Some simple steps you can take to put your affairs in order, well before they need to be.
By Brad Beckstrom
It’s An Emergency.
Sounds like the title of every email I get asking for political contributions. No donations requested here. I’m talking about a real emergency, you just kicked the bucket, vanished in the Amazon, or no longer have a solid grasp on your first name.
Welcome to my eventual demise.
Don’t feel bad, it’s something that none of us get to avoid. We all know someone that left us too soon or someone still going strong in their 90s. We don’t get to choose. If you’re old enough maybe you’ve had to deal with the estate of a relative or family member in a nursing home.
However, something has changed. When my mom passed, most of her financial information could fit in a single file folder. Things have gotten a bit more complicated thanks to the cloud, online banking, investing, social media, smartphones.
“ Where did Brad stash those bitcoins? They must be around here somewhere.”
I can imagine just dealing with passwords for all these accounts, devices, would be a bit of a nightmare for anyone. I’ve been using a program called 1Password for about five years. There are about 1000 passwords and secure notes in the app. And where do I keep the password to the password manager? Well, I finally got around to setting up a family trust and organizing all this stuff.
Nobody enjoys writing about their own demise. Once I started working through it, I realized this was a pretty efficient way to organize your finances, imagining someone else having to figure it all out. What could I do to make this easier for them? I decided this would be a positive thing and started drafting a welcome letter, well, a “welcome to my demise” letter.
It’s not just those final moments of your life you need to think about. Many of us are living longer but those last several years can be pretty rough. You need to think about what would happen if your communication or your memory became very limited. I did this a bit backwards. About a year ago, we put together a revocable trust and will and now I’m just getting around to a welcome letter, that includes all the important details that may not be included, including where to find a copy.
I actually got the idea from Warren Buffett, who wrote a similar letter to his wife that included instructions for managing investments after he was gone. I think it’s really important to at least make your wishes and strongest recommendations known to your loved ones. They may not always follow them but you’re sharing decades of experience with them and this is a good place to do it. If you’re wondering, Warren Buffett recommended his wife keep her inheritance and low-cost total stock market index funds (go cheap, go passive). Read more about the letter here. The next important element is sharing the letter with your spouse or loved ones and get their feedback. Our trust documents are over 100 pages and I don’t think I’ve even taken the time to read most of it. However, with the welcome letter, I want to keep it to about three pages including all of the investment and cloud storage information above.
The welcome letter is not a place to include passwords. It should include instructions about how to access those passwords, and possibly a hint to the master password, that only your spouse knows. See the solution I found below.
Here are some important things to include in your welcome letter.
- An introduction including the purpose of the letter and the sections that are included in the letter.
- Location of important documents including wills, revocable trusts, powers of attorney, life insurance policies.
- Important contacts including the attorney who drafted your will or trust who should keep a updated copy on file.
- A secure backup online location for all of these documents and instructions. A copy of the letter should also be included in the backed up location.
- Instructions on how to access secure websites and password manager apps. I use 1password that can be accessed from my phone or my laptop.
- Finally, you should include some next steps and further reading on managing finances including bank and investment accounts, real estate, insurance policies, credit cards and healthcare.
Location, Location, Location
One thing I’ve learned is that things aren’t often where I say they are. This is where secure cloud storage comes in. Cloud storage accounts like Dropbox can be setup to use two factor authentication. It basically requires you to have a computer and smartphone in front of you for online access to the files. All the files on my computer are backed up in dropbox including the documents listed here, as well as just about anything I’ve worked on since the 90s.
For our trust and financial documents, I recently started using Fidsafe from Fidelity. Fidsafe offers 5GB of free encrypted storage for your most important documents. They also include some handy checklists to help you organize what should be included. You don’t need to be a Fidelity customer to use it and you can set it up to give your loved ones automatic access in case of emergency. The site also uses two factor authentication for security. This means that anyone who has access will need to enter, in addition to a password, a separate online access code that will be sent to their mobile phone. Unlike Dropbox, this account does not require a credit card and documents backed up in the cloud would not be deleted if a credit card expired or the annual fee was not paid. So, while Dropbox is good for backing up everything else, I recommend Fidsafe for the essential documents discussed here including this list.
Hopefully your heirs won’t need to access these accounts for a very long time. It’s just good to know that you’ve taken the time to create something that goes a lot deeper than just breaking the glass in case of emergency.
After that, just set a reminder to log in once per year and add any new docs or info.