Digitize your documents for greater control

When it comes to our financial lives, we all want to be in control. Unfortunately, one thing we can’t control is how credit agencies, retailers, and even our own government store and protect our data. The past data breaches at Equifax, the Securities and Exchange Commission (SEC), and the IRS reminded us of that. Those incidences have also made many people frightened to store important personal information and financial data online.

But is amassing paper documents — such as your will, financial statements, life insurance policies, tax documents, and real estate deeds — in a filing cabinet really a better alternative?

Although your paper files may not be accessible to savvy hackers and cyberthieves, they could be vulnerable to physical theft or environmental damage, such as fires, floods, and other natural disasters. Paper files also create another problem: they must be organized and easily accessible if something were to happen to you. So what’s actually easier for your loved ones — access to your files in a paper-based filing cabinet, or in a highly encrypted and organized digital format?

It’s important to know the answer, since leaving your family a system that only you understand could put an added burden on them, including increased estate administration costs, delays in settling your estate, and of course, unnecessary stress.

Creating your "online vault"

If you’re thinking of digitizing your documents, there are many excellent and secure systems available to help you catalog your documents in an “online vault.” To facilitate estate administration, these systems can be made accessible to the professionals you work with, such as your attorney, executor, and trustee as well as your family members. When you do find a system you like, ensure that it offers the highest level of security as well as a multi-tier verification process that involves more than just a username and password.

Get organized first

Before you begin the process of creating your online vault, it’s essential that you sort through your documentation to remove information that’s outdated or duplicated. In addition, you must create some system that classifies your documents. I often advise clients I work with to consolidate documents into the following three categories:

• Core information. This will include documents and data that are essential to your family, including key contacts, intergenerational wealth transfers, tax returns, insurance policies, financial statements, and any real estate documents.
• Ancillary details. Your ancillary information includes things that your loved ones care about greatly, including login information for your digital files, bank account statements, mortgage and loan documents, credit cards, and safe deposit boxes as well as artwork and important family documents for all members of your family, including your pets.
• Personal wishes. This will provide the opportunity for you to share your wishes with your family, such as your funeral and burial arrangements and your philanthropic wishes or spiritual beliefs.

Organizing your documents into these three categories is just the start. As you review the information you have available and want to include, you’ll create categories that align with your unique circumstances and preferences. The most important thing to remember is that your system should be secure, logical, well-planned, and clear so that your important files and information are accessible and beneficial to the people you trust.

Ready for the next step?

Working alongside a financial professional can help you navigate the future and reach your potential. To learn how our Wealth Advisors can help you, please call 1.877.670.5400, visit us online, or visit your nearest Citizens branch.