I am ready to meet my Maker. Whether my Maker is prepared for the great ordeal of meeting me is another matter. — Winston Churchill

Death and Binders

I did something different this week for work. I deployed to a foreign country for a military exercise. I’m writing this post from that country as a matter of fact. It’s the first time since my Afghanistan tour in 2013 that I’ve deployed abroad with all my gear. It’s also the first time since my financial awakening that I’ve deployed. Granted, I traveled multiple times on official orders since Afghanistan and was also stationed overseas for multiple years. However, except for our Permanent Change of Station (PCS) move from Europe to Hawaii, I consider my travel comparable to business trips. There’s something different about packing up all your combat gear that sharpens the mind. As a result, while not a tour to a combat zone, I used this military exercise as an excuse to build my “Death Binder”.

Just for the record, Mrs. Grumpus hates the term, Death Binder. In fact, she won’t let me call it the Death Binder in the house. Instead, we call it the “Financial Binder” or “Financial Folder”. However, I call it the Death Binder when she’s not around. I do that partly because of my love of heavy metal. There’s something about the term Death Binder that makes me want to throw the devil sign up in the air and bang my head while shouting “DEATH BINDER” in my loudest metal voice.

My questionable taste in music aside though, I also call it the Death Binder because conceptually that’s exactly what it is. It’s the binder with the step-by-step directions on what to do financially if I die. It also contains all the needed information for our various financial accounts if something should happen to the both of us. That way when our trustee steps in, he knows exactly what to do, and the location of all the money for the trust.

As proactive as all of that may sound, in judging my first attempt to build my Death Binder; I’d say the results weren’t good. In fact, keeping with the heavy metal theme, if this were a Tenacious D album Jack Black would probably say something like “You passed…barely. You know what you got? F+. Click!”. That said, I learned some lessons that I believe are worth sharing, which is what the remainder of this post will discuss. By the time I finish, you’ll understand how to either build or update your (best metal voice) Death Binder!

Time and Time-Saving Tips

Lesson number one, you can’t do this in one night. At least, I couldn’t. Unfortunately, I only allotted myself a night; which partially explains why my product turned out so poor. It takes time to collect all the information needed to go into a Death Binder. Net worth statements, financial accounts, insurance policy information — the list goes on. I consider myself a fairly organized guy when it comes to that stuff, with folders in my fireproof boxes for each of the areas needed; and it still took me multiple hours just to run down the basic information. Thus, I’d say give yourself at least a weekend, if not several nights over a week, if you want to produce a quality product.

With that said, I’m not the first blogger to write about this subject, and you’re not the first reader to build this sort of binder — so don’t reinvent the wheel. Prior to starting, I requested tips and articles from those who’d done it before via a military financial forum to which I belong. In return, I received links to two exceptional articles — one which specifically addressed how to build a Death Binder. Therefore, instead of covering the same territory, you should simply read that article from the Dough Roller blog. It’s linked here. The rest of my article basically covers the stuff I learned while following the steps from the Dough Roller article.

Tracking Your Money Pays Dividends … Again

All three of my long-time readers know I’m big on the importance of tracking one’s money using programs or applications like Quicken, Mint.com, YNAB, or Personal Capital. In fact, I’ve written four articles on the subject so far. I don’t use a lot of rules, but tracking your money is one of the few I consider a must … if you want to achieve Financial Independence (FI). As a result, it should come as no surprise that whenever I discover another added benefit of tracking my money, I highlight it with my audience. Thus, everyone should take note of the following.

The Dough Roller article suggests that a net worth statement broken out by account should be the first item in a Death Binder after the table of contents. If you use a money tracking program or application, this should not require a large amount of effort, since you can simply copy your dashboard or net worth statement from your platform of choice. Some platforms make this easier than others. For instance, Personal Capital won’t let you print a net worth statement. At least, I couldn’t find the option. Quicken lets you do it fairly easily, and even allows you to choose which accounts to display.

