Posted by Lending Club :: December 12, 2008 @ 6:40 am

When I mentioned the dangers of a secret safe deposit box in a recent post “Limitations of Safe Deposit Boxes”, I was reminded of a concept that has been gaining popularity and coverage in many personal finance circles. The idea is to write a letter to your spouse containing information that would be useful in the event of your death.

While a letter expressing your feelings or wishes may also be appropriate, the purpose of this letter is simply to convey information about your finances. It should document the activities that you normally perform and list all relevant accounts as well. The letter can be tailored based on your spouse’s involvement in your family finances. Highly involved spouses may not need a reminder of when and how bills are paid, while less involved spouses could benefit from such information.

A full list of all accounts (including account numbers, PINs, customer service telephone numbers, and balances) is a minimum requirement. Much wealth continues to be held in accounts long forgotten. Including access instructions will eliminate the work of having to reset unknown PINs, etc. Keeping account information up to date will ensure its usefulness. Having all of this information in one place will also make the transition much easier. Instead of having to remember each and every account and where to find information about it, the surviving spouse need only find this one document.

One caveat is that such information would be highly valuable to a thief. Extreme care must be taken to secure it. Your spouse should know where it is stored. Disclosing the location to another trusted family member, or the contingent executor of your estate, may be prudent as well. If they know where to find this letter in case of emergency, that may be all they need to know. Storing the document with other valuables may increase its risk of theft. Since a piece of paper, or innocent-looking notebook, wouldn’t appear valuable, it may be possible to store it securely in plain sight.

Estate planning documents are vitally important, but a letter to your future widow could prove to be a useful supplement. It won’t necessarily inform your spouse of anything he or she couldn’t have figured independently, but it will remove the burden of having to do so. Making things easier in difficult times is one of the main points of estate planning in general, and this letter translates nicely to this practice.

Do you store critical information in a central location?