Are You Ready for an “Information Emergency”?
Originally published 10-22-07 by:
Todd Washburn, CFP®
In a week or so Hurricane Season will be officially over. You remember that- the one that has left us wishing for a storm to hit. Soon we’ll be told to prepare for winter and possible ice storms and such. Hurricanes, ice storms and other such natural events are rightly called emergencies, and we’re encouraged to prepare for them. Some planning can take place well in advance (storing food, water, batteries) and some much nearer the event (gassing up the car, securing the house).
But natural disasters aren’t the only emergencies you should prepare for. There are other types that can equally impact your life. There are financial emergencies such as job loss or a major unexpected bill (big roof leak anyone?). There are personal/physical emergencies such as an incapacitating illness or even a sudden unexpected death. These can lead to what I consider another type of emergency- an information emergency. A situation where someone other than you needs critical information about you. It’s this situation that I want to speak a little about.
Imagine you and your spouse/partner are in an accident and both badly hurt. Your Powers of Attorney- financial and medical- are enacted. Other people are now responsible for running your life- from making treatment decisions to paying your bills. In my house those folks will be coming from other parts of the country. They’ve never lived here. We have no family here. So how will these folks step into their roles? Think about your own situation- would your brother or sister know what loans you have? How about credit card bills to be paid? Who in your company’s HR department really knows what’s going on? What doctors, vet, even babysitter (they’re caring for your kids too) do you trust? For the person taking over they have to step in and maintain a system someone else developed.
Now take it one step further. You don’t make it and your Executor (listed in your recent Will) has to shut everything down. All bills need to be paid. The house sold. The estate settled. Who drew up the Will? Where is it? What realtor should they use? Who can they trust for advice? This is where Emergency Preparedness on your part can be an amazing gift. You need to help them as best you can before you need them.
My wife and I maintain what we call an Executor Package. It’s a Word document we’ve assembled and update at least annually. We provide a copy to trusted people to hold until it’s needed. There’s info about us- birthdates, SSN, doctors, employers, etc. There’s info about my firm- advisers, regulators, etc. There’s info about our son- name, age, school, teacher, doctor, etc. We list our trusted advisors and their contact information. We provide account numbers and contact info for mortgage, credit cards, and any other investment/debt accounts. It lays out our life in NC.
This will take some time and effort. Especially the first time through. And you have to update it. I’m amazed every year by how much has changed from the year before. Accounts are opened/closed. New advisors or job changes. It’s just amazing. As I said, I’ve done this as a Word file. But I recently discovered what I think is a reasonable alternative to this. I think it’s worth a look. It’s not exactly like my file, but I think with minimal creativity it can handle all the information we’re talking about in a simple, organized fashion. AND IT’S FREE!!! T. Rowe Price, the large mutual fund company, has produced a CD called the “Family Records Organizer”. It walks you through the process of creating the document and allows you to store it as a file on your computer (more on this in a moment). You can order it via their website (www.troweprice.com/getorganized.com) or by phone (800-225-5132). Unfortunately it doesn’t work on Macs or with Vista.
Where to store this document/file? I’ve always been nervous about this. It’s a dangerous document in the wrong hands. I’ve always kept it stored on a disc away from the computer- not on the hard-drive. I figure it lessens the opportunity for a virus to send out the info or for someone who steals the computer to access it. Do remember though- your Executor or others will need it. I would suggest getting a copy of the disc, and the file you create, for each person who needs the info. Just ask them to put both in a secure place at their home. Then you can send them an updated file each year.
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