You’ve likely heard or read about the importance of having an emergency savings account in case unexpected needs were to arise. Typically, that emergency fund is housed at a local bank or credit union. But whatever happened to the good old mattress fund? According to a few recent stories I’ve heard, the mattress fund may be as strong as ever.
When a parent, spouse or loved one passes away, it can be a sorrowful and stressful time for those who are left to manage the affairs of their estate. It is typically a good practice for everyone to communicate to the future executor of their will or trustee of their trust the whereabouts of important financial accounts, documents and life insurance policies. But what if there were more assets that a beneficiary did not know about?
I’ve recently heard several stories of folks in their 50s and 60s who have been finding large amounts of cash stashed away in their parents’ home after their parents pass away. Cash has been found in coffee cans, coat pockets and even the freezer. It may be expected to find some loose cash in random spots, but these reports were not about just “some” loose cash. These adult children are finding tens of thousands of dollars in many cases, and in one case, over $100,000.
Why Family Members May Stash Cash at Home
It may not be surprising that those who come from the depression generation are great savers. It also may not be surprising to discover that the products of the depression generation have been skeptical of banks and have preferred to “be their own bank” by storing physical cash in the house. But the extent of the amounts of money that are being found is what is certainly most surprising.
In some cases, memory loss may be a contributing factor to this trend. Mom or Dad may have saved money and hid it in an old coffee can, only to forget that the coffee can contained the cash. However, in many cases, it is believed that these individuals are making conscious and deliberate decisions regarding their cash storage.
As a financial planner, I urge our clients to not only name beneficiaries on their accounts, but to communicate to their beneficiaries about who their beneficiaries should contact should they become deceased. I also feel it is important to leave a list of physical and investment assets and to even write out special instructions for their heirs about where to find items of the utmost importance in the home.
Make Sure Your Beneficiaries Can Find Your Assets
While saving with a bank or credit union does seem to be a safer route to take because of the many safeguards banks and credit unions put in place—including FDIC insurance—some will inevitably continue to choose the “mattress” or “freezer” fund instead. If that is you, make sure to communicate your decision to your family. You can tell them directly or leave specific instructions in the form of a letter so they do not miss anything at the time of your death.
For those reading this with a parent in the early stages of Alzheimer’s or dementia, it is especially important to put a plan in place to manage your loved one’s financial affairs. You may even want to seek counsel from a licensed attorney and inquire about setting up a power of attorney so you can become an agent for your family member, giving you the ability to make financial decisions on their behalf.
If you happen to be someone who has recently lost a parent and you are faced with the task of selling off property, submitting death claims and selling a house, be sure to inspect very closely every closet, coat pocket, loose board, coffee can, etc., because you just might be surprised at what you find.
This article was originally published on Investopedia.com. http://www.investopedia.com/advisor-network/articles/dont-make-your-beneficiaries-search-your-assets/