Organizing Your Important Documents
Organizing important papers and planning for the unforeseen are essential tasks for most adults. For single parents, these activities are even more crucial.
For example, if something happened to you tomorrow, would anyone know where you keep your important documents?
Do you know which of those documents should be kept at home and which should be kept in a safe deposit box?
If you and your children had to leave your home in an emergency, would you be able to quickly retrieve a set of all your essential documents?
Hoping for the Best but Planning for the Worst
It’s natural not to want to think about what would happen if disaster or tragedy should strike. If you’re a single parent, though, it’s irresponsible not to.
If you die and there’s no other parent, who will care for your children? Who will manage your estate until your children reach financial maturity?
What about life insurance — do you have it? If you do, do you have enough?
In this article — Part I — we’ll review what papers you need to keep and where you should keep them. In Part II, we’ll talk a little bit about specific issues like life insurance, wills, trusts, and advance directives.
I’m not a financial planner, accountant, or attorney, so these discussions will barely skim the surface of some of these issues. I just want to give you some food for thought.
The next steps are up to you.
Part I — Organization and Record-Keeping
The first step to getting organized, experts say, is to keep your important records in order. But not all records belong in the same place. Here’s what’s recommended:
Safe Deposit Box
This is where you want to keep records that may be difficult or impossible to replace should they be misplaced, stolen, or lost in a house fire. These include:
[list]
* Original birth, marriage, death certificates
* Deeds and mortgages
* Titles to vehicles
* Stock certificates
* Bonds
* Copies (not the originals — see below) of wills, living wills, powers of attorney
* Insurance policies
* Prenuptial agreements
* Divorce, alimony, child custody, adoption, naturalization papers
* Employment contracts
* Passports
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A trusted friend or relative should be told where you keep your safe deposit box keys.
Central Home Files
By contrast, records that you may need to get ahold of in an emergency should be kept in a filing system in your home. This is because in some states, should the safe deposit box renter die, the box may be “sealed” for some time until an executor is appointed and the box’s contents have been inventoried.
Records that should be filed in a central location at home so that they can be easily found include:
[list]
* Original wills, living wills, powers of attorney
* Tax returns
* Original Social Security cards
* Account numbers, addresses, and phone numbers of all credit cards
* Current bills
* Bank statements
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“Emergency Financial First Aid Kit”
An extremely useful tool that will help you assemble a comprehensive package of all your important financial information is available at www.ready.gov, a web site maintained by the U.S. Department of Homeland Security. This tool is called the Emergency Financial First Aid Kit, or EFFAK. The EFFAK is a 22-page document that’s divided into four sections:
[list]
* Personal Household Information
* Professional Advisors and Health Care Providers
* Checklist of Important Legal Documents and Financial Statements
* Private Security/Access Information
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The EFFAK includes a checklist that helps you first determine which documents you have and which you don’t (and even suggests where to obtain those). After you’ve gathered everything together, you enter certain information about these documents, as well as other important personal data, into the EFFAK.
Finally, you make three copies of the whole package and put one in your safe deposit box; keep one in your home in a portable fire- and waterproof box or safe; and give one to your attorney if you have one. It’s suggested that you update the information as needed or, at a minimum, review your EFFAK once a year.
You can download the EFFAK at www.ready.gov/america/_downloads/eefak.pdf (you’ll need Adobe Acrobat Reader to view and print this).
Record-Keeping for Income Taxes
As long as you’re organizing everything, and since it’s getting to be that time of year, here’s a list of records you need for the preparation of your tax returns:
[list]
* Forms W-2 and 1099
* Bank statements
* Brokerage and mutual fund statements
* Form K-1 (for partnerships)
* Sales slips
* Invoices
* Credit card receipts
* Canceled checks or other proof of payment
* Home purchase and sales agreements, closing statements, and insurance records
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These records document both your income and your possible tax-deductible expenses. Such expenses may include alimony, charitable contributions, mortgage interest, child care expenses, and real estate taxes. Pay stubs should be kept to prove other deductible expenses such as medical insurance premiums, 401(k) contributions, and union dues.
It’s recommended that you retain copies of your tax returns indefinitely; supporting documentation for your returns should be kept for seven years.
In Part II, we’ll review some of the things you need to do now to ensure that your wishes will be followed later.