If you were to unexpectedly die tomorrow, would your loved ones know how to access your information?
Your bank accounts? Insurance policies? Debts?
How about access to your home and car? Your electronic devices?
According to Caring.com:
Approximately 2/3 of Americans don’t have any estate planning documents!
To help you avoid leaving a financial mess behind, guest host Jeremy Schnieder is sharing how he’s PERSONALLY prepared his family for an untimely death.
Specifically, he’s sharing:
- What specific info and documents he’s gathered
- Where and how he (securely) stores it
- His process for keeping everything updated
If you need actionable ideas (and motivation!) to tackle this critical planning task, today’s episode is for you!
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How to Listen to Today’s Episode
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- Jeremy Schneider:
- How to Make a Dead Box
- What is a Letter of Instruction (and How to Write One)
- 2023 Wills and Estate Planning Study
- Password Managers: LastPass and Dashlane
How to Prepare Loved Ones for When You Die
Jeremy Schneider: Welcome to the Stay Wealthy podcast with Taylor Schulte. This is Jeremy Schneider filling in for Taylor for the month of August. Today we're going to talk about the dead box.
Specifically, I'm sharing what is a dead box, why having one will save your family time, hassle, heartache, and money, and how to make one, where to put it and how to secure it If you are someone who's going to die someday, and sadly, I know that you are. So am I.
This episode is for you. For all the links and resources mentioned in today's episode, head over to youstaywealthy.com/194.
This is the fourth year in a row I'm filling in for Taylor. So nice to see you guys again, it's a chance for Taylor to go on a break, go on vacation, work on the podcast behind the scenes, and for me to share my thoughts with his community with you guys. He'll be back on the mic in September with plenty of new episodes, but until then you're stuck with me.
I'll spare everyone the long intro being that I'm almost a regular at this point. But my name is Jeremy Schneider. I'm the founder of Personal Finance Club. I'm honored to be here for the fourth summer. If you want kind of a longer Taylor Schulte intro of me, I was actually interviewed as a guest on his episode all the way back on episode 64, which seems crazy because now we're in episode 194 and it seemed like a very mature podcast back then.
And so time is just flying, but enough about me. Let's get to the task at hand. Today we're gonna talk about the dead box.
So what is the dead box? It's actually an important piece of your estate plan. And before we get into the dead box, I wanna talk a bit about the concept of estate planning. When I hear the term estate plan, and I think what a lot of people hear the term estate plan, it kind of evokes these images of offshore Swiss accounts used to evade the dreaded estate tax.
Like I think people think estate planning is just about avoiding estate tax, but it's not. And as evidence of that, I'm gonna ask you one of my favorite estate planning trivia questions. A little guessing game. And the question is, what is the federal lifetime estate tax exemption? This is the amount of money under which no estate tax is due upon your death.
So for example, if you die and you have X number of dollars, there's a certain amount of money where you owe no estate tax at all. What is that money like? How much can you give to your kids, give to your heirs, give to your beneficiaries with no estate tax being due?
When I ask this to people out in the world, I usually get guesses like $0, meaning you pay estate tax on everything after you die or a hundred thousand or 500,000. Some kind of like modest amount of money you can give to your heirs without estate tax. But the actual correct answer is $12.92 million and that's per person.
So that means if you're a couple, you can give $25.84 million tax free to your children, to your beneficiaries without paying a single penny of estate tax. And so when we talk about estate planning, for most of us who have less than $25.84 million per couple, it's not about avoiding or mitigating the estate tax because we're not going to pay any estate tax.
It's really about planning. It's really about easing the transition for your loved ones so that they can take over your finances. And that's where the dead box comes in. It's a key part of the estate planning strategy.
So what is it? What is a dead box? It's kind of this like clickbaity, maybe emotionally charged title with the word dead right in. I personally am not a fan of euphemisms. I think we should just call things what they are. And it's a box that basically is going to help ease the transition after you die.
So what is a dead box? It's a physical or digital folder where you keep all the important information that will help your family unravel your financial life in the event of your eventual demise. So for example, if you died this instant as you're listening to this podcast, would your family know how to access your money, your insurance? Would they know about your debts? Where to find the deed to your house?
Losing a loved one is already obviously an emotionally horrific and traumatic event, but it shouldn't hopefully be a financial disaster as well. Keeping an organized dead box is also a great organizational tool to keep your own accounts organized.
A lot of times, even personally, a lot of this stuff is just floating on the back of the head like, oh, I've got some accounts over here, I've got some documents over there. If you put it all in your dead box, then you know where it is. And also in the case of your hopefully demise many, many decades from now, your family can find it too.
Okay, so what do you put inside of the dead box? Taylor has a great article on what is called a letter of instruction. It's kind of an instruction manual that runs the dead box. He even provides a free template along with his article, the link to that article. And that template is in the show notes.
