Today, I am going to talk about a subject that most people would rather not talk about: death. More specifically, we are going to talk about what will happen to your family after your death. Even if it is not a funny concern, you should prepare for your death. Not for you, but for people who depend on you. The bills will not stop to come after your death.
Your loved ones just went to the tragic event of your death. Now, they may be faced with new difficulties. What if you are the only one that knows how to get access to the banking system? What if you are the only one with access to all the insurances policies?
A disaster file is one way to help your loved ones during this trouble. This will help in that case, but it will not solve all the possible problems of course. It is a first step to be better prepared.
A disaster file is a file containing all the necessary information about how to deal with administrative and financial things. This is meant to be useful once you are dead. Or once you are unable to take care of the finances. Some people also call it a death file or an in case of death file. But I think that is a bit sinister. I prefer the name disaster file. And there are some cases when this file can be useful even if you are not dead. Imagine you are in a coma or are disabled. In these cases, the disaster file may be of great help.
So what should be in the disaster file? Many things actually. The first thing I would add is an introduction letter. You can add a private message to this if you want. What this should contain is instructions on how to use the disaster file. It should list what it contains and what to do to get access to the information. You can also include your last wishes to be clear.
If you have not already shared this information before, the first actual information in the disaster file should be the password to your personal computer. If you are using your smartphone more than your computer, its password should also be included. I do not recommend including all your passwords in this file. There are too many of them. On the other hand, I would advise you to add all your passwords to a password manager. For instance, I am using LastPass to manage all my password. And do not forget about two-factor authentication. Then, you can share a way to get access to this account and the recipient of the disaster file will have all your passwords directly! Whether you want to include all your passwords in the file or made them accessible through another mean, I think they need to be included.
The disaster file should also contain key documents. These will be different from one family to another. If you have a will, this is definitely a good place to put of a copy it. You should also include your real estate properties documents, the insurance policies, work contracts and tax records. Depending on what you want, there could be many documents included. What is important is that you include the most important documents. I would also recommend having the digital copy of these documents available somewhere.
If you have advisors, you also need to prepare a list of them with their contact information. This could be your tax advisor, your financial advisor, your home property manager or your insurance manager. It is important that someone else can contact them after your passing. Your estate will not simply end with you, someone needs to manage it after you. You should probably tell these persons of who may be able to contact them.
One thing you may not think about is medical information. The first information would be the contact information for the personal doctor. Then, you should include all the details of health insurance policies. This should also include medication that is taken by each member of the family. And finally, information about the allergies of everyone.
Personal finance tasks
If you are the one managing most of the family finances and budget, you need to include information about that. Ideally, your loved one is already aware of all this. Regardless, include all the information about it in the disaster file. This should include all you need to do about managing bills and budgets. Personally, I have a set financial routine that I already described on this blog. You should include this routine in your disaster file. Describe each thing that you do to pay the bills and to manage your budget.
Of course, for paying the bills, you need the information on how to get access to all the accounts. You need to describe where is your money. This should include the login information for all of your bank, brokerage and investment accounts. If you have some physical assets stored in the house do not forget them. Also if you have a bank safe. This should indicate for each of them why it is used. Moreover, this should also include information about your investment strategy. And do not forget about your credit cards PINs.
You may think that some of this information is probably too much. Indeed, your significant other should already have a lot of this information available. And this may be true now. But who knows if everything will be remembered in several years. And what if both you and your loved one die at the same time. A member of your family or a friend may manage your estate. Or your oldest child could take care of it. In that case, they may have much less information than necessary. That is why your disaster file should be complete.
How to store your disaster file
Of course, it is not enough to write a disaster file. You need to make sure that your significant other can easily get access to it. You should also make sure that it is safe from stranger’s eyes. It contains a lot of sensitive information.
I would actually advise having several versions of it. Even in this age, I would advise for a paper version. But I would also do an electronic version that can be accessed safely. There are many ways to arrange for this, but here is what I would do:
- One digital version of the disaster file is on my computer, protected by a password.
- One paper version stored in another home. I would consider giving that to one of my parents to hold. And maybe one paper version in our own home.
It is much more difficult to lose the digital version than the paper version. Moreover, this will also force you to scan your important documents. This is a good motivation to go paperless.
Another idea is in a safe deposit box. But that is not free and may be a bit over the top. Unless you are really managing a large estate, it is probably enough to have two versions.
You can also go the all-digital way. For this, you need to make sure that the recipient of the disaster file has access to the file. For instance, you could simply put the file in your Google Drive account. Or any other cloud storage account. If the account is accessible already by the other person, in case of a disaster, they could easily access the disaster file. Since this will contain a lot of sensitive data, make sure that you protect access to this account. Two-factor authentication is once again very important here. In any case, you want to enable two-factor on most of your online accounts. Encryption of your disaster file is also a good idea :)
And do not forget to update your disaster file. If you write a disaster file and do not update it for 10 years, it will not be very useful. You should probably revisit it every few months. I am thinking that updating it every six months or one year is quite reasonable. Or you can update it each time something in it is changing.
A disaster file can be a powerful tool to help your loved ones after your passing. It may help them not having difficulties in continuing their life. I do not yet have a disaster file. But I plan to prepare one next year. Since I am managing most of our finances, I think it would be very helpful in the event of my death.
Another good way is also to share all these information while you can. Both people in your couple should have access to the accounts of the family. And both should be aware of what needs to be done for the bills, the insurance and all that administration stuff. I still think that even in that case it can help to have a disaster file.
Of course, it is only one of the things you can do to ease the event of your death. One other thing that is important in the event of your death is to prepare a will. If your situation is really simple, you may not need one. But there are many cases when a will can help. In another post, I am going to try to cover what should go into a will and how to do one. One other thing you can do is to not be the only one that is in charge of the accounts. It is easier if your spouse is also a legal owner of everything you have. It will help a lot.
What about you? How did you prepare for your own death?