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Electronic devices, computer software, and the Internet are expanding what we can do and the ways we can do it at a mind-boggling pace. Technology can simplify or complicate life, depending on how well we use it. In this article, we offer 5 tips to make our personal business management easier for ourselves and for people who must step in for us when we die or become disabled.
1. US Savings Bonds – People by US savings bonds as gifts for their grandchildren and as investments for themselves. Although savings bonds offer investment security and earnings rates that sometimes beats bank savings accounts, they create problems for estate planning and financial crisis management. First, it is difficult to transfer ownership of savings bonds because you must coordinate ownership changes with the federal Bureau of Public Debt. Second, ownership changes from one person to another during your life or upon your death trigger expensive income taxation at inconvenient moments. Some folks may disagree with us, but we prefer that people avoid savings bonds complications by not purchasing them. We suggest that people who insist on owning savings bonds convert their paper certificates into electronic bond accounts because they can manage electronic accounts without having to store and keep track of paper certificates. For more information about converting paper certificates to electronic bonds, visit www.TreasuryDirect.gov.
2. Bank and Investment Accounts – The electronic revolution has made bank and investment account management much simpler. Most banks and other financial institutions allow depositors or investors to establish online accounts that they can manage over the Internet. Instead of having to write checks to pay bills each month, we can transfer funds from our smart phones or computer keyboards in seconds and monitor our accounts 24 hours a day, 7 days a week. When someone suffers a health crisis and can no longer manage personal business, online accounts allow family members to get up to speed and carry on personal business faster and more seamlessly than with old-fashioned accounts.
3. Corporate Stock – Retirees from large companies often retire with corporate stock issued by their former employers. Traditionally, companies issued stock on fancy stock certificates. Almost all publicly-traded companies offer online accounts that allow people to manage their stocks without having to store and account for papers certificates. Electronic stock management eliminates the risk of loss caused by fire, theft, flood, or forgetfulness, because online accounts cannot be destroyed, stolen, or misplaced. Even if computer hackers hack into accounts, most online accounts have security procedures to protect investors. We recommend taking an additional step by transferring stock to registered financial representatives (stockbrokers) for safekeeping and account management because they can coordinate account transactions for estate planning and estate administration purposes much more easily than is possible for individual online accounts.
4. List of Essential Documents and Information – All of this streamlined electronic account management serve no purpose if you do not maintain some accounts list to keep track of the information. The best way to organize such financial information is to purchase asset management software such as Quicken, YNAB, Personal Capital, Mint, or PowerWallet. For people who want to work more simply, a ledger sheet or computer spreadsheet can also help keep online account organized. It is important to share information about how to find your organizational system with the people that you trust to manage things if you become disabled to make it easier for them to help you in a crisis.
5. Password Management – Account security is one of the biggest problems with online accounts. Cyber security experts recommend gibberish passwords with a combination of 12 or more lowercase letters, uppercase letters, numbers, and other characters. The experts also recommend changing passwords frequently and maintaining a different password for every account. Unfortunately, most of us cannot memorize long, sophisticated passwords, and writing lists or storing them on computers can be risky. Password managers provide secure solutions for this problem by generating and securely storing sophisticated passwords that we can access from computers and smart phones. We still have to memorize master passwords for the password managers, but it is easier to memorize a single, master password than to memorize a whole page of individual passwords. PC Magazine® evaluated the top password manager applications in its September 23, 2016 online article entitled The Best Password Managers of 2016, available online at http://www.pcmag.com/article2/0,2817,2407168,00.asp.
The learning curve to improve asset management can be steep and frustrating, but the rewards are worthwhile. You do not have to dive in head first and solve all of your asset management problems at once, but you must begin and there is no time like the present.
Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.
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