And so where do you put your letter of instruction? You put it in your dead box and we're gonna talk about where your dead box is, but what goes inside your letter of instruction. And this is from Taylor's article.
Inside of your letter of instruction goes a summary of all of your assets and debts, the location of valuable physical assets, for example, jewelry, art, collectibles, real estate, details about your retirement and investment accounts, a list of people who have important roles in your finances such as your attorney, CPA, financial planner, insurance agent.
Specific directions regarding how your estate should be settled, the location of important legal documents like your living trust will, healthcare directive, birth certificate, social security card, real estate deeds, etc. Copies of your retirement account, beneficiary designation elections, information on safe deposit boxes, and how to access them directions on how to handle and care for pets, usernames and passwords for online access to all these financial institutions.
And details on outstanding loans like mortgages, credit cards, lines of credit, personal debt. And if that list made your head swim a little bit, think about what your family would try to do to collect all that information in the time of your eventual demise.
If it wasn't all conveniently in one place, like in this letter of instruction. And that was all from Taylor's article. I would add to that a few things of my own. One is a letter to your family. I think this is kind of a nice place to put a heartfelt letter to your family they can read. I kind of get choked up that, but rather than it be strictly transactional, it could be a little bit personal too.
I'd also add two-factor authentication, password recovery codes. And so you know, when you guys sign up for accounts, often it has you download those codes, putting everything that you can inside of this letter of instruction.
And what goes inside of your dead box is a great place for that type of thing so that your family can get your passwords, your car title deed to your home or other real estate, a spare key for your house or car or instructions, where to find them. A list of bills that you're paying.
There's a lot of couples where one partner just handles all the finances, pays the bills, makes it all work. The other partner handles other parts of life like child rearing or shopping, things like that. But the day you die, there's gotta be a list for that person. Give your partner a chance to hit the ground running instead of having to learn from scratch.
The last thing I'll mention to put in here is any crypto assets you have and how to access them. I mentioned at the top of the show, the deadbox can save you a lot of money. Most of these accounts, especially in the US, have protections in place. The entities, the banks and investment banks manage them, have protections in place to eventually get the assets back to the owner or back to the beneficiaries.
But crypto doesn't have that. If you die and if you own any crypto and that's in your head, and by the way, this isn't a show like crypto. Neither Taylor or I are especially big fans of crypto, but we know a certain percent of American people are holding it. You don't want to lose that with your death. And so you need to have instructions for your beneficiaries to where to find that.
So that's basically kinda a list of the stuff that can go inside of your letter of instruction and your dead box letter of instruction is the actual letter that describes the stuff. And then the dead box is the place where you can put all these documents, you can put all the passage, you can put all the files, everything that goes in there.
I'm gonna say a little bit of a note about password managers right now. I kind of mentioned it in that list a few times. Like you put your passwords, you put your two-factor authentication recovery codes. I know as I'm saying this, many or most of you out there don't use a password manager.
You maybe keep all the passwords in your head, maybe you use the same password on every different website or a slight variation of different passwords for different websites and wagging my finger at you and saying, ah, that's naughty password use can only do so much.
So let me give you an example. If you use the same password on every website, let's say you have a Neopet and you have some grandkids and you sign up for the Neopets website, I don't even know what Neopets are, it's just an example of a silly website and you create a password and you use your standard password.
And then one day in the future, the Neopets website gets hacked. Not a big deal. You're not that tied to your neo pet. Maybe your grandchild is, but you're not. But then the hackers, they're not after your Neopet. They take that list of passwords and emails that they got from the hack and then they go over to Vanguard or to Fidelity or to your bank or to your credit card and they just try them all.
And maybe 99 of them don't work. But maybe the one person that used your same password on Neopets as you did on Vanguard means now that they have access to your Vanguard account.
And so a password manager is just basically a tool. It's an app where you can basically keep a different record for every single password you use. So every single different password is different and that password manager is very, very secure. So those can't be taken.
A couple examples of password managers are LastPass, which is the one I personally happen to use or Dashlane. And so using those, and those are linked in the show notes as well, are a great way to secure these things. And also have tools that kind of work with your deadbox.
For example, you can list an emergency contact on your password manager and you can have a setting that says, Hey, if my emergency contact requests access and I don't deny it within a period of time, you set say a day or a week or a month or whatever, then at the end of that period's time they get it.
So for example, you could have a trusted individual that you add as the emergency contact on your password manager. And then if they ever hit the button and say you kicked the bucket, then if you're not alive and they're not trying to cheat you, if you're alive, you can stop it. But if you're not, then they'll eventually get the passwords, which will save your family heartache and headache and stress and worry and money trying to get to all these accounts.
A quick story about password managers. I have a dear friend here in San Diego who unfortunately lost her husband at a very young age. I think she was in her late fifties and he might have just turned 60. They were just kind of like phasing into retirement, thought they had their whole lives out of them and he just unexpectedly passed away and she was having trouble accessing his accounts, his banks, his crypto, these things.
