In the last few years, David Harris has received a crash course in estate planning. In March of 2010, at the age of 49, Harris received a diagnosis of terminal colon cancer. “I was told I had a 12- to 18-month window to prepare myself and my family,” he says. Recalling the challenges his father and his friend had faced in determining what assets were left and where they were following the loss of a loved one, Harris was determined that his wealth would be passed down to future generations more smoothly.
Before his diagnosis, the 52-year-old Houston resident witnessed the turmoil that resulted when a friend’s father died, leaving his widow with no idea where insurance documents and burial plans were kept. “Ultimately they ended up having to pay for a burial that had already been paid for,” Harris says—no small feat considering that the average funeral costs $6,560, according to the National Funeral Directors Association. As troubled as Harris was by his friend’s situation, a similar experience soon befell his own family.
When Harris’ stepmother died, his father could not find information about prepaid burial arrangements, nor did he know where she kept information about retirement accounts or other assets. When a family member suggested he contact his late wife’s employer, Harris’ father was stunned to learn that she had a 401(k) retirement account and a $100,000 life insurance policy that he was entitled to. “The insurance company doesn’t reach out to you,” Harris says. When someone dies, if you are the beneficiary of an insurance policy or other sum of money, it’s up to you to file a claim to receive your benefits. “My father almost didn’t receive that money because we didn’t know where it was or how to access it.”
As a business owner, Harris had business and personal assets—including insurance policies and retirement accounts—that he wanted to leave to family members. Having been married twice, he had children from his first marriage as well as stepchildren from his second marriage whom he wanted to leave assets for. “I wanted to make sure that they were aware and knew what I had put in place for each one of them, and where it was for them to be able to access it,” he says.
He also wanted to pass along other valuable information such as “my will and some pictures. I had personal letters that I had written to my children and I wanted each one to receive that information.” First, he made a list of all the assets he had, including insurance policies he’d taken out years ago and forgotten about. Then he searched for a service that could help him gather and organize the information so that his heirs would be able to find it and know exactly what to do. Not finding what he was looking for, he spent the next six months between surgery and chemotherapy treatments making hard copies of important documents, gathering phone numbers of his attorneys and accountants, and leaving a detailed set of instructions to each of his loved ones.
Once Harris finished the job, his health took a turn for the better and he recognized a business need and decided to fill it. One of the most important lessons he had learned over the past couple of years was that many people make the effort to amass financial resources to pass down to future generations, but they skip the crucial step of ensuring that those assets get into the hands of the people they were intended for. So in 2011, he launched the company Assets in Order (www.assetsinorder.com) to create a product now called Legacy Lockbox, a secure online repository that lets consumers organize and store personal information and provides detailed instructions for loved ones to access and claim assets that have been left to them.
While the doctors turned out to be wrong about Harris’s prognosis, the lessons he learned about estate planning not only helped him to ensure that his wealth will pass smoothly to the next generation, they inspired him to give others an easier way to conduct their own estate planning. “It is extremely helpful to have a road map that will show you where important papers or important information and assets are,” Harris says.
How I did it Identify your financial gatekeepers. I wrote down the names of all the different people my family would need to talk to in case something happened. I had a corporate attorney, a personal attorney, a corporate accountant, and a personal accountant. So I had to write these things down. For example, if this happens you’ve got to call this lawyer because he’s the one that manages our trust and manages my will—that kind of thing.
Get hard copies of insurance policies. There were some policies that I had purchased years ago that I had forgotten all about, and I know my kids were not aware of them because I did this earlier on in their lives. I had misplaced hard copies of them so I had to ask my wife to call and make sure we got up-to-date policies and make sure the beneficiary information was right. So I gathered all those together, made copies, and I put them in a packet. If I had not done that there would be absolutely no way my wife or my children and loved ones would know where the information was.
Provide digital access to online accounts. I had so many codes and passwords. I had to write all of those down and passwords to bank accounts and so forth so that if something were to happen, then I could be assured that my family would be able to access those accounts and ensure that my wealth is passed to my wife, my children, and future generations.