Setting Up A Love Drawer

Still looking for that perfect Valentine's Day gift? Presents like candy, flowers or jewelry are always nice — but financial author and radio host Dave Ramsey tells The Early Show co-anchor Rene Syler that a real gift of love can be giving your family peace of mind in case something happens to you.

Ramsey has come up with a concept he calls the "love drawer." It's a place where you keep together important documents, such as wills, insurance and financial information.

"It's an ideal Valentine's Day gift if you're smart enough to put chocolates and roses with it," Ramsey jokes. "It's an ideal gift. When you're a real man, a real woman, the way you say 'I love you' to your family is you're prepared. You've got your act together if something happens to you.

"I lost a good friend this year under 30 years old with brain cancer. He left his wife. Three days later, she had their son. They had their whole life planned out. Financially, it was all together — and in the middle of this horribly devastating situation, all this grief, there's a smile, because he said 'I love you' in a whole different way," Ramsay explains.

Ramsey says the having key documents in one place gave his friend's widow some comfort.

The first thing you should put in your love drawer is a will. Ramsey says 78 percent of Americans die without one.

"That is stupid," Ramsey says, "because you can get a will online at something like uslegalforms.com. You can go to these Web sites and get online wills that are state-specific, that are easy to do. Even if you don't have money, you got somebody you care about, you probably got a kid, and you want the state to not manage that. You want to tell folks what to do with your stuff, and that's just wise."

The will needs to be notarized, and Ramsey says you should make sure it is state-specific.

You should also keep an estate plan in your love drawer.

"It is pretty much for the wealthy in the sense if you have over $1 million in assets, you've got to have some other things you're doing to keep the government's hands off the money in the process," Ramsey says. "Of course, the first element of the big estate plan is the will. There may be trusts, some other things built into that. That's not for everybody. It is something you kind of need to think through."

Since the will and estate plan go hand in hand, Ramsey says it's OK to keep them in the same folder.

You should create another folder in your love drawer for funeral instructions.

"We don't like doing wills and this stuff. One guy said, 'I don't want to do a will. I might die.' Dude, you're gonna die," Ramsey says. "This could be as simple as 'I don't want the Mercedes casket; I like the Chevy casket. Don't spend $9 million to put me in the ground.' And you leave instructions and directions. Some people even pre-plan their funeral in detail.

"I would not pre-pay," Ramsey says. "I would invest instead and led the investments cover it."

The next folder should hold your investment documents.

"You put everything you've got in there. The house file, stocks, bonds, mutual funds, your Roth IRA, 401(k) at work, your kid's college funds, and mutual fund statements go in there," Ramsey says. "The whole point is you can reach to one place when something happens and it's all taken care of and it's easy. It's not, 'I wonder where Uncle Harry buried the mutual fund statement in the backyard. No, we've got a game plan. It's all right here together and makes the whole process so much easier.

"My wife, Sharon, is a very bright lady, but she's not a financial geek like me. So, it's all laid out there. I'm a nerd. There's a little outline on each file. The way I look at it, that's diligence. And again, it's a way I tell my family I care about them."

The next folder to add, Ramsey says, is the insurance folder.

"Of course, that's all the different kinds of insurance," he says. "Your health insurance policies are in there, disability policies are in there. Life insurance. And you should have about eight to 10 times your income on you for life insurance if your family is dependent upon your income. If you make like $40,000 a year, you ought to have $400,000 in life insurance. If you die, your spouse can take that $400,000 and invest it. At 10 percent, it re-creates $40,000 a year worth of income."

The last thing is a safe deposit box.

"You keep a copy of the will in the deposit box and keep the key. In so many states and places, you can't get into a safe deposit box when someone passes away. It's a good place to keep duplicates of things and other things too," Ramsey says.

"Sometimes people keep antique jewelry or something in there and there's a way to get to it later. Everything is organized. It's in one place and in the midst of one of the worst times you face," he adds.