Sometimes people keep assets hidden without letting their families know about their location or that the assets even exist. Similarly, they may have life insurance policies no one knows about.
Using a fictional example of a problem that commonly occurs in our practice, here’s why full disclosure of your assets to one or more responsible members of your family is recommended: George was a successful entrepreneur. He accumulated significant wealth during his lifetime, including several real estate parcels, a wide array of securities, IRAs, and various collectibles. He owned his home jointly with his wife, Theresa. He also took out several life insurance policies on his life.
In his will, George designated Theresa as the beneficiary of most of the assets but divided up some of the other property between his two children. George named his wife and children as equal beneficiaries on the life insurance policies. Sadly, George died unexpectedly late last year.
The problem: George had hidden some of his assets without disclosing their location to anyone in his family. His loved ones had no information about account numbers or passwords. And neither Theresa nor the children even knew of the existence of one of the life insurance policies and two of the IRAs. Further complicating matters was that one of the IRAs was a Roth IRA, with account information and statements accessible by request only within the online account. This asset produced no income that would generate income tax reporting forms at the end of the year, and it produced no monthly or quarterly statements unless requested.
What happens now? It will take considerable time and effort for George’s family to track down all the assets and it’s not certain that they’ll be completely successful. And the family may never collect on the life insurance policy or Roth IRA they were never made aware of. By being secretive, George made things more difficult for his loved ones and may actually cost them money.
Don’t make the same mistake. Have an open discussion with the responsible people in your life about your possessions. Make a list of all the assets you own and provide locations, account numbers and passwords. Arrange for this information to be stored in a secure place. In the event you become incapacitated or suddenly pass away, your family won’t have the added stress of starting with no information.