Estate Planning Lessons from “My Mother’s Money”

Last year, financial journalist and Certified Financial Planner™, Beth Pinsker, wrote a book entitled “My Mother’s Money,” describing the experience of taking over control of her mother’s finances during a serious illness and then settling her mother’s estate after she passed away.  Pinsker was struck by how much of the process and problems took her by surprise despite her own financial acumen and her mother’s attentiveness to estate planning.  She wrote the book to convey the lessons she learned, such as the tasks that one should encourage loved ones to do before they are seriously ill or pass away.  Through her own experience, she communicates why it really makes a huge difference to not shy away from these tasks even though it may feel awkward or uncomfortable to discuss them and it may be tempting to procrastinate on them amid the busyness of life.

What You Need To Do before You Think You Need To Do It.  Pinsker emphasizes that one of the key elements of planning for someone taking over your finances at some point is simply having “THE FOLDER.”  Create a folder (either a physical one or a digital one, if your loved ones will have access to your computer) with all of your important medical and financial information and documents.  Pinsker knew a man who labeled this folder as the “Death Folder” on his desktop, but – in addition to this being a bit morbid for most folks – establishing the folder is at least as important in case of serious illness as it is for someone passing away.  In either case, the folder has the potential to ensure that you have appropriate care, to majorly reduce stress for your loved ones, and to ensure that your medical and financial wishes are followed.

Note that the folder will contain a lot of personal information, so it is important to make sure that the folder is secure, especially if you take the digital route.  Consider password-protecting it, and then sharing the password with two of your loved ones (or telling them where to find the password) in case they need to access the folder.  (This step has the additional benefit of ensuring that you actually tell your loved ones that the folder exists and where to find it!) 

The folder should include the following elements:

• Emergency Contacts:  a list (with names, phone numbers and type of relationship) of those who a loved one should contact in case of seriously illness or death, including neighbors, pet sitters, religious leaders, etc.
• Copies of Important Documents:
  • Driver’s license (both sides)
  • Birth certificate, marriage certificate, VA discharge papers, if any
  • Insurance cards (both sides)
  • Power of attorney (POA) for healthcare decisions and for financial decisions
  • Living will or advanced medical directive
  • HIPAA authorization
  • DNR (do not resuscitate) order, if any
  • Will and/or trust documents

• If you do not have a will or POA documents, get some.  Then put them in the folder.  You can engage an estate planning attorney or, if you have a very simple and straightforward estate plan and family situation, you could consider just using an online resource such as Trust & Will.  If you have young children, you should have a will to establish guardianship for them.  At all times (and especially as you age), Pinsker recommends that your estate documents should include provision for any pets, a digital asset plan, as well as funeral and burial instructions to ease the burden on your loved ones.

• Health Information:
  • Medications, allergies, and vaccinations
  • Major illnesses, prior hospitalizations and/or surgeries
  • Relevant family health history
  • List of all relevant doctors and specialists, including phone numbers and addresses
• List of Accounts:
  • Bank accounts (checking / savings / money market / CDs)
  • Brokerage and/or retirement accounts
  • Life insurance and annuities
  • Mortgage, car loans, home equity loans, any other debts
  • Credit cards
  • Long-term care, auto, and homeowners insurance

Include account numbers, approximate balance, any beneficiaries and/or joint owners, and the username and password for online access.  If your list of accounts is particularly long, consider consolidating accounts to help yourself and your loved ones to manage them effectively.  Close unneeded bank accounts, consolidate retirement accounts (if they have the same tax treatment), close unnecessary credit cards.  Bear in mind that these tasks (while somewhat onerous now) will be considerably more complicated for your loved ones to accomplish on your behalf down the road.

• List of Monthly Income:
  • Social Security benefit
  • Pension income
  • Monthly retirement and/or investment account withdrawals
  • Other income (e.g. rental real estate)
• List of Monthly Bills:
  • Credit card payments, insurance premiums, rent or mortgage, other loans, utilities

Note for the monthly bills whether the payments are automated, the payment date, and the username and password for managing online accounts.  This information, along with the list of monthly income, will help if a loved one has to take over your finances in an emergency and possibly calculate how to make your assets last in the case of long-term care.

• List of Digital Assets:
  • PIN to your phone and a copy of the encrypted asset key that is generated when you add a legacy contact for your phone
  • Log-in credentials for any social media accounts (note any designated beneficiaries established online for social media accounts)

With the amount of information accessible through one’s phone, as well as the prevalence of dual factor authentication, it will be essential for loved ones to access your phone in case of serious illness or death.

In many cases, taking over a loved one’s finances happens abruptly while also trying to manage a health care event. Having the relevant information to pursue appropriate medical care and handle the financial aspects of the health event could significantly lessen the mental and logistical burden on your loved ones in a time of need.