Summer 2014
F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N
Are Your
Finances Ready
for a Stressful
Life Event?
g Preparing Your Finances in Case
You Can’t Manage Them
g Deciding Where to Keep Your Most
Valuable Records and Resources
g Managing a Loved One’s Money
Matters After a Serious Situation
g Guarding Against Predators Who Try
to Profit From Personal Hardships
ALSO INSIDE
• The FDIC Enhances Deposit
Insurance Information Online
• 5 Tips to Help Rebound From a Bad
Credit History
• What’s This Computer Chip Doing
in My Credit Card?
F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N
Are Your
Finances Ready
for a Stressful
Life Event?
g Preparing Your Finances in Case
You Can’t Manage Them
g Deciding Where to Keep Your Most
Valuable Records and Resources
g Managing a Loved One’s Money
Matters After a Serious Situation
g Guarding Against Predators Who Try
to Profit From Personal Hardships
ALSO INSIDE
• The FDIC Enhances Deposit
Insurance Information Online
• 5 Tips to Help Rebound From a Bad
Credit History
• What’s This Computer Chip Doing
in My Credit Card?
2Summer 2014FDIC Consumer News
ARE YOUR FINANCES RE A D Y F O R A S T R E S S F U L L I F E E V E N T ?
No one wants to think about it,
but everyone needs to plan for the
possibility that they may suddenly
become disabled or die. Taking a few
steps now can make it much easier
for your loved ones to manage your
financial affairs when you can’t. Here
are a few tips to get started.
Build a rainy day fund. “Savings can
help you and your family get through
difficult times, especially if there’s a
major health issue or other life event
that may result in you earning less
income,” said Mark Pearce, Director of
the FDIC’s Division of Depositor and
Consumer Protection.
Financial experts generally recommend
that you set aside at least three to six
months of living expenses to get through
a difficult period without having to take
out a loan or borrow from retirement
savings. “Having even a small amount
of money automatically transferred on
a regular basis into a federally insured
savings account is a great way to
gradually build a cushion to help manage
unforeseen situations,” Pearce added.
For more tips to get started, visit www.
fdic.gov/deposit/deposits/savings.html.
Keep a list of your financial accounts
and personal documents in one
secure place. Ensuring that a loved one
responsible for your affairs can easily
find a list of your deposit accounts,
investments, loans and other assets or
obligations will save them time and avoid
risks of unnecessary expenses (such as fees
associated with certain old, “dormant”
accounts). Other paper records that
your heirs may need to know where to
find include wills, home titles, car titles,
bonds and certificates of deposit. But this
list can also be valuable to a criminal, so
keep it in a secure place that only you and
selected others have access to. For more
about what financial documents to store
where, see the next page.
Consider the pros and cons of
consolidating accounts. Think
about how many savings, checking,
investment and credit card accounts
you have. Then ask yourself if
combining multiple accounts could
Expecting the Unexpected: Preparing Financially
for a Disability or Death
make it easier for your loved ones to
identify, monitor and manage those
accounts on your behalf. If you plan
to consolidate your deposits at one
institution, though, make sure the
combined funds are within the FDIC’s
deposit insurance coverage limits.
Remember that you can have more
than $250,000 in one bank and still be
fully insured provided that the money
is in different ownership categories
— single accounts, joint accounts,
retirement accounts and so on. If you
need help, visit www.fdic.gov/deposit/
deposits or call 1-877-ASK-FDIC
(1-877-275-3342).
Consult with an attorney about legal
documents to create or update. One
example may be an advance directive
that will specify your wishes for medical
care if you are terminally ill. Others
may include a will and/or a trust to
guide the distribution of your property
after your death, and a “power of
attorney” authorizing someone else to
handle transactions and make decisions
on your behalf if you become mentally
or physically incapacitated.
Carefully evaluate who you hire to
help you. You may want to talk to a
financial advisor for help, such as in
deciding whether to consolidate accounts
or sell investments. Before choosing
an advisor, understand what training
he or she has had and any record of
complaints. For tips on choosing an
investment advisor, including what
professional designations (the letters
after an advisor’s name) mean, start at
www.finra.org/Investors on the Web
site of the Financial Industry Regulatory
Authority, an independent, not-for-profit
organization authorized by Congress to
help protect investors.
Determine if you have adequate
insurance. Consider discussing with
an insurance agent or a financial
planner whether you have adequate life
and disability insurance, and evaluate
the pros and cons of long-term care
insurance. Your needs will depend
on factors such as whether you have
dependents and any property that you
would like to pass to an heir but is
serving as collateral for a debt. Note:
In general, your debts will be paid
from your estate and will decrease the
money that your heirs could inherit.
But exceptions exist. For example, the
responsibility to repay any debts that
another person co-signed with you
shifts to that person after you die.
Take steps to make it easier for your
heirs to access your valuables. Start
by confirming that the beneficiaries or
co-owners you want on accounts are
named in the records. For example,
having joint accounts with your spouse
or another loved one can make it easier
for him or her to access the account if
you become disabled or die, but you are
giving this person equal rights to the
money in that account. You can also set
up payable-on-death (POD) accounts
at a bank that would ensure that the
people you name would have access
to the money after you (or any other
co-owners) die.
