Get a Life Book

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Financial advisers and estate lawyers say life books are the key to a happy retirement.

Do you and your family have a "life book," a physical notebook or a binder containing your important documents?

Financial advisers and estate lawyers say life books are the key to happy retirement - and to helping families know what to do in an emergency.

"For me, it's always a physical folder," says UBS financial planner and investment adviser Brad Bernstein, who works in Center City. "My life book is a three-ring binder that has tabs in it for different subjects."

What's in a life book? Copies of everything your family might need if you became incapacitated or very ill, or died unexpectedly.

Bernstein says he updates his life book every Jan. 1 to include everything from his and his wife's contact numbers to copies of their important documents.

In addition, he updates their net worth - assets and liabilities - every January, to track where they stand financially.

What else is in a life book?

A valid will. To distribute your estate and make sure your assets are divided as you want, you must have a copy of your will.

It's only within the provisions of a will that an executor for your estate can be named and guardians for minor children appointed.

Copies should be kept in your home, a safe deposit box, and with your lawyer.

Letter of last instructions. This includes information on the location of your assets.

The letter should be kept with copies of your will, as well as with those people who are charged with managing your estate.

Living will. This expresses your wishes concerning life-sustaining health care if you become permanently unconscious or terminally ill.

Copies should be sent to your physician, your attorney, your health-care agent, and close family members.

Powers of attorney. These grant a trusted person, known as your agent, the power to handle your financial affairs.

A durable power of attorney remains in effect if you become incapacitated. It should be updated every few years.

A health-care power of attorney grants the power to make health-care decisions for you if you become incapacitated. It also allows you to specify your health-care wishes more fully.

The person or people you designate should have copies of these documents.

In addition to this information, Bernstein says, the life book for him and his wife includes copies of insurance policies, their home mortgage, and phone numbers for their estate attorney and financial planner, among others.

It also contains a "to-do list for my wife, in case something happens to me," he explains.

Bernstein's list boils down to 14 items:

Check the mortgage statement, then collect the proceeds of life insurance and pay off the mortgage in full.

Get 10 copies of the death certificate from the funeral home. You will need one for the bank, one for the broker, and for so many other things.

Convert all accounts to her name. Roll over any 401(k)s into Roth IRAs. Convert all retirement accounts into her Roth account.

Meet with his manager at work.

Pay off any other debt. "In my case, I bought enough life insurance to cover the mortgage and to live on afterward," Bernstein says.

Invest the remainder.

Update the names of any beneficiaries.

Pay off credit-card statements. Cancel parking, gym and any subscriptions.

Review cash flows. Find out the monthly expenses for 529 college savings payments, car payments, Peco, Comcast, cellphone, annual real estate tax, and any future expenses.

Meet with the family estate lawyer.

Set up a revocable trust. When she marries again, have a prenuptial agreement, because often a trust won't protect the money in a divorce.

File an estate-tax return and elect his portability of estate-tax exemption.

Get or review health insurance. The spouse may be entitled to COBRA for up to three years.

Every January, look at all accounts and list net worth as of the first day of the year. "It makes it very easy to see our family balance sheet," Bernstein adds.

Blue Bell CPA David Zalles recommends that all life book documents be reviewed every five years, in case the people named change because of death, disability, mental capabilities, age or divorce, and for state law updates.

"I also recommend that these documents should be discussed with spouse and adult children," Zalles says.

earvedlund@phillynews.com

215-854-2808@erinarvedlund