Spring is the season of renewal. It is the perfect prompt in our annual calendar to refresh and reorganize our households. Swedes refer to the satisfying endeavor of decluttering as döstädning, or death cleaning. The Scandinavian focus is on those we leave behind when we pass and wanting to deliver to our loved ones our affairs and possessions in order, rather than chaos.
Should we want to emerge from financial clutter and apply a similar approach to finance housekeeping, where do we begin?
Let’s start here—decide whether you’re most comfortable organizing your financial cupboards electronically or in hardcopy form. There exist many opportunities to use secure online personal finance websites, archives or vaults. If old school is more your style, purchase or repurpose a large three-ring binder. Next—it’s recommended that taxpayers retain copies of returns and supporting documents for seven years. Whether you scan, electronically archive and then shred sensitive documents, or maintain a physical file cabinet, now may be the time to discard records for years eight and earlier, and put the prior seven years’ documents in order.
If you own real estate and other assets not represented in your monthly or quarterly investment statements, account for them with available annual valuations, along with other pertinent details.
Insurance policies allow us to protect our assets, our income, our families and businesses. Whether directly or through an employer, do you hold life insurance, health, disability, long-term care, homeowners, auto, business or personal liability coverage? If so, let’s establish a go-to location where all relevant information is summarized—policy type, account number, agent and insurer contact information, and other details helpful in an emergency so they can be accessed by you or by a trusted contact.
While estate planning does allow you to preplan the allocation of your life’s accumulations, it encompasses more than just the distribution of your assets. Should you be unable to make decisions due to incapacitation, who would act on your behalf? If you have minor children, what will the future hold for them in your absence? Do you have a will, a trust, separately designated beneficiaries on insurance policies or retirement accounts? Do you hold assets in common; with right of survivorship; or in community property titling? Do you employ transfer-on-death designations? Have you updated your documents since a previously selected beneficiary has died, or have you divorced with a former spouse still in line to inherit your holdings? Assess what you have in place and update as needed.
Lastly, if you do have an advocate you’ve legally authorized with power of attorney, and or an executor appointed to assume the responsibility of settling your estate, have you communicated with them how you’ve organized your financial household? Do they know how and where to access your information so when necessary they’re able to act in your and your family’s best interests?
Throughout the year, tidying up a few areas within our financial households is a good idea. At the very least, it’s a healthy habit each spring following the dark days of winter to let in some lightness.
Suzanne Hazlett is a financial planner and investment advisor based in Ketchum.