Hello Young Investor,
Today, I am going to talk to you about the importance of keeping your financial documents updated.
But first, I want to let you know that I am so proud of how you are showing interest in improving your finances and your life.
While I was sitting here this morning drinking my Earl Grey tea and listening to a podcast called Yo Quiero Dinero, what I heard reminded me that I needed to write to you about today’s topic.
A Financial Planner Shares a Warning Story on Why You Should Keep Your Financial Documents Updated
The host had a guest, and the guest was Kevin L. Matthews, a financial planner. Financial documents was being discussed when I tuned in. There are many personal documents in our lives. But ,this particular podcast dealt with finances. The specific financial documents in the discussion included bank accounts, investment accounts, retirement accounts, and wills.
So, this is what I heard…
Mr. Matthews shared…
two unfortunate and awkward stories
First, an older gentleman had passed away.
Unfortunately, he had not updated his beneficiaries. Unfortunately, when he died, all of his assets went to his ex-wife. I don’t know who he wanted to receive his assets. But, other family members probably thought that the money was not meant to go to the ex. However, because of state law, there was nothing that could be done.
The second situation was as follows:
Another older gentleman passed. This man has four kids. But, there was a gap between child 3 and child 4. The gentleman had not updated his beneficiaires, and had not added the fourth child as a beneficiary. So, the siblings had to get together to decide what to do. But, that had to be done outside of Mr. Matthew’s involvement. Assets have to be distributed in the documents indicated at the time of death. (One can only hope that the siblings included the fourth child fairly.)
This is a situation to which I can totally relate.
Sadly, we had a situation in my family in which someone tried to take advantage of a dying family member. A gentleman who was not a family member, was alone at the time in the hospital room with our family member. He got her to sign a handwritten document indicating that he could live in her house after her death. After her death, the gentleman produced this handwritten note. Our family was not sure what to do about that. But, here is what happened.
Unbeknownst to the gentleman
Unbeknownst to the gentleman and even family members, as it turned out, the house was co-owned by another person. The co-owner was another, younger family member. When the gentleman was told of this, he was surprised.
Since the family did not know how to respond regarding the handwritten document, they chose to respect it, and told the gentleman that he could live in the house. However, he was told that he was asked to cover the property insurance and taxes, since he was the person that was going to be the one living there. He said okay. However, interestingly enough. He disappeared, and the family never heard from him again. I’m not sure what he was thinking. I wouldn’t have been able to read his mind. However, the situation didn’t seem good to me. However, that was approximately 30 years ago.
So, you see, all kinds of things can go awry when documents are not updated, and updated documents can prevent unintended outcomes.
In addition to making sure that you have your beneficiaries updated on your accounts, you need to have a will. Your will will allow you to determine who manages the distribution of your assets, who gets your assets, and save the people involved money and time.
And, just like with your accounts, you must keep your will updated, too.
So…
What should you do about keeping your financial documents dated?
- Make sure that every account that you have has a beneficiary listed. Go back to already held accounts and check on this. For all new accounts, do this immediately when the accounts are set up.
- After every significant live event, go through all of your accounts and update the beneficiaries as necessary.
What are significant life events?
You’ll Need To Know These To Keep Your Financial Documents Updated
Some significant life events include: marriage, separation or divorce, death of a family member, birth or adoption of a child, or change of job. (There are others. But, these are examples.)
- Make sure that you have a will.
- After every significant life event, make sure that you update your will as needed.
- Then, once per year, at a scheduled time, perform an annual beneficiary check on your accounts and your will. I suggest every January.
Well, I’m off to check on the assignment of my beneficiaries.
Have you checked on whether you are keeping your financial documents updated within the last 3 months? Let me know in the comments.
If you found this information helpful or inspiring in any way, please share this post with someone else, and follow my blog. This helps me know that I am sharing something that you value, and inspires me to write more.
Keep reading and learning more about how to improve your financial journey.
Wishing You the Best,,
Rich Mom
Do you want to read more of a mom’s letters written to inspire financial independence by age 30? Check out:
Ten Secrets to Building Wealth
Spilling the Tea: How Will I Receive My Paycheck?
Nine of My Favorite Dividend Stocks
Wondering About Rich Mom?
If you stumbled upon this post and you are wondering who I am: I am a tea lover and a mother to a young adult. I have majors and degrees in business, economics, and education, and I am passionate about financial literacy and personal finance. I am worried about the future of young adults who are often being burdened by massive student loan debt, but at the same time have never been taught about financial literacy.
Unfortunately, many people work, forever living just paycheck to paycheck, never understanding the pattern that would make their lives easier. My goal with my blog is to inspire those ages 30 and under to become more financially literate, become financially independent, and be able to live a healthy (mentally and physically), happy, generous life, in which you can help others do the same. But remember, my blog is intended to inspire, but not as investment advice.
I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
Also remember that past performance is not a guarantee of future performance.
Looking for help with this topic? You can check out this book:
Get It Together: Organize Your Records So Your Family Won’t Have To: a book to help with organizing important documents