So, I was up on a ladder cleaning out my gutters this afternoon thinking, “Man this would make a great metaphor for a post”. I’m pulling out half decomposed leaves 15 feet off the ground, which is never a fun task, and something I usually put off until as late in fall as possible. Yet, its such an important thing, as with clogged gutters eventually the water will start seeping into and damaging my home. So as I’m working, it hits me, the metaphor is cleaning up your financial accounts. This is post gold I tell you people, or at least I’d like to think.
Like the gutters, I often put off cleaning up my financial accounts. Sure, I ensure I’m well invested, I watch my asset allocation, and I’m very up on my net worth. However, what I don’t do regularly is ensure my assets are consolidated across accounts. I always tell myself there will come another day where I can do this. As such I have 4 brokerage accounts, 3 saving accounts, a checking bank account, and 2 bond accounts. If you are decently down the path to financial independence you might have this financial sprawl as well. It happened when you changed companies and you left a 401k stranded, or you changed banks to capture a signup bonus and you left that last few dollars in the old bank account. At the time I’m sure you figured you would get back to it. Besides, what’s the worst that could happen? It’s not like it’s going anywhere. At least that’s what you thought, right?
The state I live in, Delaware, has been stuck in a court battle as of late. The reason is something called Escheatment. The state itself gets a huge portion of its revenue from Escheatment. So what is Escheatment? Escheatment is a point at which the state takes your money because they deem you to have abandoned accounts. Have you ever heard those creepy commercials about unclaimed property that may be yours? Well, they are talking about Escheatment. Each state deems property in financial accounts to be abandoned based on a different time frame. The worst of them are just 3 years. Not executing a financial transaction on an account in this time period can result in Escheatment, and it is often not that easy to get the money back after the fact. Usually, you can only get the property back, not any interest, and only after contacting multiple agencies repeatedly. You can search for unclaimed property in your state by following links from here to your state’s unclaimed property page.
Simplicity for Simplicity Sake
So, needless to say having your account be claimed by the state is bad, but that’s not the only risk to overly complex financial accounts. Think about what will happen if something happens to you. Do all your heirs understand your complex network of accounts? Do they have access to them, or know how to gain access if you kick the bucket? In my personal case, my spouse would have trouble with a few of the more outlier accounts. Even if I do what J Money did, and write a letter to my wife with financial instructions she’s still liable to have a problem.
Which brings me full circle, as I finish this post I’ve added a to-do this week to close out and consolidate a few old accounts. I’m also going to explore the escheatment page for my state in case something like a utility refund occurred that I missed. You never know. But first, I have to finish those gutters.