Beginning-of-Year Financial Tasks

Beginning-of-Year Financial Tasks

There are some tasks that, if left undone, can have an enormous impact on those you love. The beginning of the year is a good time to set some deadlines for yourself, while you still have New Years resolution momentum. Give yourself a February 15 deadline, and you’ll stay focused says The Daily Journal’s article “5 financial tasks you should tackle by year-end.”

Here’s the list to get you started:

Check Your Beneficiaries on All Accounts. A sad story comes from Washington state, where a man died two months after his divorce was finalized. He had not changed his beneficiaries, so all of his life insurance proceeds and his pension plan went to his ex-wife, and not to his children from a prior marriage. The case went through the court system all the way up to the U.S. Supreme Court, which ruled in 2001 that the beneficiary designations had to be honored.

Start by making a list of your accounts, then check to see who your beneficiaries are. You may need to contact the financial custodian of the accounts, or you might be able to do it online. Ask for confirmation in all cases, so you and your heirs will have it in writing. Keep this in an organized binder so it will be easy to find if something were to happen to you.

Look at Any Pay-On-Death Designations. In some accounts, there is a pay-on-death designation, in place of a beneficiary designation. This also may have been an option that you chose when you first opened the account. Without a designation or Pay-On-Death name, the account must go through probate, the legal procedure to distribute property in your estate.

Depending on the state, you might have had this option on the property or even vehicles. A local estate planning attorney will know if this is an option in your state. To add or change a beneficiary on a vehicle, you’ll need to apply for a certificate of car ownership with the beneficiary form. If you want to change your deed to a Transfer-on-Death deed, you will need to submit a new deed to the appropriate county recorder. Again, an estate planning attorney will be able to help. The lawyer will also help evaluate whether this is a good way to transfer property in your situation.

Update Insurance Policies. The insurance company is not going to send a beneficiary a check without someone filing a claim. The family often does not know what insurance policies exist. A 2013 investigation from Consumer Reports found nearly $1 billion in unclaimed life insurance proceeds. You want to update your contact information with the insurer every now and then, making sure that your beneficiaries are correct and that bills are being sent to the right address. In some cases, the insurance company allows people to notify another person if payment is overdue and they are not able to reach you. You should also keep that contact information updated, in case your back-up person moves. Keep a list of your insurance policies in a place easy to find.

What’s In Your Safe Deposit Box? If it’s been a while since you’ve visited your safe deposit box, schedule a time to go and have a look. If you neglect to pay your annual fee, after a number of years the bank is legally permitted to open the box and turn its contents over to the state. Visit once a year to make sure payments and contact details are current. Leave clear instructions with your executor and heirs about where to find the box and its keys. Consider giving another family member official access to the box.

Revise Powers of Attorney. Now is a good time to review your powers of attorney to see if it’s time for an update. If you can’t locate your original POA documents, or if the people you chose many years ago have died or moved away, it’s time for a new set. And if you don’t have power of attorney documents in place, make an appointment with your estate planning lawyer to have them created. Spare your family the stress, lost time, and unnecessary expenses that trying to get access to your accounts might cause by having these updated and name a backup agent (or two).

Yes, technically this article was for the end of the year, but we are a long way from the end of 2020 and I have a feeling that these tasks weren’t on any of your holiday ‘to-dos’ or end of year lists.  Heck, even if you did set yourself a deadline to complete these tasks before the end of the year that would be fantastic.

Reference: The Daily Journal (Nov. 18, 2019) “5 financial tasks you should tackle by year-end”