Note: For help accomplishing the things discussed in this article, you might be interested in my book and organization kit If Something Happens to Me.
It’s been a rough couple of months in the U.S. Devastating hurricanes. Wildfires. Nuclear tensions with North Korea. Charlottesville. Las Vegas. It’s all a vivid reminder that life is uncertain. Have you ever wondered what you would do if you suddenly became the victim of a natural disaster, terrorist attack or other unexpected event like a fire or earthquake? Would you know what to grab if you only had seconds to escape your house? Would your loved ones know what to do if they had to step in and manage your affairs? A little planning now can make a big difference later. Here are 5 key actions you can take to prepare for the unexpected.
Meet with Your Advisers: Having 6 feet of water in your living room is not the time to discover that you don’t have flood insurance. The emergency room is not the place to learn that you need a medical power of attorney. Your funeral is not the ideal time for your spouse to discover that you didn’t have adequate life insurance. Schedule meetings with each of your advisers and let them know that you are trying to disaster-proof your affairs. Ask them to help fill any gaps that exist in your current planning.
Prepare a Grab-and-Go Case: You should organize all your important legal, financial, and insurance paperwork into a file that you can grab quickly if you need to flee your house or your city. Consider including birth certificates, estate planning documents, financial statements, insurance policies (homeowner’s, auto, life, health), Social Security cards, contact information for all of your advisers (program it into your cell phone as well), a list of prescriptions you take, a copy of your driver’s license and some emergency cash. I’ll include a more comprehensive list at the end of this article.
Keep in mind that you may not be able to escape with your important paperwork. Many fires, for example, happen while the homeowners are away. To protect yourself, store backup copies of important documents in a safe-deposit box or with a trusted friend, relative, or adviser. As a general rule, don’t keep anything in your safe deposit box that you may need in an emergency, such as a power of attorney, because boxes are not usually accessible 24-7 and may be sealed temporarily after the box owner dies. It’s a good idea to keep copies in the box, but have readily accessible copies as well.
Prepare a Household Inventory: Recent hurricanes destroyed thousands of homes. Most homeowners will not be able to remember everything that was in their home when filing insurance claims. A simple household inventory listing your home’s contents, or a video walk through of your home, will help avoid this problem. Just remember to store the inventory somewhere other than your home.
Write a letter of instruction: Your will and powers of attorney are formal legal documents designed to put certain people in charge and give them instructions for handling your affairs. There are plenty of things those documents don’t cover, however. For those things, you should write an informal letter of instruction to your spouse or other heirs. The letter can contain things like your funeral preferences, passwords, a “To-do” list, recommendations on how to invest life insurance proceeds, how to disperse certain personal property or heirlooms not accounted for in the will, what to do with pets, or any other explanations or instructions that would help ease the transition through an obviously difficult time. It’s an informal document, so add anything you think might be helpful and periodically update it so it stays current.
Update Your Plan Annually: Change is the one constant in life. Make sure to review your affairs at least annually in order to make necessary updates. Some questions to ask include: 1) Has your marital status changed? 2) Has the value of your assets changed significantly? 3) Have you made any changes to your insurance policies? 4) Have you changed jobs? If you answer “yes” to any of those questions, you should meet with your advisors to update your planning.
Life can change suddenly. By investing a small amount of time and energy into organizing your affairs, you can gain the peace of mind and protection that comes from being prepared.
Document Storage Checklist
- Contact list
- List of checking/savings account numbers
- List of credit card numbers
- Recent statements for all investment accounts
- Insurance policies (life, homeowner’s, renter’s, auto, etc.)
- Will and/or trust documents
- Durable power of attorney for health care
- Durable power of attorney for finance
- Social Security cards
- Copies of birth and marriage certificates
- Passports and copies of driver’s license
- Computer and online user names and passwords
- Safe combination
- Safe deposit box keys
- List of prescriptions you take
- Emergency cash
Safe Deposit Box
- Copies of will or estate plan
- Copies of your powers of attorney
- A list of your insurance policies
- A list of your financial account numbers
- Originals of birth and marriage certificates
- Adoption papers
- Citizenship records
- Military service records
- Vehicle titles
- Real estate deeds
- Mortgage paperwork
- Loan agreements
- Stock and bond certificates
- Certificates of deposit
- Precious metals
- Valuable collectables
- Photographs, video and/or a written inventor of your home’s contents
With a Friend, Relative or Trusted Adviser
- Paper or digital copies of the documents in your grab and go case
- Contact information for you (email, cell phone, etc.)
- Instructions on keeping the data secure
- Contact list for your advisers and heirs should something happen to you.