25 Documents You Need to Have Organized

Recently, the WSJ ran an article that contained a list of documents everybody should have in one place (and probably more). The article is a great read and provides some wonderful, common sense advice.

Let's start with the basics:

It isn't enough simply to sign a bunch of papers establishing an estate plan and other end-of-life instructions. You also have to make your heirs aware of them and leave the documents where they can find them.

I realize this sounds silly, but all of your preparations are meaningless unless you tell your beneficiaries and loved ones about the plans and also tell them where the documents are located. It's just as important that people who have legal rights -- legal POAs, medical POAs -- have the documents available to exercise them in the event they must be exercised. Once you have your plan together, I always recommend sitting down with the family and the client to explain everything so that there are no surprises.

What happens if you don't have these documents together?

The financial consequences of failing to keep your documents in order can be significant. According to the National Association of Unclaimed Property Administrators, state treasurers currently hold $32.9 billion in unclaimed bank accounts and other assets. (You can search for unclaimed assets at MissingMoney.com

So -- what should go in this folder?

An original will is the most important document to keep on file.

Yes it is. Also of importance are any trust documents used in conjunction with or as a substitute for a will. If you don't have these documents, expect a problem to develop.

You should keep documentation of housing and land ownership, cemetery plots, vehicles, stock certificates and savings bonds; any partnership or corporate operating agreements; and a list of brokerage and escrow mortgage accounts.

All documents that show ownership should be placed together in one place.

Mr. Law recommends sharing a list of all accounts and online log-in information with your family so they can notify the bank of your death. "If nobody ever takes any more out or puts money in, it becomes a dormant account and then becomes the property of the state," he says.

Be sure to list any safe-deposit boxes you own, register your spouse or child's name with the bank and ask them to sign the registration document so they can have access without securing a court order.

Copies of life-insurance policies are among the most important documents for your family to have. Family members need to know the name of the carrier, the policy number and the agent associated with the policy.

Be especially careful with life-insurance policies granted by an employer upon your retirement, since those are the kind that financial planners most often miss, says David Peterson, CEO of Denver-based Peak Capital Investment Services. New York state alone is holding more than $400 million in life-insurance-related payments that have gone unclaimed since 2000, according to the state comptroller's office.

Estate planners also recommend that you draw up a list of pensions, annuities, individual retirement accounts and 401(k)s for your spouse and children.

First -- consolidate as many accounts as possible. More accounts = more problems. Second, put your accounts with as few financial institutions as possible. All banks/brokerage firms/financial service firms offer all the services one person or family will need. In addition, most of these services are commoditized, meaning the only real difference is the service you receive and the advice you get. Find a financial adviser you like and trust and stay with them. I would recommend that they be younger than you. Third, if at all possible, hold your accounts in a JTWROS or as tenants of the entirety to ease the burden of transition.

Possibly the most important health-care document to fill out in advance is a durable health-care power-of-attorney form. This allows your designee to make health-care decisions on your behalf if you are incapacitated. The document should be compliant with federal health-information privacy laws, so that doctors, hospitals and insurance companies can speak with your designee. You may also need to fill out an Authorization to Release Protected Healthcare Information form.

If you are incapacitated and your family can't locate a health-care power of attorney, they will have to go to court to get a guardian appointed.

Health care POAs are sensitive issues. Here is how I recommend you deal with them.

1.) Think long and hard about who will have this power. Usually, it's a spouse. Remember -- you may be asking them to terminate life support in the event you are incapacitated. Make sure they are comfortable making that decision.

2.) Sit down with the person given the health care POA and the attorney to explain the issue.

3.) Make sure you clearly communicate your desire to have life support terminated -- and not just at a meeting with the attorney. My mother had a medical POA and always told us that is what she wanted. The last two weeks of her life, she was in intensive care and unresponsive. The first time I saw her, I realized she would not want to be kept in that condition, largely because she told me so on a repeated basis. Do the same for all people involved.

4.) Give the person you ask the opportunity to refuse the request and don't be hurt if they do. For some people, the decision is simply too hard.

Ensure your spouse knows where you have stored your marriage license. Mary Cay Corr, now 74 and living in Raleigh-Durham, N.C., couldn't locate hers when her husband died. "I had to write to New York, where we got married, and pay for a new marriage license to prove that I had been married to my husband before I could claim anything," she says.

For divorced people, it is important to leave behind the divorce judgment and decree or, if the case was settled without going to court, the stipulation agreement, says Linda Lea Viken, president of the American Academy of Matrimonial Lawyers in Chicago. These documents lay out child support, alimony and property settlements, and also may list the division of investment and retirement accounts.

I have nothing to add to this.

I always place all of these documents in a binder with clearly market labels and exhibits.

As I mention above, the last thing anyone needs when a loved one dies are legal problems, scrambling for documents or any minor paper work issues to arise. Having all your documents in one place goes a long way to preventing these types of problems from developing.