In this week’s podcast, I explain how to create a family emergency binder using 11 essential categories of info to make it easy for loved ones to understand your finances and figure out what you have, what you owe, and what you’re owed.
What you’ll learn:
- 11 essential types of info to include in your binder
- Tips on how to organize documents, PDFs, spreadsheets, and videos
- How often to update it + tips on staying organized
- Why it’s worth starting now, even if it takes a long time to finish
Do you have a family emergency binder? What other info do you think belongs in it? Let me know by leaving a comment when you’re done.
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Links mentioned in this episode:
- Free downloadable checklist: 11 Essential Categories of Financial Info For Family Emergency Binders
- 16 essential estate planning checklist topics to protect your family and give you peace of mind (HYW009)
- Schedule a private 1:1 consultation with me
- HYW private Facebook community
Read this episode as a post:
Today I want to talk about some of the prep work I recommend doing to be super prepared in case you get hit by a bus and die.
And specifically, what I mean is prep work you can do to organize and catalog your financial and business affairs, so that your family, spouse, and estate administrators can efficiently and easily piece things together to know exactly what you have, what you’re owed, what you owe, and how to administer your estate.
And that really means assembling an emergency folder or spreadsheet or binder that contains all your financial information and accounts, all in one place.
I’ll give you a comprehensive checklist of what accounts and items to include so you can pick out the things that are relevant to you. And I’ll also share some tips on how to keep things organized and manageable.
I’ll also include a checklist of things we’re going to be covering in this episode as a freebie which you can get at the show notes for this episode at hackyourwealth.com/47. So no need to write anything down in case you’re on your commute or jogging or not in front of your computer.
Before we get to all that, though, as always, I want to invite you to join the Hack Your Wealth private Facebook group which you can access at hackyourwealth.com/fb.
That is a forum where we can connect, have a two-way dialogue. I’m in there every single day. I try to respond to every question and comment in there.
And it’s a place where folks can ask about financial independence, early retirement, tax strategies, real estate investing, side business and side hustle income, career transitions, or just advice in general about personal finance.
So I definitely encourage you to join us in that forum and meet other members as well. hackyourwealth.com/fb
Escape the Room?
To set the stage for our discussion about organizing all your financial and business information into some kind of emergency spreadsheet or folder, I want to start by analogizing to the game “Escape The Room.”
It’s an in-person game that you go to an actual physical location to play. And they set up a room where you and your teammates are meant to be locked inside of, and there are clues and objects inside that will help you solve a puzzle to help you “escape the room.”
And there are different levels of this. So as you escape each room, you then get put into more and more difficult rooms where the clues and the objects are more challenging to solve in order for you to escape.
And so it’s this game where you are trying to piece together based on limited information and all these puzzle clues, and you keep moving to more and more difficult rooms as you escape each one.
But it would be a lot easier, obviously, if you just had a key or an instruction list that you could just follow to escape the room rather than trying to have to pore over and scrutinize these limited clues to figure out what the path is to escape.
It would be a lot easier if you essentially just had the answer printed on a little map or legend or key that would allow you to manipulate all the objects, knowing exactly what would happen to each one and how then you could escape the room very efficiently that way.
Why You Should Create a Family Emergency Binder
Well, in a way, creating a binder or spreadsheet that contains all your financial information and business information is a way of creating that type of roadmap, that type of key or legend, for future people that you want to have access to – your family members, your estate administrators.
So that they can piece together your financial and business life in a way that allows them to access the assets and wealth you intend for them without having to solve a whole bunch of clues to figure out how to access this pot of assets over here and how to log into this website over there and how to correspond with this trustee over here.
Rather than having to do all that legwork and all that piecing together themselves, you can actually create a roadmap for them in advance, so that if you suddenly get hit by a bus, they have a much easier time just simply following that roadmap to get to all of the wealth and assets that you intend to leave to them anyway.
So essentially what I suggest doing is creating, as I alluded to earlier, a folder or spreadsheet or binder that contains all your financial information and accounts in one place that your spouse or estate administrator can access in an emergency, if you pass away, if you’re incapacitated, and they need to then manage your affairs.
This can literally be a physical binder of paper documents, if you want something tangible, or it can be a spreadsheet with notes, numbers, login credentials with links that point to various PDF scans, linked electronic documents or website login pages. Or it could be a combination of the two.
