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Creating THE Folder…

By Jeremy Ferguson - Topics: Financial Planning, Marbella, Pensions, Spain
This article is published on: 18th February 2019

It was only recently I wrote about the fact we are all living longer as a result of improved lifestyles and medication, and the lovely Spanish lifestyle we are all enjoying.

The point I was making is how it is all very relevant to our finances and how we best manage them. But what if you are the one who tends to manage the family affairs and finances: are you confident that all of the papers and documents you hold are not only all in order, but equally as important, somewhere where they can be found and easily understood in the event of your demise? I am aware of many couples who would not know where all of the important documents relevant to their lives are. It is all down to who normally runs the financials, and that can the husband or the wife.

We all spend time every year making sure the ITV for the car is sorted, house insurance and car insurance policies are up to date, tax returns are filed etc. How about putting some time aside to create ‘ THE Folder’ as I like to call it?

So what is THE Folder?
It is a single file (digital or physical) where you keep all of your important personal and financial information together. It allows easy access to these documents in the event that you are no longer around to help. It is really important to have it in place when one family member takes the lead on the family finances; this includes paying bills, managing accounts and storing documents. Even if that is not the case, it is an important exercise.

So what should be in THE Folder?
All documentation that is relevant to running your household with regards to finances, such as:

  • Birth, marriage and divorce (if applicable!) certificates
  • Bank account details, including online login details
  • E-mail and social media account details and logins
  • Life assurance policies
  • Funeral plan policy
  • Pension documentation and statements
  • Investment documentation and statements
  • Wills
  • House ownership deeds

THE Folder can be very simple, and I always suggest contact details for each of the relevant policies etc. should be clearly marked as well. Also, make sure that when THE Folder is complete, you sit down together and explain all of the information it contains, as it will be as useful as a chocolate tea pot if you don’t both know exactly what is there.

Is it worth the effort?
Well, I think it is worth the effort. At a time of loss it can be stressful enough, without having to try to piece together the deceased’s financial affairs. This can be a really difficult time for family members, even more so if your support network, typically children, is back home in the UK.

final salary pension review

However, preparing THE Folder is much more than just avoiding stress; if you leave behind an administrative nightmare, you could delay access to inheritors’ funds and potentially cost a small fortune in legal fees.

To give you an example of this, the UK Department of Work and Pensions estimates that there is currently more than £400 million sitting in unclaimed pension pots in the UK.

Which is best…..physical or digital?
This comes down to personal preference. It can be done by either creating an electronic file that survivors can access in the event of death, or an actual paper file. An electronic file can be stored on your main computer, in the cloud or on an external hard drive. Make sure everyone knows how to access the computer, cloud or hard drive though!

Alternatively, if you use a physical folder to keep all of the important information together, make sure it is large enough to keep everything together. The good old shoe box has been a long time winner in this department, although a well organised file does make life a lot easier for everyone.

For what it’s worth, I find lots of people prefer paper and are happier with hard copies of everything. I personally prefer digital, which I have shared with some trusted family members. It may even be worth considering asking your legal advisers to hold the folder on your behalf (electronic is much better for this reason), so a simple visit to them if anything happens means they can assist you far more easily with everything.

Typically they will want all of the information it contains anyway, so by saving time when it becomes relevant, the small annual charge they may make for holding the information will normally be offset.

How often should THE Folder be reviewed?
It is sensible to note the date that it was last reviewed, so that anyone using it has an idea of how up-to-date the details are, and then going forward, reviewing the file on an annual basis should be sufficient, or of course, whenever a significant change occurs which you consider materially important.

And finally…
I have already stressed this, be sure to tell someone about it! There is little point going to the effort of creating such a folder if no one knows of its existence or where to find it…..

Article by Jeremy Ferguson

Jeremy FergusonIf you are based in the Marbella area you can contact Jeremy at: jeremy.ferguson@spectrum-ifa.com for more information. If you are based in another area within Europe, please complete the form below and we will put a local adviser in touch with you.

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