I decided to come up with an article on list of
things that everyone must do to avoid any kind of disturbances in future for
you and your loved ones. The content of this article might be overwhelming if I
try to fit in one post so I will break this down into 3 parts. The contents of
this article are based on my personal experience and discussions with my
friends and family members. I would like to thank my friends and family members
for their valuable input and contribution towards this article.
PART 1
In this part I will give an overview of the
article.
Part 2 of the article highlights a few easy
Financial decisions that are often delayed or neglected such as:
1) Will & Trusts
2) Life insurance
3) Keeping spouse/family informed about personal
assets and liabilities
4) Distribution of Net worth
5) Watching credit reports and safeguarding
identity
Part 3 of the article highlights different ways
to backup your personal information for easy access and availability to you and
your family members when needed. These include:
1) Saving a soft copy of personal documents like
passports, visas, insurance, health related docs etc
2) Saving work related data and education related
certificates
3) Saving financial information in a secured way
4) Saving vehicle titles, home titles & any
property related docs
5) Saving photos, videos etc. Basically plan to
backup your PC, laptop, tablet, smart phone etc.
The target audience for this article are
people/families who
1) are educated
2) are working
3) have kids
4) are either not aware of or have delayed/not
acted on some financial decisions mentioned
PART 2
In this part I will highlight few easy Financial decisions
that are often delayed or neglected in this part.
1) Having a Will and/or Trusts
A Will/Trust is a legalized document that
addresses who/how your assets are dealt with after you die. The risk of
not having one is that your assets could end up with the government/courts and
not with the ones who really deserve/need them (family). All your assets (bank
accounts, real estate, safe deposit boxes, automobiles, ornaments, etc.) can be
included in your document. Remember that Trusts or Wills made in US will not
cover assets back home. You should have a separate Will made in your home
country. Recommended way is to have a Trust to cover assets in US and a Will to
cover assets back home (India mainly). There are many CPAs and lawyers in the
market who can do this in US & back home. The following link has additional
details, pros/cons of each approach - Regular Will Vs Living Trust
2) Whole life Insurance Vs Term-life Insurance
Life insurance isn’t a topic most people want to
discuss. You don’t have an option of staying back when death knocks on your
door. Death in a family is both a physical and a mental drain; make sure your
family is financially taken care of at that time. The basic concept of an
Insurance policy is that you’d be paying an annual premium and in case
something happens to you, your family would be paid a lump sum amount, in most
cases Tax-free. The two common types of Insurance policies are: Life,
Term-life. Life is more expensive than Term-Life; however, Life returns a
portion of your money at the end of the term, while Term does not. Some
criteria to decide on which one to choose should be Finances, health, life
style, age, duration of policy, etc. Do your own research and seriously
consider getting either one that best fits you and your family. The following
link has additional details of each type - Life Vs Term-life
3) Keeping spouse/family informed about personal
assets and liabilities
The most common mistake most people do is sparing
their spouses/family of financial dealings, mostly with an intention of
shielding them from tedious unnecessary detail. That is the most terrible act
of violence you will inflict on your dependents; in case something were to
happen to you. If your family doesn’t know what you own/owe, they will not be
able to claim them in the absence of a will/trust.
4) Distribution of Net worth
Knowing the different categories of assets you
hold is very important to laying out both a short-term and a long-term fiscal
strategy. Depending on current distribution, consider diversifying into other
categories. Recently, Gold is becoming an important asset class, with one
analyst suggesting a current allocation of up to 20% of the portfolio link. Use
following link to get an idea of your current asset distribution - Asset Allocation Calculator
5) Watching credit reports and safeguarding
identity
Identity theft occurs when someone uses your
personally identifying information, like your name, Social Security number, or
credit card number, without your permission, to commit fraud or other crimes.