And so I went over there as the local tech guy to help out. Her husband didn't have a letter of instruction at Deadbox and everything that's being described in this episode, but he did use a password manager, which saved us because we were able actually to get her access to the password manager, which is basically was the keys to the castle, the keys to the kingdom.
And we were a little bit lucky in that specific situation, but thankfully due to his organization on that behalf, it saved her untold hours, weeks, months of calling banks and carrying death certificates around and trying to access it and not even knowing where they are and not knowing which accounts there are and things like that. 'cause the password manager is a nice record of every single account.
So I highly recommend checkout LastPass, checkout Dashlane. There are others out there, but I would recommend using a password manager.
Alright, so the dead box is this place where you keep these instructions and all these important documents. How do you make one? Well, there's basically two different types.
There's a physical one or a digital one, or maybe both. A physical one could be like a fire safe in your home or a safety deposit box in your bank. A digital one could be a Google Drive folder or a Dropbox folder, or it could be a secure note in your password manager. The password managers we discussed have the option to include documents in there too.
And I think whenever I mention this, someone raises their hand and says, what about security? What if someone gets into my dead box? And to be clear, that would be very bad. If your dead box is not secure and someone gets all of your passwords or all of your bank numbers, things like that, that would be very bad.
So security's important, but that said, there's no perfect security. If you've talked to security experts, there's no such thing as perfectly secure. A fire safe can be stolen from your home and broken into with a jackhammer or a safety deposit box could be lost or your key could get compromised.
A Google Drive folder, while it's very secure, if your password's not secure, maybe the Google Drive folder isn't secure. And so while there is no perfect security, you still wanna do the best you can. I personally keep my dead box in a Google Drive folder. I have two factor authentication turned on on my Google account.
I have a certain amount of faith in Google as a tech giant with some of the smartest software engineers on the planet Earth working for them that they're going to make their servers secure. And then I'm very careful about who I give access to my Deadbox folder too.
I personally happen to be someone who implicitly trusts my brother and my parents, who are the people who are the executives of my will. I'm still 42, so I hope I'm not gonna die anytime soon, but if I do, they're going to take control and I have already given them access. They can log in today and look inside of my dead box.
If they decide to steal my identity, then I guess I will be very shocked and that would be bad for me. If you're not someone who implicitly trusts someone like that, you might have to put additional protections in place like included in that password manager note so they only get access to it in the case of your death.
But those are the basic types, physical or digital. Once you decide where it's gonna go, you write your letter, you write your letter of instruction, plus maybe the letter to your family, and then you dump all your files in there.
And again, it's a great organizational task to find your different loans, find your insurance policies, find your title to your car, the deeded to your house. And for a lot of us, this stuff is floating out there. Some of it's just in your memory, some of it's in different places. Putting it all in one place is a really thoughtful organizational experiment.
Once you have made your dead box and put all of your documents inside, are you done? Are you done with this task? Unfortunately, no, you're not done because making one alone isn't enough. If your family doesn't know where it is, it's obviously no good. The whole point of it is for them to know where it is and know how to access it in.
Additionally, if it's not up to date, it slowly becomes worthless over time. A seven-year-old deadbox may be just north of worthless because accounts and passwords and insurance, those accounts open and close over time.
Passwords change, situations change. And so unfortunately, many of us don't know when we're gonna die. Some of us can die in an accident or unexpectedly due to medical conditions or whatever. And so we have to, when we're healthy and death isn't on our mind, we have to be purposeful about keeping this updated.
And so what I do is I set up a recurring annual calendar event. It's sometime in mid-January, not like on January 1st when we're still celebrating the new year, but sometime around the beginning of the year. And I list the instructions to myself, to my future self, and I say, Hey, every year, go through your deadbox and update all of the account information, update your letter of instruction, and then send an email to your brother.
I've been doing it for years now. You can kind of look through my email history and see if part of these, I say, Hey, brother John, just so you know, the dead box is still here in this folder. It's all updated. This is the ongoing instructions, and if I die, you know where to go because memories fade. Even a year is kind of a long time.
If you haven't gone an email like that in six years, you might just assume that that is no longer valid. And so in addition to making a dead box, set a calendar event to update it at least annually so that your beneficiaries, your heirs, your children, the executive of your will will know where it is when the unfortunate time comes.
That is it. That's the dead box. It's a simple idea and concept, but executed well can save your family tons of time, headache, heartache, hassle, and tons of money. I highly recommend you do it. It's a really important part of your estate plan. Even if that estate tax isn't out to get you, the logistics of transitioning all these accounts can be difficult.
So go and create a dead box. That is all I have for you today.
For all the links and resources mentioned in today's episode, head over to youstaywealthy.com/194.
This is my first of four episodes during August where I'm filling in for Taylor
Thank you for listening, and I will see you here again next week.
Episode Disclaimer: This podcast is for informational and entertainment purposes only and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services.