Starting Off The New Year Financially Right

Tuesday Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.

2010 is over – for better or worse. You can’t change your 2010 financial decisions. For now, it’s just waiting for your W-2, interest forms from the bank, final summaries from the stockbroker or mutual fund, and a few other pieces of tax information. While you’re waiting, why not organize your files, get ready to prepare your tax return, and prepare some family records.

Collect your family’s critical information
  • Birth dates, social security numbers, extended family contact info, employment data
  • Drivers license numbers, credit card account numbers
  • Location of wills, trusts, dates completed, attorney, executors, birth certificate information and location
  • All bank accounts, savings, money market accounts, etc.
  • Safety deposit box information
  • Annuities, dividends, interest earned, part time jobs, business, etc.
  • Brokerage accounts, 401(k), SEP/Keogh, stocks, IRAs, bonds, etc.
  • Registration data for autos and other vehicles
  • Deeds to your residence and other real property; note balances owed, loan company information and account numbers
  • Insurance policies on your residence, vacation property; include account numbers, addresses, amount of coverage, agent’s name and address, etc.
  • Other insurance, e.g., life, health, auto, long-term care, umbrella policies; include account numbers, addresses, amount of coverage, agent’s name and address, etc.
  • Creditor data, including the companies and the account numbers, e.g., personal loans, credit card accounts, balances owed, etc.
  • Passwords for your computer, as well as security questions and answers

Put this information where others will be able to find it, and if I can suggest, give a copy to a trusted family member or friend, as well as your attorney and financial advisor. I further suggest scanning all of these documents, and putting them on a flash drive for your spouse and that trusted other person.

In addition, and this is really number one, talk to your spouse about all the documents as well as your insurance policies, your investments (how and why), and what to do in case of an emergency.

And while your family is on your mind, think about medical directives and a health care proxy, as well as a living will. What I’m talking about here is what are your wishes should you become terminally ill, or permanently unconscious, and cannot make your own medical decisions? You’re aware of the Terri Schiavo case. You need to give detailed instructions as to your wishes. This directive may be a health care proxy, a medical directive, or a living will.

The Health Care Proxy

: A ‘power of attorney’ allows another to act as your agent in financial decisions. For example, if I needed to represent you at the IRS, I would need a ‘power of attorney.’ A ‘health care proxy’ is the same, except that it is for medical treatment. It gives another the legal authority to communicate your wishes if you become incapacitated. Further, if you regain the ability to act for yourself, the health care proxy reverts into a dormant state. Click here for a NY State Health Care Proxy form.

Appointing an Agent

: The agent should be a person that you trust will follow your instructions, especially if the members of you family see medical treatment differently than you do. So if you are in favor of life-sustaining treatment, you may not want to appoint your ex-spouse. (Although your spouse or family members may wish to follow your instructions, at a critical time, they may have a change of heart.) The original health care proxy should be kept by the agent, with a copy in your records, and another with your physician.

Medical Directives

: The ‘medical directive’ can be a part of the health care proxy, and states the type of care you want. It may give detailed direction as to what to do if you are in a coma (refuse or remove life support, do everything to keep life going), or it may be broad medical directives.

Living Wills

: A ‘living will’ gives instructions in instances of terminal illness, coma, or a vegetative state. It is not necessarily a substitute for the other legal documents noted above. It only takes effect upon your incapacity, and may be changed at any time. It states your desires about life-sustaining treatment under what type of conditions.

These directives are very serious and very personal. You should discuss your wishes with your loved ones, appoint your agent, and lead as happy and productive a life as you can.

Have a great 2011.

Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.


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