Michael Pace, a financial planner in Seattle recalls how a relative taught him an enduring lesson about estate planning.
As an advisor, I always ask clients about their estate-planning documents. I’ve found that while many of them have had documentation in place for years, the people they’ve appointed to execute their estates don’t have a clue where to find crucial information they need in order to take action.
This was brought home to me through personal experience. Years ago, my sister named me as her personal representative, but she hadn’t given me copies of any of her estate-planning documents. Eventually, I took a trip to Phoenix to visit her and my brother-in-law, in part to discuss this very topic with her. When I asked her where she kept the documents, she led me into the guest bedroom. She opened the door to the closet, bent down and uncovered a well-camouflaged “secret compartment” in the carpeted floor. In the compartment was a locked metal box with a combination lock.
I looked at her incredulously and asked how she could expect me to be able to open the box without knowing the combination. “Oh, you’ll find that in the butter dish in the fridge,” she told me.
There was no way I would’ve found the lockbox under the trapdoor in the closet in an obscure room of her house — not to mention the combination. In fact, I wasn’t even sure I’d be able to get into her house, which was in a gated community with a coded keypad.
I asked my sister to imagine what would happen if she happened to get hit by a bus next month. I would have to fly from Seattle to Phoenix, call the police department and convince them that I was her brother (even though we have different last names), and then ask them to let me into the house so I could search high and low for documents that I probably wouldn’t be able to find.
My sister was sheepish, but nodded. More important: She seemed to grasp the problem.
I asked her to give me copies of all her estate-planning documents, plus instructions for how to enter the house — including information about any hidden keys and pass codes — as well as how to access her computer. “Please make it easy for me to help you,” I said. Thankfully, she did.
Not only was the experience a wake-up moment for her; it was also helpful as a lesson I could pass along to my clients.
When I discuss the elements of estate planning with clients, I tell them this story. Then I conclude the meeting by offering to send them a sample “info list” template document I created. I explain that the purpose of the template is to make sure the person they’ve appointed as attorney-in-fact, personal representative, or trustee knows that he or she has been appointed. The template is also so the person will know where the needed information is stored.
Many of them tell me that it hadn’t even occurred to them to give their designated fiduciaries (who are often relatives) a key to their house or instructions for how to boot up their computers. This way, if something happens, there won’t be the added stress and drama of trying to gain access. In almost every instance, the clients tell me they are very happy we had this conversation.
Published in the Financial Times Service