contact for repairs.
Write instructions for how to use the zillion gadgets in our homes, including multiple TV remotes, the security system, internet routers, etc.
Miscellaneous: This section is for anything else that will help your spouse, children, or beneficiaries if you die. As new topics or documents come to mind, put them under miscellaneous.
Compiling a finance binder takes time. However, just starting one is a reason to celebrate. Continue adding information as time allows, and tell your spouse, partner, and children (or other beneficiaries) where the binder is located in your home. Creating a Finance Binder will help you become more organized, and at some point – hopefully far in the future – someone will appreciate your act of love.
Finance binder sections
- Net worth statement
- Investment and bank statements
- Insurance statements
- Legal documents
- Important documents
- Cash flow and location
- Home and technology
- Miscellaneous
Donna Skeels Cygan, CFP, MBA, is the author of “The Joy of Financial Security.” She has been a fee-only financial planner in Albuquerque for over 20 years, and is the branch manager for the Mercer Advisors office in New Mexico. Contact her at [email protected].