One can't run away from death so this is the time that YOU must create your own death file.
P V Subramanyam explains what you must know about this most essential financial tool.
A death file (DF) is a tool to help you organise and keep all of your most important financial files, data, and documents in one place. It could be a physical file, a pen-drive, a BOX, or be in any combination of the above.
These include financial documents, details of your investments, passwords, estate planning documents like Will, Power of Attorney (remember this does not work once you are dead, but the family will be able to use it for a few days at least!) health care will, health policies and any life insurance policies.
The purpose of having this in case of your death is your family will be able to find all the relevant and necessary documents at one location. This surely reduces stress for the people who have been left behind. This is all the more useful in case of early death -- as a person in his/her 50s.
In their 80s people may not have too many fires burning, so the relevance of this file goes down.
Boring, but absolutely necessary
Creating your DF is a dull, boring, but absolutely necessary and serious process. Planning for this should be done today -- and you will need separate files for each member of the family.
Being organised during the process -- especially at the beginning -- can help, as it will likely take time to put all the things together.
First, decide on how you plan to keep it. Keeping some of the files in physical form makes sense; however, most of the things should be in digital form.
Making sure that you and your spouse use similar passwords -- like home address, date of birth, etc. will be very useful, in case they have to crack it.
Next, decide what all to keep in the DF: Will, Health Will, Power of Attorney, Life Insurance policy, Annuity lump sum to be received on death, Postal investment details -- which may not be available in digital form; birth certificate, PAN copy, Aadhar copy, passport copy, marriage certificate, house nomination form copy, bank and credit card account details, loan documents, automobile records, etc.
Create and organise
Creating a DF takes time -- so keeping a spare copy in the bank locker or office locker is not a bad idea. In the case of the rich and famous they keep a copy in a different seismic zone also, but we may not be that paranoid about documentation, I presume!
Keep it well organised -- use a new physical binder, keep the table of contents, and in case you decide to 'borrow' something from this box, make sure that you put it back immediately.
Do remember the box that you have kept in a different location ALSO has to be updated if you make some major changes in the binder that you have at home.
Of course, the digital files which you keep in the cloud have to be updated too!
Make sure that only very responsible people like your spouse and kids have access to the box.
Keeping it sealed makes sense -- so that nobody 'borrows' anything from that box and 'forgets' to return. Make the removal of anything from the box a big event!
Update annually
The DF (or the death binder or the death box) has to be updated at least annually or on the happening of a significant event.
The significant event could be like updating of the Will, loss of a person named in the Will, death of spouse, spouse going into a coma -- whatever it is make it an ANNUAL event at least for starters.
Making this box in the presence of your children -- with their help -- makes sense so that they know that such a file exists, and where it is kept.
Your lawyer, chartered accountant, investment advisor, should all know that such a box exists. All of them need not know the full contents or even where it is kept.
In case the whole family is killed in an accident, they may access this with the help of the police. Oops, sorry for being morbid -- it is my job, apologies.
Discussing death is not easy -- especially discussing the death of a 55 year old with their 84-year-old parents is morbid, but one can't really run away from death, right?
P V Subramanyam is a chartered accountant with more than four decades of experience in the field of personal finance and blogs at subramoney.com.
