No one likes to think about death, but everyone should. We're all going to die someday. So why not greet the end of life with peace of mind, knowing that your estate plan is well organized and easy to find by those you leave behind?
Of course, the best estate plan for you will depend on many factors, and you should always seek solid legal and financial advice before making any decisions. But one thing experts agree is right for everyone, regardless of their circumstances, is keeping paper copies of important information that can help your executor carry out your estate plan after your death.
"I'm a big believer in paper. I create a three-ring trust binder for each of my clients with 15 dividers for important documents, like their trust, their will, their account statements and so on," says David E. Woods, an attorney in O'Fallon, Missouri, whose major focus is on estate planning and probate law. "I also tell people to include their online account credentials. With a binder, everything is in one place, which makes it easier for someone to carry out their final wishes."
Why Include Paper in Your Estate Plan?
In an age of cloud storage, thumb drives, hard drives and digital records, why do experts recommend maintaining paper records of estate documents?
1. Paper won't become obsolete.
Technology is constantly changing. If you store important records electronically, there's no guarantee that the media you use today will be readable on computers of the future. (When was the last time you used a floppy disk or a CD to retrieve files?) Paper will always be compatible.
2. Paper doesn't malfunction.
Computers can crash, rendering files unreadable or inaccessible. Data can also degrade over time, turning those important CDs into useless bits of plastic. Paper, on the other hand, lasts for decades, even centuries if properly stored, and it doesn't require electricity -- which can be helpful in an emergency.
3. Paper isn't easily hacked.
Identity theft hit an all-time high in 2017, due in part to our increasing reliance on digital transactions and communications. "I don't want to sound alarmist or like a Tom Clancy novel, but computer hacking is a cottage industry," says Woods.
Because the documents in an estate plan contain sensitive personal and financial information, they must be kept secure. Keeping a printed estate plan in a secure location can help protect the information from potential hackers.
4. Paper is proof.
Important legal documents stand up in court because they're usually signed in front of witnesses, and they often include seals, security features, notary stamps and other proofs of authenticity.
"Death certificates, for example, are green and white with intricate designs and a raised seal. That is difficult to forge," Woods explains. "In court, few things are self-proving or self-evident. But with a piece of paper, you can say, 'Look, it has his signature in front of two witnesses, and there was a notary who watched all three people sign. This paper is the proof.'"
5. Paper is portable.
It's easy to grab a binder or some file folders if you need to evacuate in an emergency or if you require documentation after the death of a loved one, and it works everywhere. "You can hold those papers in front of a judge, if needed. Holding a thumb drive and asking to use a computer in court will not get you quick results," Woods says.
He also recommends keeping multiple copies of certain critical documents, such as a durable power of attorney. "I tell people to keep copies of their power of attorney for health care in the glove box of any car they own. They should also keep a copy of their spouse's documents," Woods says. "If something were to happen to my wife on her way to work, I know I'd be driving to the hospital to meet her there, and I'd already have that important document with me without having to look for it."
Which Papers Do You Need in Your Estate Plan?
The National Institute on Aging offers guidance on the types of information and documents that you should collect as part of your estate plan. They include:
Personal information, such as full legal name, Social Security number, date and place of birth, legal residence and names and addresses of spouse and children
Location and/or copies of your will, your power of attorney documents and your revocable living trust or other key legal documents that outline your estate plan
Location and/or copies of documents like birth and death certificates, marriage certificates, divorce papers, citizenship documents and adoption records
Employment, education and military records
Financial information, including bank, lender or broker name; account number for each account; and a list of total assets and liabilities
Insurance information with policy numbers, agent names and contact information
Copies of your most recent tax return
Contact information for lawyers, financial advisors, clergy members, doctors, relatives and close friends
A list of medications and medical conditions
Car title and registration information for every vehicle you own
Location of a safe deposit box, along with a key, or the combination to any safes or lockboxes
Keep all of this information in a file cabinet, a fire safe, a binder -- or a Legacy Box like the one offered by financial guru Dave Ramsey -- and update it regularly. You could also consider storing the information in a planner. I'm Dead. Now What? is a tool that walks you through the process of documenting your estate plan and final wishes.
Finally, make sure someone knows where your estate plan and key documents are located.
"Don't make it a game of hide and seek," says Woods. "I like to paraphrase Proverbs 31 and say, 'Your children will rise up and call you blessed, and not say you're an idiot.' That's funny, but it underlines how important it is to make sure someone knows where the important papers are."