While some identity theft victims can resolve their problems quickly, others
spend hundreds of dollars and many days repairing damage to their good name and
credit record. Some consumers victimized by identity theft may lose out on job
opportunities, or be denied loans for education, housing or cars because of
negative information on their credit reports. In rare cases, they may even be
arrested for crimes they did not commit link. The different types of fraud that
can be committed are: Credit card, phone/utilities, bank/finance, Government
documents, etc. There are many credit monitoring services available in the
market. I strongly recommend signing up for one to keep a close eye on your
credit history. Also, The Fair Credit Reporting Act (FCRA) requires all 3
credit reporting agencies — Equifax, Experian, and TransUnion — to provide you
with a free copy of your credit report once every year. Don't forget to utilize
this free service provided to you.
PART 3
In this part I will highlight different types of
personal information to save and secure forever. I don't mean months or years,
I mean decades. Planning to backup all personal information should be given a
serious thought so that it is available to you and your key family members when
needed. Let's go over specific information in our life that demands a secure
backup.
1) Saving a soft copy of personal documents like
passports, visas, insurance, health related docs etc.
It is always a good idea to have a soft copy of
your Passports, Visas, & Insurance docs. When you lose the originals these
copies will help you in filling out the information when applying for new
originals. You will not know what information would be needed by your loved
ones when you are not around. Saving and sharing copies of these originals will
help your family members when they are in need (for example when claiming
insurance benefits). Without these copies you and/or your family members will
have to spend lot of money and time when needed.
2) Saving work related data and education related
certificates.
Allocate time to backup all your work related
data like 401K documents, stock options, ESPP, RSUs or any other work area
benefits. Did you ever go through the pain of ordering original degree
certificates? If yes, you know what I am talking about. Sit down and make a
copy of all your degree certificates and mark sheets. May be ask your spouse to
help and I am sure you will have some good laughs going through your marks and
grades.
3) Saving vehicle titles, home titles & any
property related docs.
If you have a living trust you should have
already covered your properties and vehicles in it. Please read Part 2 of
this article if you haven't started preparing a Will/Trust. It is always a good
idea to save a copy of your vehicle titles and home titles. BTW, never keep
vehicle titles in your vehicle so that you don't lose them when your vehicle is
lost or stolen.
4) Saving photos, videos etc. Basically plan to
backup your PC, laptop, tablet, smart phone etc.
We spend enough money to capture best moments and
important occasions in our life. We cherish those moments by watching the
photos and videos in which they are captured. Generally these photos &
videos are saved on your personal PCs or smart phones. Imagine losing access to
your PC or smart phone for various reasons like virus attack, hardware
malfunction etc - a sickening feeling. Saving a backup of these photos &
videos will save you from such nightmarish disappointments. Losing every photo
from first year of my kid's life or some irreplaceable pictures is a huge deal
to me. So to be extra cautious I actually do 2 backups - one to the cloud and
one to external hard drive.
5) Saving financial information in a secured way
Last but not least it is always important to save
these backups in a secure way. Someone getting access to your backup copies is
another nightmarish disappointment. Do your research and find a trustworthy
cloud storage service to save your backups in a secure way. I personally prefer
Google
drive because first 15GB is free per account and then it is only $1.99 per
month per 100GB and the next level is $9.99 per month per 1TB. If you are like
me 100GB offering should be good enough to start with. When I reach the 100GB
limit, instead of signing up for the next level 1TB offering, I plan to create
another account with 100GB storage offering.
Bottom line: Scan all your originals. If you don't
have a direct access to scanner try out the CamScanner
app in android market or iTunes. Save all your important originals in a bank
safe deposit box or a private safety locker. At minimum keep one backup copy of
originals in a hard drive and another backup copy in a cloud storage. Most
important: share access details with your spouse and don't forget to update
your backups frequently. Not taking these actions now might cost you money and/or time down the road.
This is the last part of the article I planned.
In future if I find something new I will write Part 4. Please feel free to send
me an email or use the comments section below for any inconsistencies or
additional information you might want to share.
If you find this interesting, please consider
social sharing. Thanks!