If you were to die today, would your spouse and other beneficiaries know where you keep all of your accounts? Would they know how the bills are paid and where the insurance policies are kept? Who is the executor of your will (if you have one) and does that person know who your financial adviser is? If you are not the member of your household who handles the finances, would you know where to begin to look if your spouse or partner were not to come home tonight?
These are very difficult questions to ask ourselves even though we are all very well aware that eventually the inevitable will happen. Death is a topic not many of us really want to think about, let alone talk about. Perhaps it is because of this that decisions about the will and powers of attorney are put on the backburner as we hope they won't be needed for many years down the road.
Even if your will is in place and up to date, it is important to discuss with your better half where your savings are and how your finances are run if you want your estate to settle easily and for your household to continue to run smoothly during a very difficult time for your survivors.
If you are the only household member to manage your various accounts, it can be very difficult for your family members to uncover the mysteries around your finances.
To avoid this problem, not only should you consolidate your accounts, you should do up an "estate directory" -- a document containing the details of your personal financial information for family members. It states where your accounts are held, which professionals you deal with and who to contact should tragedy strike. It also contains a statement of net worth, which is a crucial document used to start the financial planning process.
Update it every two years or whenever major changes to your financial situation take place.
Few of us tend to speak openly and honestly about our finances with our family. Consolidating your accounts and preparing an estate directory is a good way to ensure a smooth transition for your estate on your passing. The most important step, however, is to communicate your wishes and provide a clear roadmap to your finances for your family members to follow.
As seen on The Toronto Sun.