Disclaimer: This information is general in nature only. While Budget Direct has endeavoured to ensure the information we’ve relied on is accurate and current, we do not guarantee it. Budget Direct accepts no liability for this information.
Losing crucial legal records can be a nightmare – don’t let it happen to you. As we go through life, we accumulate an assortment of valuable documents, legal papers and critical information representing a record of our family and business lives. For many of us, storing this information is a haphazard affair. We might just shove all our important papers in a drawer somewhere, to be forgotten until we need to check old credit card receipts or try to locate tax records from years ago.
Family records can be consumed in a house fire or irretrievably damaged in a flood. They could be stolen during a burglary for the purpose of identity theft.
Family records can be consumed in a house fire or irretrievably damaged in a flood. They could be stolen during a burglary for the purpose of identity theft. You might even accidentally throw them out during a frenzy of spring cleaning. And isn’t it always the way that when you’re looking for a single piece of paper in your home, you find every single document you don’t need except the one you’re after?
Keeping good records isn’t just about being tidy and well organised. Proper storage of key documents makes it easier for you to meet your legal obligations, manage family cash flow and reduce stress at tax time. So what are the most important family documents, and how can you keep them safe?
Wills
Your Will is perhaps your most important legal document – if you have one. Research shows that over 45% of Australians don’t have a valid Will.1 Valid’ is the key word here – picking up a DIY Will kit from your local newsagent or Australia Post may seem like a quick and easy solution, but in many cases it can create more problems than it solves.
Research shows that over 45% of Australians don’t have a valid Will.
A Will is a complex document and there are lots of ways to get it wrong. If you draft a DIY Will in your own words (instead of having an expert draft it using correct legal terminology), your wishes may be misinterpreted.
Also, each Australian jurisdiction has its own specific legislation regarding the signing and witnessing of Wills, and it’s not uncommon for people using homemade Wills and Will Kits to get this wrong.
A Will must adhere to strict legal requirements and be worded very precisely in order to be valid. This is not a job for amateurs. Marriage, divorce, children, de facto relationships and many other factors affect how Wills are drawn up, and a public trustee or solicitor knows there can be many intricacies. Always seek professional legal advice.
If you die without a valid Will, a court-appointed administrator pays your taxes and bills from your assets and then distributes what’s left according to a predetermined formula. This scenario can be messy, time-consuming and stressful to your loved ones, and your assets probably won’t be portioned out as you might have liked.
A Will is no good to anyone if it can’t be found. Make sure to store your Will in a safe place. If you use a public trustee or solicitor to organise your Will, they’ll often store the original in a fireproof safe or other secure location and give you a copy for your records. An all-too-common situation is where family members and other beneficiaries know a Will exists, but can’t locate it when the person passes away. Always make someone close to you aware of your Will’s location.1
Insurance policies
Your insurance policies (life, home and contents, car, health, etc.) are important documents that need to be kept in a safe place. In particular, losing track of a life insurance policy can lead to major family headaches. For starters, if you’ve lost the original policy document, you’ll have to fill out a statutory declaration and pay a fee to have the document reissued.
According to ASIC (the Australian Securities and Investments Commission), there’s around $80 million of unclaimed life insurance money in Australia.
What if you die and your life insurance beneficiaries can’t find your policy, don’t know which insurer it was with or aren’t even sure you had a policy in the first place? According to ASIC (the Australian Securities and Investments Commission), there’s around $80 million of unclaimed life insurance money in this country2 – which proves just how hard a life insurance policy can be to track down at times. Houses are sold, mail isn’t forwarded, relationships change, people take out insurance without telling anyone about it, etc.
Life insurance in the form of a Death Benefit and/or Living Benefit (like Trauma or Total and Permanent Disability cover) is a valuable family asset. In terms of potential payouts to your loved ones if something unexpected should happen to you, it can be worth a very substantial sum of money. Store these documents carefully and make sure a trustworthy person knows their location.
Mortgage documents and propertybills
Deeds, mortgage papers and other property-related documents tend to be entirely forgotten until you want to sell your house or property. Then there’s a frantic dash through all your papers to find records of everything from termite inspections to mortgage details.
The longer you live in your home, the more property paperwork you accumulate – and all of it matters. Keeping all your property-focused documents together in one safe place is wise.
Passport and travel documents
Identity theft costs the Australian community around 1.5 billion a year, and passports are a popular target for identity thieves. Whether you lose your passport or have it stolen, replacing it is both costly and time-consuming.
You have to go through all the same processes as when you got your original passport (application, interview, etc.), but this time, you’ll pay an additional fee on top of the application fee.
Identity theft costs the Australian community around 1.5 billion a year, and passports are a popular target for identity thieves.
This fee will vary depending on how many passports you’ve lost or had stolen within the previous five years. You’ll also need to fill out Section 10 (relating to loss or theft) of the passport application form3.
Hide your passport well enough to deter a thief, but not so well that you forget where you put it. When travelling, the safest place for your passport is on your person.
A zippered front trouser pocket or hidden around-the-neck pouch are secure options. Don’t cram it into your back pocket where it can be easily ‘lifted’ without your knowledge. Keep your passport in a zip-top plastic bag so it stays dry in humid climates, sweaty pockets and torrential downpours.