It might even include links to video files or video recordings of you explaining each item in the file one by one to provide additional evidence about your intentions and wishes, similar to the kind of video recording evidence that I suggested back on Episode 9 of the podcast where we talked about estate planning best practices.
2 Things You Should Have In Your Family Emergency Binder No Matter What
And for all your financial, business, and medical accounts, I recommend doing two things across all of them.
One, I recommend getting a notarized power of attorney document that authorizes your spouse or administrator to access, liquidate, withdraw, consolidate, and otherwise manage all your accounts and health records and financial affairs.
Number two, as I alluded to a moment ago, I also recommend writing a little bit of commentary for each account or maybe recording a video to describe what the purpose of each account is, so that there is some evidence of what your intentions were with each account, in case an administrator needs to sort through it and piece together your intentions if you get hit by a bus.
So with those things in mind, let’s run through the checklist of things that are worth including in your emergency binder or emergency spreadsheet.
1. Bank Accounts
First is your bank account information.
Here, you’ll want to note all your bank names, account numbers, and website login credentials, as well as, ideally, approximate account balance amount so it’s clear to reconcile what each account roughly contains.
Obviously, those amounts may fluctuate day by day as money gets deposited and withdrawn, but approximately the amount you have in them will be helpful for folks when they’re trying to reconcile and access those account balances for them to line everything up. That will be helpful.
This is an addition to the general power of attorney document which I mentioned a moment ago that you should have notarized that will allow your spouse and administrator to access your assets directly.
2. Brokerage Accounts
Number two, after bank accounts is brokerage accounts.
So this would include all of your taxable accounts, any retirement accounts that you have, such as 401(k)s, IRAs, Roth accounts, and any other of these type of accounts where you’re investing in securities, stocks, and bonds. It will also include any individually publicly traded stock or bond holdings, obviously, that you contained in these accounts.
And for brokerage accounts, you want to include the name of each brokerage, the account numbers, website login credentials, and ideally, even a list of the individual holdings and the approximate account balances and approximate amounts of each of the holdings.
That will help an estate administrator or your family members understand what you believed you were leaving behind versus what is actually in the account when it comes time to access it.
So similar to bank accounts in the type of information that you would include, but these are just securities and investments.
3. HSAs and FSAs
Number three on the list is HSA and FSA accounts.
You should include here the name of the financial institution where the money sits, account numbers, website login information. Same as the other accounts that we just described.
For HSAs and FSAs, it’s also a good idea to have scanned receipts for all medical expenses that are still eligible for reimbursement and that have not yet been reimbursed to you, so that money can be taken properly out of the HSA and FSA as reimbursement for past medical expenses in a tax-free manner.
And you have the receipt scans or the proof of receipts as backup in case you’re audited by the IRS. You can show those receipts, that those are proper reimbursement withdrawals or distributions.
4. Illiquid Assets
Fourth, I would include notes about illiquid assets.
So these are any illiquid trust shares, maybe private equity investments, limited partnership shares. For example, if you invest in, say, a real estate syndication as a limited partner.
Any kind of illiquid assets that you have in your portfolio, you’ll want to have the financial institution names or sponsor names where this money is being invested, account numbers, obviously, website login information if there’s an LP login portal.
As well as PDF scans of key documents, like partnership agreements, trust agreements, names and contact information of the general partners of the partnership or fund you’re invested in, maybe the name and contact information of legal counsel and trustees.
So that it’s just very easy for your estate administrator to understand these holdings. Basically, what your next of kin would need to know to start unwinding your positions in these investments.
5. Credit Reports and Credit Cards
Number five on the list, I recommend you including information about your credit.
So here, I recommend detailing information about two things in particular: credit cards and credit reports.
For credit cards, I recommend including a list of all credit cards you have active under your name.
So, the name of the credit card, who the card issuer is, what the credit card number is, the expiration dates, CVC codes, and any website login credentials that will allow your estate administrator to log in and handle your account balances.
You just want to make it really easy to pay these things off and close the cards.
For credit reports, I suggest including a copy of your most recent credit report and score. And you can refresh that periodically as you update your emergency binder or spreadsheet. As well as the login credentials and pin numbers, the personal identification numbers that you have for each of the reporting agencies.
