Estate planning is more than just drafting a will or setting up a trust. Filling your plan in a safe place with other important documents is invaluable, but so is keeping track of them and providing access to executors or family members.
Creating a “red file” can be a game-changer. It can allow your loved ones and estate executor to access critical information if you become incapacitated or when you pass away.
What is a red file?
Essentially, it is a collection of information often needed during a time of crisis. It can guide your family through your care during incapacity and estate administration upon your death.
Vital components of a red file include the following:
- Personal details: Full name, birth date, social security number and important contacts
- Medical information: Health conditions, medications, doctor contacts and care preferences upon incapacitation
- Financial details: Bank and investment accounts, insurance policies and debts
- Estate documents: Will, trusts, powers of attorney and other crucial documents
- Passwords: Access to online accounts and safe combinations
- Funeral wishes: Preferences for funeral and burial or cremation
It is wise to include business information in your red file, including key contacts and succession plans. Remember to revisit the file periodically to make sure it always reflects your current circumstances.
Why create a red file?
Having critical documents and information in one place can guide your family at a stressful and difficult time, reducing their stress and confusion during emotional upheaval. It also helps prevent potential disputes among family members.
It’s wise to seek legal guidance to start and maintain your file as well as with your entire plan.