If you are not tracking your money, I imagine this task gets harder … presuming you have a lot of accounts. Credit cards, mortgage statements, loans, checking, savings, 401Ks, Roth/Traditional IRAs, and taxable investments all go into the net worth statement. Don’t forget the value of any properties you own too. You must compile all your assets and liabilities in one place so that either a spouse or a trustee, has a one-stop reference for each account. Don’t make them go hunting and pecking for account numbers either. List them all and you’ll make an already hard task a lot easier for the ones you love.

Understand Your Employer’s Death Benefits

This lesson might be something unique to professions with a higher mortality risk, but it’s important to understand what benefits your spouse or loved ones stand to receive from your employer upon your death. Until I undertook this Death Binder building exercise, I didn’t understand all the benefits that the Department of Defense or Veteran’s Administration provide. In fact, it’s probably fair to say that I seriously misunderstood them. Fortunately, the second of the two articles I mentioned above corrected my misconceptions quickly. If you are Active Duty U.S. Military, and you haven’t read anything about death benefits, I highly suggest that you read this article from the Military Wallet.

Even if you’re not in the military, your employer may still provide some form of compensation to your loved ones upon your death. This might include life insurance payments or assistance with funeral services. It may not be much, but every little bit helps when it comes to a sudden loss. However, the most important issue to consider and research, especially for the Golden Albatross audience, is what happens to your pension if you die prior to retirement?

It’s important to note the distinction. I already addressed what happens to a pension should a pensioner die after retirement in my survivorship article for the Pension Series. If that’s your situation, you should go an read it. In contrast, in this article, I’m referring to the money set aside by a future pensioner, and their employer, for the future pension. What happens to that?

Unfortunately, like with many issues surrounding pensions, there’s no one size fits all answer. Every pension plan is unique. Generally speaking though, any money paid into a plan, should be returned to the deceased’s designated beneficiary(ies). Whether or not that money gets returned in form of pension payments depends on the plan, and whether or not the deceased vested in the plan prior to death. Here’s a link to a good, but basic, article on the general subject.

If the deceased wasn’t vested, the money they contributed should be returned as a lump sum to their beneficiary(ies). If the deceased was vested at death, then their beneficiaries may get a choice between a lump sum payment for the entire pension, or regular pension payments. Check your pension plan to find out the details. If your pension plan offers lump sums, then I suggest you go to my lump sum articles within the Pension Series and read about the pros and cons of taking a lump sum. Of course, you’ll need to understand the financial maturity of your beneficiaries. If they are not financially savvy, then you may want to leave them directions on what to do.

Finally, it’s important to note the difference between a person who “vested” in a pension and “fully vested” in a pension. Vested means a person’s worked the bare minimum of years in order to earn a percentage of the pension. Fully vested means a person worked long enough to earn the full pension. The length of the deceased’s employment within the pension system determines the amount offered to their beneficiaries as either a lump sum or pension payments.

Social Security

It’s worth remembering that any widow or widower over 60 can claim their dead spouse’s Social Security. According to the Social Security Administration’s website, it appears that much like a normal Social Security claim, the widow or widower can claim the full amount at full retirement age, or claim a reduced benefit as early as age 60. Although the Social Security Administration website doesn’t mention it, I presume a widow or widower could also delay claiming until age 70 in order to receive an additional 8% per year. Don’t take my word on that last part though, check the SSA website or with your local SSA office.

With that said, there are other Social Security benefits you should be aware of in the event of your death. Did you know that Social Security will pay out immediately upon someone’s death if they are a parent? I never knew this until I talked to one of my senior enlisted whose wife, unfortunately, died several years ago. As a widower and a father of their small child, he receives Social Security benefits on behalf of their son. Those payments will stop when the son turns 18, and the SSA put stipulations on how the money can be used until then; but still, it’s money that makes up for the loss of an income earner in the family. That certainly doesn’t replace a dead loved one, but it makes the loss of their future income less traumatic.

Other Thoughts

Since we’re on the topic of payouts at death, it seems only natural to discuss life insurance. If you have it, you obviously need to include all the information possible in your Death Binder. For a guy like me, with three different policies, that took a while to compile. Not only do you want the policy information in the Death Binder, but you should check to ensure your beneficiary information is up-to-date. You can accomplish most of that online.

