They say death and taxes are life’s only certainties. Perhaps not so coincidentally, both require significant paperwork. And in the event of the former, knowing where to find the information may be among the kindest legacies one can leave.
“Everyone needs some kind of plan,” says Laurie Siebert, CPA and a certified financial planner with Valley National Advisers, Inc. in Bethlehem, Pa. “Yet, estate planning tends to be the elephant sitting in the room that many people seem determined to ignore,” she adds.
Those trying to ignore this particular inevitabilty are in good company. According to a recent survey conducted by the online legal document service provider LegalZoom.com, 70.2 percent of Americans lack a last will and testament. That level is consistent with prior years’ surveys and persists despite the existence of sites like LegalZoom.com and Nolo.com. Both offer forms and formats for speeding along the drafting of wills and powers of attorney, making a team of high-priced lawyers and ensuing meetings entirely optional given many individuals’ circumstances.
Even worse, survey respondents who were parents with minor children were the least likely to have prepared a will. The most commonly cited reasons: Disagreement or indecision over naming the children’s legal guardians.
Unfortunately, not making such decisions still has consequences. “If you don’t decide, the state will. However, the results will likely be undesirable for everyone,” says Siebert.
Deciding about the welfare of children and assets does not just apply to parents — new, middle-aged or otherwise — or to individuals in poor health. Even the young and the single need a plan.
“As soon as you start a career, you are likely to have assets such as a 401(k), IRA, or even an employer-paid insurance policy,” observes Joseph Corriero, a director in online marketing for Merrill Lynch in Hopewell, N.J. All require thought and decisions regarding beneficiary designations. They also require periodic review to ensure the listed beneficiaries are still those who should be named and their contact information is current.
But beyond that a mechanism is also needed so that loved ones, attorneys or whoever would respond in a time of personal crisis would know how to contact employers, doctors, and landlords, for example, or where health insurance cards and bank records are kept.
“People, in general, are managing ever more complex financial lives, with so many moving parts, they need some way of keeping track of it," says Rich Aneser, a Merrill Lynch director for brand management and communications. "In my own case, if I get hit by the proverbial bus, my wife needs to know where everything is and how to access my accounts.”
To address this need for personal preparedness, Merrill Lynch developed a financial organizer for its private clients to use. It can be used to gather all critical information into one easily referred to document. It was designed to keep legal, financial and tax advisors along with significant others informed so that if anything interrupts a client’s daily life, their finances would continue to be managed and the necessary advisors and service providers would be alerted.
“The document has been popular with our financial advisors as they work with clients to help keep their full financial lives in focus. But from the online client side, it has become one of our most popular downloads,” says Corriero. This popularity recently led the firm to offer public access to its ‘Essential Document’ through its Total Merrill Web site.
Though the document is intended for sharing, it obviously needs to be safeguarded. It would supply an identity thief with everything they could possibly need to assume and finance a new life.
“Obviously, we recommend it be kept with all private information in a safe and secure place, not on the kitchen counter or in a computer file or where it can be accidentally thrown away,” adds Corriero.
While such fundamental financial preparedness, along with a will and powers of attorney, help ensure the passing along of a legacy that does not include a paper chase of frustration, like so many aspects of life, communicating wishes and expectations personally with loved ones is also recommended.
Siebert suggests one way adult children can have this conversation with their parents is to begin by asking advice: "Now that I’m working and have a 401(k) and have a baby on the way — how did you and Dad decide who your guardians and beneficiaries would be when you were my age?" Or they could ask: "If something were to happen to you Dad, how would Mom be taken care of?"
“Making estate plans and letting those who need to, know about them, is obviously a sensitive part of someone’s life,” says Siebert, but it is one that still needs attending to, as it is an area ripe for rather expensive and unintended consequences when it is persistently ignored.
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