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09/21/2017 12:00 AMFiling cabinets and paperwork can certainly get overwhelming and it's hard to decide what is worth keeping, what you can throw away, and what should be shredded. The State of Connecticut's Department of Consumer Protection offers some guidelines on what to keep and for how long (noted in sidebar on page 16), but according to professionals, what is most important about important documents is organization and communication.
Keeping organized files will not only help make the documents you need more accessible, but will enable someone to step in to take over in case of an emergency. Lynn McPhelimy, author of In the Checklist of Life, A Working Book to Help You Live and Leave This Life and organizer, notes that even if you are in charge of the files and financing in your household, it is important to share your system with others.
"When I meet with clients, I like to have someone else, whether a family member or friend, meet with us to go through the system," says McPhelimy. "Then have the conversations early and often, talk about every piece of paper so you know why, what, and who."
McPhelimy recommends a color-coded file system, separating papers into financial, medical, insurance, and legal, though any system like alphabetical can work as long as someone else is able to use it. The legal folders contain some of the most important documents in your household, including your will and living will.
"Once you have these documents, it's important for people to know that you have a will and where they can find it," says Jeff Beatty, an estate-planning attorney at Beatty & Beatty, LLC, in Guilford. "You don't need to provide copies to people, but you just need to let people know that you have estate planning documents and where they can find them in case of emergency. It doesn't matter where they're kept as long as someone can access them in case of emergency. When it's a difficult time, you don't want it to become more difficult by wondering where these papers are."
McPhelimy recommends not storing these documents in a safe deposit box as those who need to access the documents will likely not have access to it. Beatty also stresses that wills and other legal documents are "snapshots of what you want at a certain time" and should be revisited every five years.
"If everything is fine, there is no need to change it, but sometimes something comes up that requires a revision," says Beatty. "People want to make sure their family members are taken care of and their wishes are carried out."
Another recommendation Beatty has is to create a document that maps out any assets and accounts as well as contact information for each account. McPhelimy agrees, adding that keeping organized files will help your family through the probate process.
"The end game is asking if they could keep the house running smoothly just in case something happens," says McPhelimy. "If you're handling somebody's estate, you need to be able to show and close out any outstanding liabilities and debts."
Information needed to settle an estate can include documents pertaining to assets and debts; leases on property such as boats, planes, and timeshares; mortgage and property documents; and financial documents for banking, credit cards, and investments.
"This discussion is hard because so much is online now so you still have to know they exist and where to find them," says McPhelimy. "Someone's online life and the location of it are important and you need someone to be able to access it."
One suggestion McPhelimy has is keeping an up-to-date list of key contacts such your financial planner, accountant, and attorney, as well as a list of accounts you have with any pertinent information. She also recommends keeping track of any monthly subscription services, automatic payment schedules, and passwords.
With so much information online now, accurate record-keeping is even more important. McPhelimy keeps an index card box of her accounts and passwords handy. The alphabetized box not only contains usernames and passwords, but any pertinent account information such as account numbers and phone contact numbers, as well.
"Having so much online makes many things easier, but it can be harder, as well," says McPhelimy. "If you use an app to keep track of passwords, make sure you share the master code with somebody else, in addition to the codes for unlocking your phone, tablet, or computer."
Because she felt that many of her clients found the process so daunting, McPhelimy wrote her book In the Checklist of Life, A Working Book to Help You Live and Leave This Life as a way to help people successfully prepare for an emergency.
"It's a list of fill-in-the-blanks of contact for each and every person that touched your life in a financial or legal way," says McPhelimy. "Organizing your life empowers you because you are in control of your numbers."