Through our regular meetings with our clients, we systematically review financial life topics. We may analyze tax strategies, review estate plans, discuss survivorship plans, or review other important topics. Once you have organized your financial plan, it’s essential to communicate it to your heirs.
If our clients are interested, I encourage them to include their adult children in one of our meetings as a way to establish a relationship with our firm. This way I can reassure everyone that the proper amount of information will be given at the appropriate time.
Knowing that your family can contact us when the time comes offers both my clients and their families peace of mind. For my clients, they know that they are in control of how much information is given during their lifetime. For their families, the fear of not knowing where to start is eliminated because it will start with a phone call to our office, and we will lead them from there.
At this stage, it is not necessary for you to share every detail of your finances with your family. Share as much as you are comfortable with. You might consider sharing only the basics such as approximate net worth. This will give your family a better idea of your financial responsibilities, your plans for your retirement and eventual legacy, and the amount of money needed to make those plans a reality.
Your Executive Ledger
To memorialize your finances in greater detail, I suggest you create an Executive Ledger.
Everyone — single or married — needs an Executive Ledger. It will prove to be a blessing to those charged with settling your affairs. If you don’t want to discuss your finances in much detail with your heirs, just letting them know where your Executive Ledger is located so they can access it when the time comes may be enough.
A well-executed ledger includes three types of documents:
1. The Triple Ls: Lifetime, Legacy, and Legal documents
These are papers that describe what you want to have happen during your life and afterward. They may include:
- Financial power of attorney
- Medical power of attorney
- Healthcare directives
- Family trust documents
- Your will
- Prepaid funeral arrangements (if applicable)
Most folks already keep these documents in one place. If you have all of these filed away in a binder, use it as the foundation for your Executive Ledger. Just add your cash flow/asset information and a list of titles and certificates.
2. Cash flow/assets
You, your spouse, and your heirs will need a detailed list that includes all sources of household income, as well as all of the assets that you own.
The easiest way to provide this information is by placing a copy of last year’s tax return, along with a copy of your most recent net worth statement, in the front pocket of your ledger. These two documents should give whoever inherits the financial duties the insight they need to settle your estate.
Don’t forget to update this information each year. One of my clients updates his records on Memorial Day every year. He likes the symbolism of doing it on a day that we honor those who have died before us. Also, this is a good time of the year because the previous year’s taxes have usually been completed.
This section of the ledger should also include:
- Life insurance policies (company names, policy numbers, death benefits, etc.)
- Location of the file that contains bank names, account numbers, and access information
- Location of the file that contains brokerage names, account numbers, and access information
- Safety deposit box instructions
- Names and contact information for your financial advisor, attorney, and accountant
This section of the Executive Ledger should list where you keep documents that provide legal proof of ownership or legal associations. The list may include:
- Automobile, RV, boat titles
- Real estate deeds
- Marriage, birth, and adoption certificates
- Divorce decrees
- Stock certificates and bonds
If you’ve noticed, I suggest that you only keep a list of these documents along with a disclosure of the actual document’s location. I don’t recommend keeping bank or brokerage information, titles, and certificates in the binder. Keep them in a safe place. Include a master list in the front pocket of the ledger along with your tax return and net worth statement. If something happens
to your ledger, your documents will be safe in their separate location.
Don’t Keep Secrets!
Tell your spouse about your Executive Ledger, or better yet, do this activity with your spouse. If something happens to one of you, the other will need to know where to find the binder. If you’re not married, show a trusted family member or friend where you keep your Executive Ledger. Remember, if you are not ready to share any detailed information with your children, just let them know where the ledger is kept. Sharing important financial information will not only make carrying out your wishes in death easier for your loved ones, but it will alleviate unnecessary frustration and allow them to grieve.
Jack Davis is the founder and CEO of Navigation Retirement Group, an independent wealth management firm serving high achieving retirees and pre-retirees with investable assets between one and ten million dollars. For nearly three decades, he has been using his asset management and financial planning skills to develop and implement planning strategies that help pursue his clients’ unique goals. Passionate about education, he holds a Masters in Personal Finance and the CERTIFIED FINANCIAL PLANNER™ credential. He is also the author of Cash Out! Retire on Your Terms, Live Well and Die Happy, a book that gives pre-retirees and retirees planning tools and insights that can help them flourish throughout retirement. Based in Oro Valley, he and his team serve clients throughout the greater Tucson area and around the country. Learn more by connecting with Jack on LinkedIn.
Securities and advisory services offered through Navigation Retirement Group, a Registered Investment Advisor.
Navigation Retirement Group is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein.
Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph, or marketing piece to make decisions. The information contained herein is intended for information only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. Please contact your financial advisor with questions about your specific needs and circumstances. There are no investment strategies, including diversification, that guarantee a profit or protect against loss. Past performance doesn’t guarantee future results. Equity investing involves market risk, including possible loss of principal. All data quoted in this piece is for informational purposes only, and author does not warrant the accuracy, completeness, timeliness, or any other characteristic of the data. All data are driven from publicly available information and has not been independently verified by the author.