How will your loved ones track those “invisible” bill-pay charges?

Over time, I have set up automatic payment for several of my bills:

• My monthly mortgage bill is paid by a recurring, automatic charge (direct debit) to my checking account. Two insurance premiums are paid the same way.

• Other bills are automatically charged to my major credit card: newspaper, online services, gym membership, and movies by mail.

While these methods are common, there are many people who also use online bank services or PayPal to pay their bills electronically. Often their records are also maintained electronically—stored and organized conveniently, securely, and without a shred of paper left on the desktop.

The simplicity of these options has streamlined the bill-paying process and reduced our record handling. However, when we become incapacitated or die, how will our loved ones know of our arrangements, follow our methods, or generally handle our finances and bill paying? In particular, if payment is automatic, how will they learn of the payments before our accounts become overdrawn or unknown charges accrue?

If we don’t leave clear instruction, it is probable that our electronic arrangements will create a mess. For example, given the direct debits to my checking account, available funds will dwindle, and mortgage and insurance charges will probably “bounce” before my loved ones learn of my payment arrangements.

So how can you leave clear bill-paying direction for your loved ones? Here are a few tips for documenting your information and helping your family to avoid a mess—at a time when handling your tasks is already burdensome.

Document.Given that you have set up and often used your bill-pay methods, the steps have probably become second nature. Identifying and documenting clearly may take some time and concentration.

Try this approach:

• The next time you pay each bill, write down the steps that you follow.
• Be sure to document all automated payments, whether annual, monthly, or other cycle, and whether confirmed by USPS mail, by email, on your bank statement, or by other means.
• Then, when handling the following payment or two, follow your written steps carefully, adding in information that you previously overlooked. Assess your instructions with an objective eye. Would they be completely clear to someone reading them for the first time, unfamiliar with your files or computer, and probably emotionally distressed and hurried?

Store.Once you’ve drafted your instructions, store them securely—but with easy assess for your updates and, ultimately, for use by your loved ones—that is, most likely your agent and alternate on your Durable Power of Attorney for Finances.

The best storage location is your fireproof, water-resistant home safe, along with your other important records. If you’ve made a Get It Togetherplanner, your bill-pay instructions will be included in Section 22, Credit Cards and Debts.

Notify.Next, ensure that one or two trusted loved ones—especially your agent and alternate on your Durable Power of Attorney for Finances—have easy access to your instructions (and, ideally, to your entire planner).

Describe the instructions to your loved ones and provide access to the materials—for example, location of the key and the combination to your safe. Further, reinforce their recall by repeating the information periodically, perhaps once a year. That way, when the time comes, your loved ones will be able to easily find what they need, when they need it.

Maintain.Over time, as you add, change, or discontinue your bill-pay methods, retrieve your documented instructions, modify, and again store the update securely.

And I hope that you will enjoy an additional benefit, as I have. I documented this information for my loved ones several years ago. In the meantime, however, before they have needed to access, I have referred to it many times. As my memory dulls, I have been blessed by my own organization.

May you also enjoy the benefits of your work for many, many years!

Melanie Cullen is the author of Get It Together: Organize Your Records So Your Family Won’t Have To (Nolo), a workbook/CD-ROM for preparing and organizing your important records—for yourself and for your loved ones. She is a management consultant with TerraSys Consulting, Inc. and serves on the Projects@Work editorial board. She holds an MBA from the Graduate School of Business at Stanford University.

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