Make It a Safe and Organized New Year
Everyone can use some help getting their financial affairs in order, especially senior citizens who may face special challenges and decisions involving money management later in life. Here are some ways everyone, regardless of age, can get a grip on record-keeping and avoid chaos if a crisis arises:
Simplify your life: Have your paycheck, Social Security benefits, pension payments and other income automatically deposited into your bank account each month. Direct deposits are safe, reliable and convenient. You can also have automatic withdrawals from your bank account to routinely put a certain amount of money into a savings account, a certificate of deposit (CD), a mutual fund or Savings Bonds.
Telephone banking allows you to use your touch-tone phone to confirm that checks or deposits have cleared, get your latest balance or transfer money between different accounts at the same bank. And if you own a home computer, consider banking and bill paying quickly and easily over the Internet, 24 hours a day, seven days a week with First eBanc, our free Internet banking service and First ePay, our bill pay service. Paying your mortgage, utility bills, insurance premiums and any other recurring charges with First ePay takes the hassle out of making scheduled payments and helps avoid late charges or service interruptions. You also save money on postage.
Update your will and other legal documents: Who will inherit your savings accounts and other property when you die? Who else should have access to checking accounts to pay bills if you’re hospitalized? What kind of medical treatments do you want to receive - or avoid - if you become critically ill? These are the kinds of questions you should be asking yourself, preferably in consultation with family members and your lawyer or other experts. Your answers to these questions may require actions involving important legal documents and how you set up various bank accounts.
Some matters may be handled as part of your will. Others may involve having or updating a “durable power of attorney” (authorizing someone to handle your finances, property or other personal matters if you become mentally or physically incapacitated), a “living will” (instructions about future medical care if you become ill and are unable to communicate your wishes) or a “health care power of attorney” (designating a family member to make decisions about medical treatment). Having these health-related directives can prevent unwanted and potentially costly medical procedures.
You may want to hire an attorney specializing in elder law or “estate planning” (how money and property and other assets can go to your heirs with a minimum of costs, taxes and hassles). Because estate planning can be complex, it would be wise to consult an estate planner - a seasoned specialist who will be objective and knows the nuances of the field.
Organize and protect your important documents: Make sure your bank and brokerage statements, insurance policies, Social Security and company pension records, and other personal and financial papers are in a safe place and are easily accessible.
As the victims of recent hurricanes, floods and other disasters have learned, it’s wise to take extra precautions with essential records. For the most important original documents, such as wills, passports and birth certificates, seal them in airtight and waterproof containers to prevent water damage. Make backup copies and consider giving duplicates to loved ones — or at least let them know where to find your records in an emergency.
Consider renting a safe deposit box at the bank for certain papers that could be difficult or impossible to replace, such as birth certificates and originals of important contracts. Don’t put anything into a safe deposit box that you might need in an emergency, such as your passport or medical-care directives, in case your bank is closed for the night or weekend. Also, many experts generally advise against putting a will in a safe deposit box because, in many states, there may be complications accessing the box after the person dies. (Keep in mind that copies of wills aren’t valid.) Perhaps the best approach is to ask your attorney for guidance. For the most important papers you keep at home, consider an inexpensive but durable home safe.
Toss old documents: Are you afraid to throw away old bank statements, bills, receipts and cancelled checks because you think you may need them some day? We can’t tell you when it’s safe to throw away certain financial documents —that’s for you to decide, perhaps after consulting with your accountant or attorney. As a general guideline though, cancelled checks with no long-term significance for tax or other purposes can usually be destroyed after about a year. However, cancelled checks that support your tax returns (such as charitable contributions, investments, home improvement costs or tax payments) should be held for at least seven years, and in some cases indefinitely. (Although the actual checks are no longer returned, check-imaging statements can be printed out and saved, or stored on your computer.)
Also, to avoid becoming a victim of identity theft, shred any unneeded documents that contain a Social Security number, bank account number or other personal or financial information. A crosscut shredder that turns paper into confetti is highly recommended by experts. First Community Bank and Trust also sponsors two "Document Disposal Days" each year (May in Beecher; September in Peotone) when customers can bring their old documents to the bank to be shredded on site. The saying “one man’s trash is another man’s treasure” has never been more true when it comes to this sensitive information! Don’t take chances of someone pilfering through your trash hoping to find their treasure.
Take precautions with old accounts: For the benefit of your heirs, either dispose of proof of old bank and brokerage accounts, life insurance policies and other assets you no longer own (again, assuming you don’t need the documents for tax or other purposes) or clearly mark them as being sold or cashed in. Otherwise, loved ones who discover the information after your death could waste a lot of time and effort researching these mystery accounts when there is no money or property to be claimed.
At First Community Bank and Trust, we care about protecting you, our valued customer. If you have any concerns or questions about protecting the privacy of your financial affairs, please call us. We are here to help.