This April our theme for our Estate Planning is more than Wills Facebook group is sort your filing - sorting out your filing system and your perpetual calendar in daily, five minute chunks. I will endeavour to keep each daily task restricted to something that you can get done so this helps you to feel accomplished, rather than adding to your lengthy to do or #lifeadmin list.

Day 1 - Choose your filing system

Before you think, that’s not a task, what I am asking you to do is choose one filing system (instead of the four different ones you probably have currently) and start using only that system from today. The main problem with most people’s systems is that it isn’t a system at all, it is a mish-mash of habits that have sprung up without any real planning or thought.

You need a proper filing system because (a) the permission to help you is useless unless someone can help you, and (b) you need a good reminder system for things like superannuation declarations and driver license renewals.

You need a system to store your documents, passwords and other information. Currently, I am guessing that these documents are strewn across different places within your house, or different places between your house and your work, as well as some of the information only residing inside your head.

Sort your filing - April theme - physical or digital.png — Physical or digital?

You can have a physical or digital system. The advantage of a digital system is it is harder to lose, and it is easier to share with people who should have access to your information. However, some people don’t want a digital system, so I will some advantages and disadvantages of both systems here.

Both can be done very well, and both can be done very poorly in a way that makes identity theft easy or makes it unnecessarily difficult for your loved ones to help you. You may think a physical system makes it harder to steal your identity, in a sense you would be correct but in a sense not. I am going to make a bold statement here, a good digital system is safer than a physical system.

Risks of a physical system

Some examples of things that can go wrong with a physical system is a visitor to your house could steal it, or take photos of the key parts with their phone. If someone breaks into your house and knows what they are doing they could steal it, and on your death, your identity might get stolen if your documents are not in an obvious place for your Executor to safely dispose of. What often happens on your death is a lot of stuff gets tossed in the yellow bin, and stealing the identity of a dead person and pretending they are alive is a common ruse.

Certain identity criminals know that an Estate is an easy option, there is an announcement in the paper so they start searching around for information and if they can find your address then they can start going through your bins (such as your recycling bin) to get enough documents to successfully apply for credit in your name. The only way someone (say a bank) knows you are dead is if they see a death certificate, there is no reason for the credit agency would know you are dead. This can cause a lot of issues for your Estate.

As an Estate lawyer, I get emails every year from people who are looking to get in quickly with Executors and make a low offer on the house. Of course, they don’t say that, they say you will save money because you won’t pay for a real estate agent and I can give you cash quickly, that sort of thing. The information that they already have about the Estate in those emails is a little scary. Believe me, people are reading those announcements and then researching estates online for purposes other than finding out where your loved one’s funeral is.

Risks of a digital system

The primary risk of a digital system is that you will set a poor password, or you will have it open on a device (say your phone) that is not password protected. This means that if someone steals your phone or laptop, you have also accidentally given them your entire filing system. It isn’t difficult to set a great password on all of these devices and make this the safest system, but you have to be willing to only open the filing system on devices that are password protected.

If you have a digital system you will need a very limited physical system for some documents that the government or other agencies still require you to keep a physical copy of, documents like birth certificates and passports. The risk is that you start dumping things into the physical system thinking “I will do it later”. If you are going to have a digital system you need to be firm with yourself about these physical documents and not use it as a backup.

Advantages of either system

Whether a physical or digital system is best for you will turn mostly upon how you receive your information. Are you receiving most of your information electronically or by mail? Do you have a smartphone so that you can download a free document scanning app and quickly convert any printed paper documents? Do you like having a physical paper system, does it make you feel more accomplished to deal with your #lifeadmin tasks that way? The primary goal for all of this is setting a system, one system, that you will use from now on. So actually the question of advantages is a very personal one, which system will work best for you?

Don’t do both

I would strongly advise against having both a physical and a digital system. You don’t want to have to search through both every time you need something, your loved ones will struggle to find things, and it doubles your risk of identity theft. Additionally I can tell you that if you have more than one, you probably have more than two systems. You probably have a handful of different systems. This means that none of the systems are complete, and when you are stressed and need a document urgently you will waste time or, worse still, you won’t be able to put your hand on it.

You need to make a commitment. Choose one and commit to it moving forward.

Your perpetual calendar

Tomorrow we are going to look at setting up a perpetual calendar system, you might like to have the same for both (physical or digital for both your calendar and your filing system) but actually, there is no reason that you need to have the same system for both. You will use both of these for different purposes, so you should choose the system that will fit in with your purposes even if that means having different platforms for these two things. The biggest problem with almost all filing systems is user error, you are the user, only you know which system you are most likely to use properly.