With that said, changing your beneficiaries typically requires signing and mailing in forms; or at least signing and scanning them in as a .pdf in order to email or post to your company’s website. That means someone will need to review and approve the change in beneficiary on the other end. In other words, don’t assume it only takes a night like I did. Fortunately, I updated all my life insurance last year prior to buying more. What I hadn’t done was log in and create an online account for my newest policy. Thus, I took the time to do it the night I built my binder.

This offers a great segue to the point that the Dough Roller article makes about passwords. Mrs. Grumpus and I strongly encourage all families to create a centralized document with all family passwords written down. This includes bank accounts, investment accounts, electronic devices, social media accounts, and any other account someone might need to access after the death of a loved one. Let me emphasize the fact that we write them down, by hand, as opposed to typing them. Do not create your password document online, or even on your computer! You’re begging hackers to find it. Certainly, you can type out all the account names, but leave space for the passwords, and write them in by hand after you print off the document with the account names. When you finish, store it somewhere safe, and preferably fireproof.

Since I hadn’t updated our password sheet for some time, I took advantage of the Death Binder effort in order to create a new one. As a shortcut, I printed out our net worth statement (which listed all of our financial accounts) and wrote the passwords alongside each account. I then flipped it over and transcribed all our other account passwords from our old sheet to this new one. It wasn’t the prettiest product when finished, but it got the job done on a night I was in a hurry.

The Narrative

Finally, the most difficult issue I encountered was how to write the narrative. Think about it. If you’re reading this, you’re probably the financially savvy one in your family. I certainly am. Mrs. Grumpus has made it clear over the years that I’m the Chief Financial Officer (CFO) of the family. I’ve tracked our money for decades and spent the last three years educating myself on everything possible from the FI and personal finance world. Which means I now understand these issues at an innate, or possibly sub-conscious, level. Thus, how do I channel all that knowledge in a clear and concise manner into simple financial instructions she could follow after my death?

She won’t have time to read JL Collins’s “A Simple Path to Wealth” or Darrow Kirkpatrick’s “Can I Retire Yet?” before the financial decisions start flying at her fast and furious. Those are the two best crash courses in personal and retirement finance I could recommend to anyone. Nor can I foresee all the issues she might face. Whatever written instructions I leave would grow stale fast. What to do?

Considering the fact that I was facing a tight timeline, I copped out. I left her a copy of my financial plan (yet another great reason to have a written plan to begin with), a skeletal set of instructions, and the recommendation that she bring my younger brother onboard to handle financial issues in the immediate aftermath of my death. I also sent him an email with the same set of recommendations that I left her. That was far from a perfect answer, but it was enough to allow me to leave home with a clear conscious. Of course, I’ll need to keep working on the narrative for future versions of the binder. It certainly isn’t where it needs to be.

One final thought on the way out, slip a nice note or letter to your significant other or beneficiaries into the binder. While the binder itself contains the bare bone financial facts your survivors need in case of your demise, it shouldn’t leave them feeling cold and hard about you. Any reason you give them to want to open the binder is a good one in my opinion. That’s a free tip from a guy who was once dubbed the “Tin Man” by his subordinates because he lacked a heart.

Conclusion

Much like the Winston Churchill quote at the top of this article, the question isn’t so much if I’m ready to meet my maker (I’m not, just in case anyone is taking notes). The real question is whether or not Mrs. Grumpus is ready for the “great ordeal” of taking on the family finances? No matter what, her learning curve will be steep. However, with a little more work, I think I can get the “financial binder” to a point where it’s good enough for her use in the immediate aftermath of my death.

Ideally, that’s all I’m striving for, good enough. There’s no way I can write her a step-by-step plan that works for twenty or more years. I can, however, leave her a playbook that helps navigate many of the financial decisions required in the first years after I’m gone. Who knows, if that works, she might even begrudgingly call it the “Death Binder!” while throwing me a devil sign in the air for old time’s sake!