(Corrects Krooks' title to past president instead of current, 6th paragraph)
By Beth Pinsker
NEW YORK, July 15 (Reuters) - After helping a girlfriend through the messy, tangled finances left in the wake of a parent's death, John Kerecz had a message for his own mom and dad: Get your paperwork in order.
A few years later, Kerecz's father passed away unexpectedly. The 52-year-old environmental engineer from Harrisburg, Pennsylvania went to the house and looked where his father and mother used to keep their important documents, but nothing was there. It was pure luck that he went to the computer to look up a phone number and saw a folder on the desktop labeled "DEATH."
"Sure enough, everything was there in that folder," Kerecz says.
Armed with a copy of the will, lists of the financial accounts and insurance policies and other paperwork, Kerecz was quickly able to settle his father's estate and use the funds to take care of his ailing mother, making him extremely grateful.
The difference between having your files organized or not is about more than just stress; leave behind a mess and it can delay inheritors' access to funds and cost a bundle in legal fees.
"It could be six months or longer if you don't have the paperwork in order, and ... your family is in the dark, not knowing things, jumping through hoops. It's not a fun existence," says Howard Krooks, past president of the National Academy of Elder Law Attorneys.
Taking care of the necessary documents is a hallmark of good parenting, he adds, rather bluntly: "More than any kind of monetary legacy, if you really love them, you'd do this."
Compile a list of the financial information your heirs will need upon your death: wills, trust information, investment accounts, legal contacts, etc. You can keep this information in an electronic file - in one master document or several attachments - to serve as a road map to find all the physical paperwork.
Or, you can do what some of elder law attorney David Cutner's clients do, and just pull out a cardboard box and start piling up the papers.
You have to do more than just gather the information, though, cautions Cutner, co-founder of the Lamson & Cutner Elder Law firm in New York. You have to tell your loved ones you have done it and tell them where to find it. You can either hand over the file immediately or keep it in a safe place (away from the prying eyes of caregivers and potential scammers).
A safe deposit box, by the way, is not a good place to keep these papers, says Cutner, because it's too hard to access when needed.
Top of the list is a copy of your will, hopefully the most recent version, plus contact details for the attorney who drew it up and any executor named. Also important are trust documents, if they exist, estate experts say.
While power of attorney and living will documents are crucial should you become incapacitated, they will not be useful after your death, says Krooks - your heirs will then be using a death certificate to obtain access to accounts.
The real power in assembling all these items is that it forces you to go through the process of specifying your wishes. Without them, your family would have to put your estate into probate, which is when the state determines the distribution of your assets. This can take up to a year and eat up about 5 percent of the estate, says John Sweeney, an executive vice president responsible for Fidelity's planning and advisory services business.
Your heirs will need to know all of your account information, down to your utility bills and your tax returns. You can either create a list or include copies of statements in the file, or just directions to where to find them. Also useful is a list of relatives to contact.
Knowing passwords for online accounts is not as important as naming another person on key accounts ahead of time, says Sweeney. This way, if the family needs to make mortgage payments or pay any medical bills, they do not have to wait until the estate is settled.
"Children are often dipping into their own assets to pay for taxes and mortgages when the last surviving parent has passed away," says Sweeney.
In that same vein, make sure to sign another person up for a key to any safe deposit boxes or home safes, says Krooks. Include clear directions on how to access any other valuables that may be stashed elsewhere, so that it's not mistakenly thrown out.
Pensions and insurance plans have many different payout rules, so you need to leave behind detailed information about policies. Insurance information should extend beyond life insurance to car, home and boat insurance, says Sweeney. It is also critical to include your Social Security benefit information, he adds.
The job of assembling all of this information can be massive, but most people appreciate it in the end.
"At first they curse us out because it's so much to gather and put in one place. But by the time they come into the office, they're really glad they did this exercise," Krooks says. (Follow Beth Pinsker on Twitter at twitter.com/bethpinsker; Editing by Lauren Young and Jonathan Oatis)