General
Organize Finances to be Prepared for Emergency
Generally, after large-scale disasters like the Loma Prieta earthquake, the events of September 11, 2001, or hurricane Katrina, our minds turn to preparing a disaster plan for our own and our family's safety. Often, however, such plans inadvertently overlook our finances. Developing a full-scale emergency plan should include getting your financial life in order and developing a plan for your finances in all types of emergency.
Initially, the thought of such a plan may be overwhelming. Many people do not know where to start in developing an emergency plan for their finances. This article is designed to provide you with a good start. A plan like this will need to take many forms and cover the possibility of many different scenarios. You'll want to be sure that you plan for the possibility of not only something happening to you, but also to your entire family.
First and foremost, you need to develop and maintain a master list of your financial affairs. Initial development of this list can be time consuming, as you will need to gather a lot of data, but a master list of this kind would prove invaluable to those handling your affairs in a time of need. Begin with details of all of your accounts, including the name on the account, the account number, the location of the account (e.g., Bank of the West or Fidelity Investments), and the location of paperwork associated with the account. A general idea of the balance of each account might also be helpful. Be comprehensive. Include retirement accounts, pensions, stock options, and the like, as well as taxable accounts. Also be sure to include contact information for any financial professional with whom you work.
Add to your list any other assets you have and their locations. These may include real estate, savings bonds, stock certificates, cars, jewelry, art work, coins, boats, and the like. Include the location of any deeds and titles you possess for those assets.
Along with assets, it would be a good idea to include on your list a summary of any loans you have outstanding. Be sure to detail loan numbers, lending institutions, interest rates, outstanding balances as of a specific date, monthly payments being made, and approximate dates during the month (or year) when each payment is due.
Next, be sure to include the details of any insurance policies held. For all types of policies, list the company with which the insurance is held (including contact information), the policy number, and the location of the policy. For life insurance, list the owner (who may be someone other than the insured), the death benefit, and any cash value in the policy. For disability insurance, give the amount of monthly income provided by the policy. Do the same for long-term care insurance.
Your list should also detail the location of any estate-planning documents such as wills and trusts. Provide contact information for the estate-planning professional that helped you to develop these documents, if applicable. You should have an Advanced Healthcare Directive in place, and your list should specify the location of this document as well (if you do not have an Advanced Healthcare Directive in place, execute one as soon as possible).
Make sure that every member of your immediate family knows where to locate this master list. If this list is locked in a safe deposit box or the like, be sure that everyone knows the location of the key. Also, provide a copy of this list to someone outside of your immediate family (or tell them where they could locate this list in an emergency situation) in case there is an accident that involves your entire family. It is especially important that you provide a copy of this list (or provide the location of the list) to the person designated to act under your durable power of attorney for finances. (If you do not have a durable power of attorney for finances, be sure to take that step as soon as possible).
In addition to the master list you create, you should maintain a home inventory. Generally this is used for insurance purposes. A good, easy way to create the inventory is to use a video camera. If possible, include any serial numbers, especially for expensive electronic items. Be sure to record an estimate of value. Keep this list or recording in a safe place, such as a safe deposit box or a fire safe box. Also be sure to keep this list updated in the future, especially if you make any large purchases.
If you don't already have one, consider renting a safe deposit box to securely remove important documents from your home. This step ensures that all of your important documents will remain safe should damage occur to your home. Additionally, a fire safe box can be utilized at home.
Finally, keep a fair amount of cash on hand. Denominations of $20 or lower are generally best. In an emergency, ATMs and credit card terminals may not be functioning, and having ready cash would be helpful.