By ELLEN E. SCHULTZ –
When my great-uncle Creighton Cornwell was visiting his family in Nevada in 1991, his entire Oakland, Calif., neighborhood was incinerated in a wildfire. He salvaged a single teacup.
Mr. Cornwell, then 87 years old, kept a few records in a safe-deposit box, such as a marriage license, birth certificates and mortgage documents. After the fire, those records weren’t enough to get his life back in order. Mr. Cornwell, who died in 1998, lost everything else, including insurance policies, medical records and irreplaceable correspondence and photos.
Though retirees are likely to have the greatest number of critical records—and might need access to many of them on short notice—they are among the least likely Americans to be taking advantage of new tools to secure such records. If this includes you or your parents, consider these steps on how to secure your family’s financial documents:
Take inventory. First, make an inventory of all your documents, which might be scattered in file cabinets or boxes in the attic, or on old computers, new laptops, thumb drives or emails.
In one group, include crucial items such as car titles, wills, powers of attorney, life-insurance policies, medical directives, deeds, licenses, and pension and retirement-plan documents.
In another group, include items you probably will never need but might want to archive, such as old tax returns, brokerage statements and records of when you established individual retirement accounts.
This is a good time to purge old checks, mutual-fund statements, mortgages for homes you no longer own and bank, credit-card and brokerage statements.
Make copies. The most practical way to duplicate files nowadays is to scan them. It takes little more time than making photocopies, and will save you from ever needing to make or mail a copy again. If you can’t scan it yourself, ask your accountant, lawyer and financial advisers to send you scanned copies of your documents, or hire a scanning service.
You don’t need to scan or copy things like bank and credit-card statements, which are generally available online for five years. But it is critical to make a list of all such accounts, as well as email, photo-sharing and other online accounts. Include account numbers, user names and passwords.
Store electronically. Having duplicates and backups won’t do you much good if you keep them all on a desktop computer and your home burns down. Documents in safe-deposit boxes could be inaccessible after a tornado or flood, or if you are stricken with a serious illness while traveling.
That is why online storage “in the cloud”—on a remote server—is crucial. Such services work pretty much the same way.
With Dropbox, for example, you download the program, and then drag your files into the Dropbox “file” on your computer. Files are copied automatically and changes are synchronized with changes you make on your home computer, tablet, smartphone or other devices. You can access your files from anywhere in the world, and share access with trusted advisers and family members. Other cloud-storage platforms include Microsoft’s MSFT +2.65%SkyDrive, Google’s GOOG +1.06%Google Drive and Apple’s AAPL +1.01%iCloud.
Storage is free up to a specified size limit for all these sites. If you need more storage space, you can purchase upgrades for generally a few dollars a year.
Store securely. Wary of entrusting sensitive documents to a cloud-storage site? Relax. Chances are you are doing exactly the same thing already.
When you compose a Google or Yahoo email on the Web, you are creating a file on a remote server. That email you sent your accountant with your tax return attached? It is on a remote server. In the cloud.
You can enhance security by encrypting your own files before downloading, using commercial or open-source software, or by putting a password on individual PDF or Word documents.
A new option aimed at the more cautious is VaultWorthy, a cloud-based storage platform that uses 256-bit AES encryption and other security features. Users can upload as many as 50 documents to their VaultWorthy account and provide access to up to five designated “trustees.”
At $12.95 a month, it is costlier than other cloud-storage platforms, and it stores far less. VaultWorthy’s founders say it is intended to be an online safe-deposit vault, not an online garage. On the plus side, users don’t need to encrypt files separately, and it is easy to use.
That is something my great-uncle Creighton, who also survived the 1906 San Francisco earthquake and fire, would have appreciated.