Another safe option is to store it in the inside zippered compartment of the daypack you’re wearing. Storing passports, credit cards and cash in a bag that can be stowed in the luggage section of a train or underneath a bus is a common traveller mistake.
This practice is far too trusting and makes it easy for a thief to grab your whole bag at an opportune moment and make a run for it.
Banking information
If someone is able to gain access to your financial details, they can steal your identity, run up massive credit card bills in your name and even clean out your bank accounts. There is an entire criminal industry devoted to the practice of extracting credit card numbers, PINs, card security codes and banking passwords from unsuspecting victims.
Many banks offer a Security Token as a second level of authentication when you log into your online account, so always make use of this option when it’s available.
Many banks offer a Security Token as a second level of authentication when you log into your online account, so always make use of this option when it’s available. In addition, be vigilant about ‘phishing’ scams, in which you might get an email telling you your account will be frozen if you don’t ‘update your details immediately’.
These bogus emails then prompt you to go to another Webpage which looks like an official bank page. But really is a well disguised fake, solely designed to extract your confidential information.
Identity thieves may also remove mail from your mailbox to obtain banking and other personal secrets. Change to a lockable mailbox – it’s a worthy investment in your personal information security.
Tax returns
Whether you’re an employee or running your own business, maintaining correct tax records isn’t just good practice – it’s a legal requirement.
And as anyone who has ever been audited can tell you, having all your paperwork and receipts in order can make all the difference in how stressful (and costly) your ATO audit turns out to be. According to ATO, you must keep your written evidence for five years from the date you lodge your tax return.4
Passwords
Think of passwords as the ‘front door key’ to your online world. And just as it’s folly to leave your key under the mat, it’s silly to make it easy for others to access your online information by swiping or working out your passwords.
Think of passwords as the ‘front door key’ to your online world. Don’t use the same password for all your accounts – this makes life incredibly easy for a cyber-thief.
Here are some useful tips to keep passwords safe:
• Don’t share your passwords with others.
• Make your password hard to guess: your pet’s name, your birth date or ‘123456’ just don’t cut it. A mishmash of letters, numbers and symbols is best.
• Don’t use the same password for all your accounts – this makes life incredibly easy for a cyber-thief.
• Change your passwords regularly – even several times a year.
• If you’re going to write your passwords down, don’t make the mistake of ‘hiding’ them near your computer. Sure, you’ll be able to access them quickly if they’re taped under your desk, slipped beneath the mouse pad or scribbled in your conveniently placed address book, but everybody else can readily access them too.
• When your online accounts offer a two-step authentication system, use them.
Storing your valuable documents: what are the options?
How you store your valuable documents is a personal choice, and largely depends on the answers to some simple questions:
1. How secure is my home?
2. How secure/well hidden is the place within my home where I’m storing documents?
3. How secure is my at-home (and work) computer? Who has access to it, and how is my password security?
4. Am I comfortable using a cloud server to store my most valuable documents?
4. What about a bank safety deposit box, a private secure storage facility or other off-site location?
5. Should I invest in a home safe, and if so, what kind?
There are numerous apps available that can assist you in keeping track of your essential documents.
Because it’s the 21st century, don’t worry: ‘there’s an app for that’. In fact, there are numerous apps that can assist you in keeping track of your essential documents. Evernote enables you can take photos of your receipts and documents and then download them to your record-keeping system.
Sign-N-Send for Apple devices facilitates the opening, signing, storage and emailing of documents. There’s also Tax Receipt Log, which saves images of receipts to a spreadsheet for easy reference. Many similar record-keeping apps are available.
Cloud-based online storage is a popular option, as it features numerous layers of security keeping your personal information safe. If your important documents are stored ‘in the cloud’, they can really only be lost if the Internet crashes.
It’s a smart idea to make copies of all your vital records and have them stored away from your home. This way major water damage or a house fire doesn’t destroy the only copies.
If instead you’ve got everything stored on a single computer at home, you’re going to lose it all if your hard drive crashes and you’ve failed to make backup files. Cloud storage has the added advantage of allowing you to access your information from virtually anywhere on earth where there is functioning Wi-Fi.
It’s a smart idea to make copies of all your vital records and have them stored away from your home. This way major water damage or a house fire doesn’t destroy the only copies.
If you decide to get a home safe, there are plenty of choices. Most are fire-resistant and some are water resistant. Small, portable safes may not offer the same protection as a heavier safe that’s securely bolted to the floor.
Another decision is where to position your home safe. The master bedroom is often the first place a thief will visit, so another room might be less obvious. A wall safe can be hidden by a picture and a floor safe can be covered by a rug. Even a hollowed out ‘book safe’ is better than leaving your most crucial documents sitting in an unlocked drawer.
1. https://www.tag.nsw.gov.au/wills-faqs.html
2. http://www.canstar.com.au/life-insurance/direct-life-insurance/unclaimed-life-insurance/
3. https://www.passports.gov.au/Web/LostStolenInfo.aspx
4. https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Keeping-records/Keeping-your-tax-records/?page=3#How_long_should_you_keep_your_records_
This post was brought to you byBudget Direct Life Insurance
