Let’s be honest: no one likes to think about dying, even though it’s an unavoidable fact of life. But if you were to get in a car accident, fall ill, or even die tomorrow, would your grieving family know where to begin in terms of managing your accounts and assets?
You probably already know how important it is to protect your family’s finances (especially against worst-case scenarios) by saving for the future, creating a will, and buying life insurance coverage. But there’s one thing you may not have thought to do, and it’s both simple and inexpensive: leave behind an “in case of death” binder.
Here’s what an “in case of death” binder is and how you can put one together.
What is an “in case of death” binder?
As the name implies, an “in case of death,” or ICE, binder serves as a guidebook for your loved ones if you were to suddenly die, fall ill, or be injured. This binder typically includes a range of financial and personal documents intended to help your loved ones manage the household and your assets in your absence, whether temporary or permanent.
You may know this binder by other names, such as a family emergency binder, legacy binder, estate-planning binder, just in case binder, death binder, etc. No matter what you call it or how in-depth your binder is, the concept remains the same: it’s a road map for those you would leave behind.
Why an emergency binder is so important
I first heard about an emergency binder from a trusted financial colleague. He managed his household’s finances and realized one day that if he died, his wife would have no idea where to turn. She didn’t know which investments they held or how to access them; wasn’t familiar with managing their insurance and mortgage accounts; and didn’t even know which company held his life insurance policy.
An emergency binder was the perfect solution, allowing him to leave his wife with all the tools she might need in his absence. With this binder, she had access to account passwords, account numbers, contact information for their lawyer and accountant, all their investment and savings account info, and even a list of his old law school buddies (who would want to know if he died). She could also quickly locate his life insurance policy and file a claim, so she and their children would be financially protected as soon as possible.
Legacy binders aren’t just for families. Couples and single adults might consider building them, too. Without one of the important documents and information in this binder, your loved ones may not know where your accounts are held or how you would want your estate handled.
You also run the risk of your estate going through probate, where assets can be held in limbo for weeks or even months if things aren’t left in order or could be contested. Although probate costs vary from one state to the next, they aren’t insignificant. Court costs and probate attorney fees average about 4-7% of the estate’s value, or sometimes more.
Lastly, putting a binder together helps you see any potential missing pieces in your estate planning. For instance, although many of us may have thought to buy the best life insurance for our family, we might forget to tell our own family how and where we would prefer to be buried.
What goes in your binder
Now you know that you need an emergency binder to protect your loved ones. But what important documents and information do you put in it? Everyone’s binder may be slightly different depending on your assets, estate plan, family size, and personal wishes, but this list is a good place to start:
- Life insurance information: If you have private or workplace life insurance, be sure to include a hard copy of your policy in the binder. This will help your loved ones file a claim with the insurance company in a timely fashion.
- Health care wishes: Although it’s wise to speak to your family about your medical and end-of-life wishes, you might also want to spell these out in your emergency binder. This could include mentioning preferences on life support and advanced directives like a health care proxy, as well as your wishes regarding things like organ and tissue donation.
- Will and other directives: Put a copy of the most recent version of your will (which should also be filed with your attorney, if they helped you draft it) in your ICE binder. You might also add a letter with your unofficial directives, spelling out things like your burial and funeral wishes.
- Key legal documents: Include certified copies of important paperwork such as your Social Security card, birth certificate, marriage certificates or divorce decrees, and any power of attorney you may have granted.
- Financial account information: Your spouse or family members will need access to joint bank accounts, brokerage accounts, credit cards, and online portals for things like insurance, a family trust, or your home mortgage loan. Make sure they have account numbers and logins for any accounts held at financial institutions, whether that involves debt for a student loan or assets like real estate.
- Passwords and account access information: Be sure to also leave behind instructions for anything else your family may need in your absence, such as passwords to email accounts, social media accounts, and the like. You can either write your usernames and passwords out, or simply sign up for a secure password manager and include the master login info in your binder.
- A list of contacts: This could include a list of phone numbers and other contact info for your doctors and medical providers, in case you were hospitalized. It could also include information for important professional contacts, such as your financial advisor or attorney. You may also want to add emergency contact information for extended family, and a list of friends and acquaintances you want to be notified in case of your death.
- Special situations, directions, or guidance: As the mother of a child with special needs, my own ICE binder is more complex. It includes my son’s medical history, a list of his providers, and information regarding treatments and medications, as well as a copy of the documents involved with his special needs trust. I have also added letters and lists for his guardians, in case both my husband and I were to die suddenly, that include my wishes for his care and how I would like his life insurance benefit to be used. If you have children, a family member with special needs, an aging parent, or even a cherished pet, you might include guidance or directions for their care in your binder.
You can start building your emergency binder today by simply purchasing a three-ring binder and inventorying the documents you already have versus the ones that are missing from this list.
How to store your binder
Once assembled, your in-case-of-emergency binder will contain a slew of important personal and financial information. In the wrong hands, this could be disastrous, so it’s wise to store this in a secure but accessible location.
First, decide whom you will tell about the binder. More than likely, you’ll want to let your significant other know, and you may even want to create a joint binder together. You might also tell adult children, a sibling or close friend, your financial advisor, or an attorney, just so they are aware it exists. If you are injured, fall ill, or die suddenly, your loved ones will at least know to look for a binder as a road map.
Next, you’ll need to figure out where to put it. The binder should be placed somewhere secure, where it couldn’t inadvertently fall into the wrong hands. You may already have a great hiding spot in your home or you might want to invest in a fireproof safe. If you don’t feel comfortable keeping your binder at home, you could lock it away in a safety deposit box at your bank. Just be sure your loved ones know where it is and how to access it.
What are the most important estate-planning documents?
When creating an “in case of death” binder, you’ll want to enclose a number of key estate planning documents. These may include copies of:
- Your most updated will
- Life insurance policies
- Statements for banks accounts, brokerages, retirement accounts, and other investments
- Titles and/or deeds for your home, car, or other large assets
- Personal legal documents such as your birth certificate, Social Security card, passport, marriage certificate (or divorce decree), etc.
What happens to your bank account if you die without a will?
Typically, you’re asked to name a beneficiary any time you open a new bank account. If you were to die, this named individual would assume possession of your account and its contents.
If you share a joint account with someone, such as a spouse or adult child, they will likely maintain control of the account even after your death. If you have a bank account without a named beneficiary or joint account holder, the account will pass to the executor of your estate following your death and would be distributed according to law and/or your will, sometimes through probate.
Whom should I tell about my “in case of death” binder?
Your “in case of death” binder won’t do much good unless it can be found following an emergency. This means you may want to let select, trusted individuals know about its existence, and where to find it.
For instance, you might want to tell your spouse or significant other about the binder and what’s inside, or perhaps an adult child or close friend who could help manage your finances were you to die or become incapacitated. You also may want to tell your lawyer, accountant, or financial advisor about this binder once it’s created, as it could be very valuable in managing your finances and/or navigating your estate.
There are many key tasks involved with estate planning and end-of-life preparedness, such as investing, drawing up a will, and buying life insurance coverage. These can not only help you prepare your personal finances for the future, but also create a safety net for your loved ones in a worst-case scenario.
An emergency binder is another important part of financial planning, and it can help your loved ones navigate finances and manage your assets if you fall ill, are injured, or die unexpectedly. This binder can be as simple or as complex as you’d like, but it serves as a much-needed road map and may provide some peace of mind for those you would leave behind.