You want to make it easy for your family members and your estate administrator to get into those accounts, contact the credit bureaus, and report that you’ve passed away, so they will stop writing to your credit report and also not allow other people to pull your credit or write to your credit report after that.
6. Estate Planning Documents
Sixth on the list, I would include information about estate planning documents that you have.
In here, I would make sure to include any revocable trust agreement documents, any notarized and authenticated wills, power of attorney documents, medical directive documents.
I would also include a notarized HIPAA waiver. That’s the Health Insurance Portability and Accountability Act, which governs your medical privacy and restricts medical care providers from sharing your medical information with other people unless you’ve signed a written waiver and that’s been notarized.
You want that so that family members can access your medical records if they need to and you’re not around.
And ideally, all of these documents are both available as PDF scans and original paper documents in your binder or spreadsheet or electronic folder.
7. Housing Documents: Deed, Title, Mortgage
Next on the list, number seven, is housing-related documents.
Here, I would include two things: Copies of all your property deeds, so the actual grant deed documents, as well as key information like parcel numbers and tax identification numbers.
I would also include mortgage documents for mortgages that still have balances owed. So that would encompass the lender names, the mortgage numbers, website login credentials, plus how much is still left to be paid on the mortgage (both principal and interest together) as of the most recent update to your binder or spreadsheet.
If you also have a PDF scan of the mortgage loan agreement you signed, that would also be good to include as well, so it’s easy to see what the terms of your mortgage are.
8. Insurance Documents
Number eight on the list is insurance documents.
This would include life insurance, disability, homeowner’s insurance, and auto insurance documents at a minimum.
But really any insurance document where the thing being insured is expensive.
And for these, I would include policy numbers, policy coverage documents, website login credentials, of course, and any contact information needed for claims filing.
You can see there’s already a theme among the items we’ve listed, to include name of the institution, account numbers, any pin numbers or tax ID or other identification numbers or policy coverage numbers, and website login credentials.
This will be a consistent theme for all of these type of assets.
9. Loans and Debts
Number nine on the list, I would include any outstanding non-mortgage debts, student loans, taxes, etc. that you owe and that are owed to you.
For both the stuff you owe and the stuff owed to you, I would include information about who was owed, how much is owed, broken out by principal and interest, when the due date is, and any key payment terms folks should be aware of. At least the most recent state of these things, as of the most recent update to your binder.
Of course, these balances and amounts will change over time, but just mark the date of the most recent update to your binder for these things, so your estate administrator and family can quickly see what is owed to you and what you owe to others and settle the debts appropriately.
10. Family Business
Number 10 on the list, I would include information about family business information.
10(a). Business Bank Accounts
So business bank accounts: bank names, account numbers, website login credentials, rough account balances, as well as notarized power of attorney documents as first thing under family business information.
10(b). Governing Documents
Also, you should include with your family business information any copies of the business’ governing documents.
This may include, for example, the articles of incorporation or charter of the company and any company bylaws.
It might also include a shareholders’ agreement or partnership agreement if it’s a partnership. And there might also be some kind of operating agreement.
You just want your family and administrators to be able to quickly understand what all the rules are surrounding governance of the family business if they’re not involved in it day to day because those documents essentially spell out the laws that apply to your family business, which might be very important for your family wealth if you have a lot of wealth tied up in your business.
10(c). Stock Certificates
On top of that, you should include share certificates for stock and partnership shares that you own in the business. So PDF scans and original documents here are ideal.
10(d) Business Website Credentials
And finally, you’ll want to include any website login credentials that are applicable to all the items that we’ve discussed since, these days, a lot of those materials may be stored in the cloud online and there might not be physical paper documents.
If you have physical paper, of course, retain a copy of those. But if you only have electronic copies, make sure you include website login credentials.
And for physical documents, I always recommend it’s a good practice to PDF scan them so you have an electronic copy as well.
11. Miscellaneous: Bills, Accounts, Licenses, Software, Social Media, Email
Finally, number 11 on the list is a number of miscellaneous items I recommend noting in your binder or spreadsheet to just help your next of kin and estate administrators wind down all the odds and ends of your affairs so there aren’t loose threads hanging.