And if you have a safe deposit box,
talk to a bank employee or an attorney
about how a loved one or another
person you designate could access the
box. Procedures vary considerably by
state. For example, after a death, some
state laws may permit a decedent’s safe
deposit box to be accessed immediately
by a co-owner, but other states may
generally not permit anyone to remove
any items other than a will and burial
instructions for several weeks.
To learn more about preparing your
finances for a serious life event, start
at www.mymoney.gov. For more
about how to protect your heirs with
FDIC-insured accounts, see www.
fdic.gov/consumers/consumer/news/
cnfall10/estateplanning.html. Q
ARE YOUR FINANCES RE A D Y F O R A S T R E S S F U L L I F E E V E N T ?
No one wants to think about it,
but everyone needs to plan for the
possibility that they may suddenly
become disabled or die. Taking a few
steps now can make it much easier
for your loved ones to manage your
financial affairs when you can’t. Here
are a few tips to get started.
Build a rainy day fund. “Savings can
help you and your family get through
difficult times, especially if there’s a
major health issue or other life event
that may result in you earning less
income,” said Mark Pearce, Director of
the FDIC’s Division of Depositor and
Consumer Protection.
Financial experts generally recommend
that you set aside at least three to six
months of living expenses to get through
a difficult period without having to take
out a loan or borrow from retirement
savings. “Having even a small amount
of money automatically transferred on
a regular basis into a federally insured
savings account is a great way to
gradually build a cushion to help manage
unforeseen situations,” Pearce added.
For more tips to get started, visit www.
fdic.gov/deposit/deposits/savings.html.
Keep a list of your financial accounts
and personal documents in one
secure place. Ensuring that a loved one
responsible for your affairs can easily
find a list of your deposit accounts,
investments, loans and other assets or
obligations will save them time and avoid
risks of unnecessary expenses (such as fees
associated with certain old, “dormant”
accounts). Other paper records that
your heirs may need to know where to
find include wills, home titles, car titles,
bonds and certificates of deposit. But this
list can also be valuable to a criminal, so
keep it in a secure place that only you and
selected others have access to. For more
about what financial documents to store
where, see the next page.
Consider the pros and cons of
consolidating accounts. Think
about how many savings, checking,
investment and credit card accounts
you have. Then ask yourself if
combining multiple accounts could
Expecting the Unexpected: Preparing Financially
for a Disability or Death
make it easier for your loved ones to
identify, monitor and manage those
accounts on your behalf. If you plan
to consolidate your deposits at one
institution, though, make sure the
combined funds are within the FDIC’s
deposit insurance coverage limits.
Remember that you can have more
than $250,000 in one bank and still be
fully insured provided that the money
is in different ownership categories
— single accounts, joint accounts,
retirement accounts and so on. If you
need help, visit www.fdic.gov/deposit/
deposits or call 1-877-ASK-FDIC
(1-877-275-3342).
Consult with an attorney about legal
documents to create or update. One
example may be an advance directive
that will specify your wishes for medical
care if you are terminally ill. Others
may include a will and/or a trust to
guide the distribution of your property
after your death, and a “power of
attorney” authorizing someone else to
handle transactions and make decisions
on your behalf if you become mentally
or physically incapacitated.
Carefully evaluate who you hire to
help you. You may want to talk to a
financial advisor for help, such as in
deciding whether to consolidate accounts
or sell investments. Before choosing
an advisor, understand what training
he or she has had and any record of
complaints. For tips on choosing an
investment advisor, including what
professional designations (the letters
after an advisor’s name) mean, start at
www.finra.org/Investors on the Web
site of the Financial Industry Regulatory
Authority, an independent, not-for-profit
organization authorized by Congress to
help protect investors.
Determine if you have adequate
insurance. Consider discussing with
an insurance agent or a financial
planner whether you have adequate life
and disability insurance, and evaluate
the pros and cons of long-term care
insurance. Your needs will depend
on factors such as whether you have
dependents and any property that you
would like to pass to an heir but is
serving as collateral for a debt. Note:
In general, your debts will be paid
from your estate and will decrease the
money that your heirs could inherit.
But exceptions exist. For example, the
responsibility to repay any debts that
another person co-signed with you
shifts to that person after you die.
Take steps to make it easier for your
heirs to access your valuables. Start
by confirming that the beneficiaries or
co-owners you want on accounts are
named in the records. For example,
having joint accounts with your spouse
or another loved one can make it easier
for him or her to access the account if
you become disabled or die, but you are
giving this person equal rights to the
money in that account. You can also set
up payable-on-death (POD) accounts
at a bank that would ensure that the
people you name would have access
to the money after you (or any other
co-owners) die.
And if you have a safe deposit box,
talk to a bank employee or an attorney
about how a loved one or another
person you designate could access the
box. Procedures vary considerably by
state. For example, after a death, some
state laws may permit a decedent’s safe
deposit box to be accessed immediately
by a co-owner, but other states may
generally not permit anyone to remove
any items other than a will and burial
instructions for several weeks.
To learn more about preparing your
finances for a serious life event, start
at www.mymoney.gov. For more
about how to protect your heirs with
FDIC-insured accounts, see www.
fdic.gov/consumers/consumer/news/
cnfall10/estateplanning.html. Q