Legacy Notebook: Investment Accounts

Day 5 of the Legacy Notebook Series

Now that your banking info is in the financial section, we’ll move on to investment accounts.

But first, a word about safety deposit boxes that I neglected to include in the banking post.

Safety Deposit Boxes
The financial section of your legacy notebook is where you add notes if you maintain a safety deposit box. Safety deposit boxes are an area of mystery for many families after someone passes away. Many times, no one in the family knows if the decedent had a safety deposit box (or where the key may be hiding).

If you choose to store items in a safety deposit box, please keep in mind that no one will be able to access the items in that box immediately after your death (unless there is a joint owner of the safety deposit box). Generally, a non-owner may only access a safety deposit box after the decedent’s death certificate is provided. That’s why I’m not a fan of using a safety deposit box for keeping items like your will or letters outlining your final wishes. When your time comes, you want your family to have access to those items quickly so they have the peace of mind that they are making the right choices on your behalf. If you want to use a safety deposit box to store important docs, please consider adding a second (trustworthy) owner on the account to make things a bit easier.

Investment Accounts
Today we’ll tackle your investment accounts. Make a list of your investment accounts to include in the notebook. Here’s a worksheet to get you started (scroll through the tabs to find the investment worksheet).

The list should include each investment account, which brokerage maintains the account, type of account (401k, Roth IRA, Roth 401k, IRA, SIMPLE IRA, taxable account) and beneficiary designations or transfer-on-death (TOD) arrangements. The idea is to have a quick summary listing to reference along with copies of recent statements from each account. Yes, those ‘recent’ statements are quickly outdated but they typically include contact information for your broker and provide easy reference for you and your VIPs.

While you’re making the list of your investment accounts, take a minute to think about any orphaned retirement accounts you may have left with a former employer or have simply forgotten about. It might be a 401(k) you opened with your first job or an E-Trade IRA account you opened years ago.

Now is the time to round up all those accounts and track down the account details. The orphaned accounts can be rolled over or consolidated later. For the moment, just focus on getting all the accounts listed on your summary sheet for easy reference.

Confirm your beneficiary designations on each account <– PLEASE don’t skip this step
You’ll see that the worksheet has a space to enter your beneficiary designations on each account. This is often referred to as a Transfer-On-Death (TOD) arrangement. Please, please, please take the time to confirm your beneficiary designations on each account.

I’ve written about it previously, but failing to designate beneficiaries on your account can be a costly mistake. At the time of her death, my grandmother had an investment account for which she hadn’t named beneficiaries. This meant that her investment account became a part of her estate included in the probate process. In her state of residence, the attorney’s fees for probate proceedings are set at 2% of the estate assets. Including an investment account in probate can add thousands of dollars of estate legal fees that could have been completely avoided by simply designating beneficiaries.
Today’s Action Items:

• Put your completed investment accounts summary sheet in your binder
• Print out recent account statements and include those in your binder also
• Add copies of your beneficiary designation or transfer-on-death paperwork, too

thanks for reading,
Lesley

P.S. Looking for the rest of the series? You can find it here.

Stronger Wallet’s Legacy Notebook series information is intentionally general in nature and covers typical scenarios. You may have special circumstances that need to be considered. Always consult a trusted advisor before making big decisions about your financial legacy. Feel free to send me questions along the way at lesley [at] strongerwallet .com.