Those miscellaneous items that I recommend including are things like payroll information, property tax information, utility bills and billing details, miles and points loyalty accounts, if you have a lot of miles and points stored up, any professional licenses you had, such as a law license, medicine license, accounting licenses, things like that.
And finally, email, social media, file storage accounts for software like Gmail or Facebook, LinkedIn, Twitter, Dropbox, Amazon, things like that. Plus any two-factor authentication information someone would need to access those accounts that are secured by two-factor authentication.
That might mean, for example, including your cell phone account as well, or information on how to access your cell phone account, or a two-factor authentication app on your phone, which also means needing your phone unlock password to access such an app.
And what I recommend including here are, as we mentioned several times now, account numbers, login credentials, notarized power of attorney docs that grant authority to your spouse and administrator to request and access these things, so that accounts can be paid off and closed or shut down, and so that critical information can be retrieved from them, particularly from your email accounts.
Email has a lot of the things needed to get into other accounts elsewhere. Confirmation emails, password recovery emails, things like that.
So it’s particularly important that your family can get into your email should they need to when you’re gone because you don’t want them to have access to the general account information, but then not actually be able to authenticate and get in because they’re blocked out of your email.
So all this stuff, as you can see, will obviously take a long time to put together. So I’m not suggesting you do this all in a day. I do recommend getting started ASAP if you don’t have ANY of this put together currently.
Just prioritize the most important items first. You can take your time finishing the entire list.
It may take you weeks or even months. But the important thing is to get started and make progress, even if it’s slow and steady.
It’s very much worth the time invested in doing this work upfront because you can think about it this way: For every hour you invest upfront in making your financial and business affairs clear and easy to follow, it’s going to save your loved ones and estate administrator days on the backend when they’re trying to sort everything out – and when they’d really rather just be grieving emotionally.
If you think back to the analogy I mentioned at the beginning of this episode, it’s going to allow them to “escape the room” with a clear roadmap and instruction list in hand rather than trying to unwind and access all these accounts by using clues and bits of information here or there.
Or lots of chased phone calls with different counterparties at all these financial institutions, which will take a lot more time – when they’d really rather just be grieving emotionally.
So putting together this type of binder or spreadsheet will allow them to have a clear roadmap with all of the credentials and information and authentication data they need to get in and start unwinding positions and accounts as appropriate.
Now, one big question that comes up is, even after you create such a binder or a spreadsheet, won’t it easily get outdated?
Well, first, it probably will get outdated over time, but that doesn’t mean you shouldn’t do it. You should still do it.
A good practice is to make it a ritual or habit to update it, say, once a year thoroughly and then do perhaps spot updates periodically when something major changes, such as when you open a significant new account or you buy a home or you inherit a sizable chunk of assets.
Whatever it is, you can do spot updates when there are big shifts in your financial situation.
And then do a broader annual update that goes item by item as just part of your year-end financial planning and getting ready for the next year.
I keep a lot of my stuff in a spreadsheet, personally. And what I have found is helpful is to have a cell in the spreadsheet marked where I indicate the calendar date when the file was last updated. And that helps me track how stale the contents inside the file have become and when I’m due for a next big update.
You could also put last updated dates next to each major category or bucket in the spreadsheet so you can prioritize updating the oldest stale categories first whenever you go in to update things.
Not all categories will even need much updating once they’re set the first time.
Your mortgage, your deed, bank account and brokerage information, things like that probably need minimal updating once they’re recorded the first time, unless something big changes, like you close or open the account or you pay off the mortgage or you buy a new house.
You don’t have to go in and change the approximate account balances over and over again until maybe the end of the year when you’re doing a general update for the entire spreadsheet.
So even though updating your binder and spreadsheet is a little bit of a burden, is a bit of a chore, it’s not overwhelming, and that shouldn’t be a deterrent to doing this work in the first place.
Most of the time invested in it will be in the initial creation of the binder. After that, updating it periodically is actually pretty lightweight in terms of value for time spent.
So I would encourage you to not think of the burden for updating as a deterrent.
I definitely think it’s a good idea to just invest the time, create the binder or spreadsheet, and then update it maybe just annually, if need be, to account for any major changes that have occurred in your life over the past year.
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All right. That’s it for this week. Thanks for tuning in, and we will see you next time!
Related: be sure to also check out our posts on how to calculate how much life insurance you need and how to set up a revocable living trust (with sample trust document).