As I discussed in a previous article, having your personal and financial information readily available for your executor or loved one at the time of your death or incapacitation is one of the most thoughtful things you can do.
Let’s say you’ve heeded the advice and worked hard at recording and organizing your information. Now you must decide where the documents should be safely stored. To help in your decision making, I’ve listed some pros and cons of five options for securely preserving your data.
What is the best place for storing your sensitive information? I will detail what I believe are the pros and cons for the following storage areas, presenting the choices from least to most desirable. The options are: hidden in the home; on a personal computer; with an attorney, executor or family member; in a safe deposit box, or in a personal home/fire safe.
Pros: Information and documents kept in your home are easily accessible at all times. Assuming you can remember where you have hidden your documents, you can gather the papers, notebook or flash drive and update the information or add new and/or corrected documents at any time.
There is no cost to hide documents in your home, as there is with a safe deposit box or a home safe.
Cons: As mentioned above, you may forget where you have hidden your information. This is especially true if you try to get creative and want to “outwit” anyone possibly gaining access to your information. This can be alleviated to a certain degree if you tell someone else, such as a spouse or other loved one, where the documents are hidden.
This selection carries the greatest risk of all the storage options of theft and natural disasters, such as floods, fire, tornados, etc.
Pros: Information stored on your computer is as accessible as the documents hidden in your home. You would have access 24/7/365 to update, add and correct the information. It’s important to make sure the information is password protected and that you back up on a regular basis.
Cons: Unfortunately, nothing is 100% secure on a computer. There will always be the risk of hackers, regardless of the security measures you take.
There is also the possibility that a computer hard drive will crash, or cease to be operational. If you have not backed up your information properly and regularly, you run the risk of losing all your data. One way around this is to make a copy of all your information and store it somewhere other than in your home.
As is the case with all the choices, you run the risk of theft and natural disasters. If someone were to break into the house, know that technology equipment is usually one of the first things stolen.
Pros: Giving your data to an attorney, executor or loved one would require obtaining their permission. If they have agreed, they are most likely fully aware of your wishes and have agreed to honor them.
Other than maybe the attorney, there would be no cost to you. Lawyers and their firms have different procedures, so if this is your choice, you would want to discuss where they keep the data, who would be responsible for the security and if there is a cost to you for storing the information.
Cons: When your documents and information are in the hands of someone else, it becomes difficult to access for updating, adding or correcting. It can still be done, but you have to work with the time frame of the holder of your information.
You must trust the individual you have chosen to care for your information to keep it safe and secure. Depending on what form you provide your information, the individual may have to remember passwords and/or keep track of keys or combinations.
As with the other choices, there is a risk of theft and natural disasters.
Pros: Information cannot be accessed without the proper authorization. There is no threat of someone that you have not granted permission seeing your sensitive data.
While not full-proof, the risk of theft or natural disasters is less likely in this setting than in the other options.
Please note, the FDIC does not insure the contents of a safe deposit box, however, if the contents of a safe deposit box are stolen or missing due to bank error or employee dishonesty; the bank’s liability insurance may compensate.
Cons: Access to your safe deposit box is limited to bank hours.
Also, safe deposit boxes can be cost prohibitive. Some banks offer free safe deposit boxes if a certain balance is kept at their institution, but these are usually smaller boxes. Some of the large boxes can rent for hundreds of dollars a year.
The size of the box is limited. If your information is stored in a notebook, you would require one of the larger safe deposit boxes.
You must keep track of the safe deposit key, which is required for access to the box.
If an individual dies without a co-owner to his safe deposit box, some states require an executor to show proof of executorship, a copy of the death certificate and possibly a court order to access the safe deposit box.
Pros: Easy access to your data at any time.
One-time fee to purchase the safe versus annual rental fees for a safe deposit box.
Cons: You must keep track of the key and/or combination in order to access the documents.
Even though the safe offers some protection against theft and natural disasters, they can still be vulnerable. A lot will depend on the quality of the safe as to the protection it offers.
Wherever you decide to store your important sensitive documents and data, be sure to evaluate the pros and cons of your option. Choose a storage option that offers the most security that is within your budget.
Have you already started organizing your important papers? Where do you store your important documents and data? Have you got a plan in place for storing for financial and person information? We welcome your comments and questions.