Fire, Flood, Or Tornado

I first started thinking about the value of protecting important records when my sister's neighborhood was hit with an F5 tornado. The houses I had grown up around were decimated -- in some places, there was nothing left but the foundation. Fortunately, there were very few casualties, but think about how difficult it would be to rebuild your life without the right paperwork. How long would it take you to file a claim with your insurance company, if you didn't know your policy number? What financial challenges would you face if your checks, bank statements, and credit card info was destroyed? How could you get the help you needed without birth certificates, social security cards, and other personal information?

The goal here is not to be pessimistic, but prepared. You should keep a list of all your important numbers (bank account, credit card, insurance policies, social security) and contacts (advisors, account managers, customer service) for any information that you would need if disaster struck. You should also consider storing the originals of your vital records (birth certificates, wills, insurance policies) and your list someplace safe. That means a deposit box at the bank, a locked drawer at your place of employment, your mother's house, or a fire safe in your closet -- then keep copies in your everyday files for quick reference. It's also a good idea to leave copies of this information with your attorney and CPA -- the two professionals who will be most involved with your situation if you do face a major emergency.

If You Have To File A Claim

Another important piece of paperwork to consider during an emergency is your household inventory. If your personal possessions are damaged or destroyed, the insurance company isn't just going to write you a check for the amount printed on your policy (so don't try to claim a million dollars in coverage for $250,000 worth of stuff!) You will be asked to itemize everything that you lost and estimate its value. If you had to, right now, could you make a list of all your belongings and how much they are worth? Probably not. And it would be even more difficult during a time of crisis when you are stressed out and not thinking straight. So the key is to get things in order before you are put into that situation.

You have several different options for creating a household inventory. The easiest technique to walk around your house with a camcorder, filming everything that you own. Where you can,  go ahead and make comments about your belongings as you shoot -- "We bought that TV last year and it cost $600," or "Grandma Miller gave us that table; it was made in 1865." If you don't have a video camera, just take still snapshots of each item. Don't forget to estimate the year of purchase and the value of each piece. If you have the receipt, make a copy and clip it to your list. If an item is particularly costly or hard to replace (like artwork or an antique), you may wish to have an certified appraisal done and include that documentation with your list. Your household inventory should be stored with your other important papers, but don't just stick it away and forget about it like you would a marriage license or deed to the house. You need to plan a time each year to update your list -- adding on any new items you have acquired since the last inventory.

Making It Easy On Your Heirs

No one likes to think about death, but it is a fact of life. Grief is hard enough to handle, without having to deal with confusion over the deceased's paperwork and final wishes. You can make things easier on your loved ones by getting your affairs in order now. Start by creating a document locator -- a list outlining exactly where all of your important papers are stored. If you've got them in a box at the bank, you may want to rethink that strategy -- safe deposit boxes are often sealed at the time of death, so keep your funeral arrangements and wills someplace more accessible. And don't forget paperwork that is kept in off-site storage. Your family will need to know the location of the following records:

• legal (wills, powers of attorney, trust documents, special bequests, safe combination)

• family (birth/adoption/guardian, social security, citizenship, marriage/divorce, military)

• banking (trusts, loans, list of accounts, statements/cancelled checks, check/passbooks)

• investments (CD, securities, stock/bond/mutual fund, retirement plan, IRA, annuities)

• business (incorporation papers, contracts/agreements, computer back-up)

• deeds/titles/registrations (title insurance, property, home inventory, vehicles)

• insurance (life, other death benefits, property and casualty, health, homeowners, auto)

• funeral instructions (burial instructions, cemetery plot deeds)

• contacts (friends/relatives/business, attorney, CPA, insurance, broker, executor)
  

Indicate the precise location of each -- in a bankers box labeled "vital documents" in the attic at your house, in the third drawer of the big file cabinet in the corner of your office, in a safe deposit box at such-and-such bank (and where to find the key), with your attorney, accountant, or brokerage house. Be sure to include the address, directions, and any other important contact information.

Memories Count As Vital Records Too

Everything we've talked about so far related to legal or financial records. But what about your memorabilia? It's just as devastating (if not more so) to lose years worth of photographs and love letters as it is to have your important files destroyed. But you can take some preventative measures to protect your beloved memories, as well. If you are computer savvy, think about scanning your photos and storing them on a CD-Rom or external hard drive (which should live in your fire safe or bank deposit box). If you don't have access to that kind of technology, at least store your negatives (clearly labeled and organized chronologically or categorically) in a safe location, so you can have your photos reprinted if you need to.

You can also do the same thing with physical objects that have sentimental value. Take photos of your most beloved possessions and stash them all away in your fire safe.  If you have a lot of "treasures" that need protecting, you might even consider getting a unit big enough to hold your most important memorabilia. I purchased a fire safe that looks like a 2-drawer file cabinet -- the top drawer holds my photo albums and "keepsakes," the bottom drawer is for important paperwork. Just remember that photos and negatives are more sensitive to heat than paper -- you will want a different grade of "fire proof" for these items to keep them from melting.

Facing a personal crisis is stressful enough, without the headaches of dealing with lost paperwork and missing information. But by taking a proactive stance, and a few preventative measures, you can save yourself and your loved ones a great deal of pain -- make the recovery process a lot quicker and easier.