While no one expects emergencies, many people still find themselves facing unexpected or catastrophic events.
Having the proper financial documents and information in place can be a huge help to your family in the event of your death or could even help you navigate the aftermath of a disaster you survive.
“It’s an act of love; you’re helping your family,” said Jim Shagawat, a certified financial planner and partner advisor at AdvicePeriod in Bergen County, New Jersey.
Here’s what financial advisors recommend having in place to make your finances as disaster-proof as possible.
Key documents for all adults
There are a few important documents that experts recommend all adults have in place, regardless of their age or wealth.
Health-care directive: A health-care directive allows you to specify what kind of medical treatment you would like to have if you are not in a state to give consent. You may also want to have a medical power of attorney, which means you can appoint someone to make health decisions for you if you’re unable.
“It covers the kind of worst-case scenarios that none of us really likes to think about,” said Bruce Colin, a CFP and president of Bruce Colin and Company, an independent wealth management firm in Rancho Palo Verdes, California.
A health-care directive is generally simple to fill out and may vary by state. If you move to another state, you should check with an attorney to see if you need to update this document or get a new one.
Durable power of attorney: A durable power of attorney applies to your property and finances. This document allows you to designate someone to take care of your money and other assets if you cannot. For example, if you’re in a coma, it would give your appointed person the ability to pay your bills.
You should check if the financial institutions you work with have their own process for naming people who can access your account in an emergency, said Colin. Some banks won’t recognize a power of attorney and have their own forms that need to be filled out, he said.
Once you have your document drawn up, go to your bank and ask if it will be accepted, said Colin. If it’s not satisfactory, you can fill out the correct paperwork right away.
Last will and testament: Having a will is especially important for people who have assets they want to pass along. It is also where you can spell out things such as funeral arrangements so that your family doesn’t have to wonder what you’d like while they are grieving.
“It is really hard to think clearly when you’re grieving, and funerals are not inexpensive,” said Patti Black, CFP, a partner at Bridgeworth Wealth Management in Birmingham, Alabama. Specifying your wishes, and even prepaying for what arrangements you’d like, can be a huge help to your family, she said.
Once you have a will, make sure you update it every five years, or when you have a major life change, said Shagawat at AdvicePeriod.
Other important documents
In addition to your health-care directive, durable power of attorney and will, there are a few other items advisors recommend you have securely stored.
This includes your Social Security card and birth certificate, passport, a copy of your driver’s license, statements for any investment accounts, statements for debts such as a mortgage, insurance policies and a recent income tax return. These documents, in addition to estate planning, can be helpful for your family in the event of your death or if you become incapacitated.
You may also want to include a list of tangible personal property such as jewelry or cars as well as a list of your digital assets — social accounts, pictures online, and more — to go with estate planning documents.
Because these documents contain sensitive information, they should be stored in a safe and secure place that’s known only to the people that would need access. This could be a safety deposit box in a bank — although that can be a hassle to access — or a safe or fireproof box in your home, according to Shagawat.
You can also securely store digital copies on many online platforms, which can be helpful if the physical copies are lost or stolen. Many advisors have online vaults for such important information and will help you make sure your documents are up to date.
For online accounts, advisors recommend using a password keeper such as LastPass or Dashlane. These services help you keep track of your passwords securely and let you name a beneficiary of sorts — someone who can access your accounts if you die.
Of course, everyone will need to come up with a personal plan of how to best store and notify your family of these documents.
“There’s nothing foolproof about any of this,” said Black, adding that each person and family should discuss the best way to keep track of their information in addition to having documents in place.
What to do if you lose important financial information
If you’re in an emergency where you lose these documents or other important financial information such as your credit and debit card, it’s also good to have a plan of action in place.
For things such as credit cards, debit cards or certain memberships, you can contact the company and notify them of missing cards and ask for new ones with new account numbers, said Shagawat.
You can also call credit reporting companies to place a fraud alert on your name and Social Security number and call your state agency to place a lost or stolen alert on your profile if you lost your driver’s license. This can help protect you from fraud or having your identity stolen, Shagawat said.
Shagawat also recommends keeping a list of important phone numbers such as your bank or credit card companies in your phone, which you’d hopefully still be able to access following an emergency. You should also have saved the names and numbers for any financial professionals you work with such as a lawyer, accountant, insurance professional or financial advisor, as they can also assist if you need help.
While it isn’t necessarily a fun exercise, taking the time to have a plan and the information you need can save you and your family from extra hardship later.
“It’s just as important as having water, food, the flashlights and all those extra batteries,” said Shagawat.
