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While no one expects emergencies, many people still face unexpected or catastrophic events.
Having the right financial documents and information in place can be a huge help to your family in the event of your death or 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 associate counselor with AdvicePeriod in Bergen County, New Jersey.
Here’s what financial advisors recommend having so your finances are as protected as possible from disasters.
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Key documents for all adults
There are some important documents that experts recommend all adults have in place, regardless of age or wealth.
Health Care Directive: A health care directive allows you to specify what type of medical treatment you would like to have if you are unable to 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 are unable to do so.
“It covers the worst case scenarios that none of us like to think about,” said Bruce Colin, CFP and president of Bruce Colin and Company, an independent wealth management firm in Rancho Palo Verdes, California.
A health care directive is generally easy to complete and can vary by state. If you move to another state, you should consult 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 name someone to take care of your money and other assets if you are unable to do so. For example, if you are in a coma, it would give the designated person the ability to pay your bills.
You should check to see if the financial institutions you work with have their own process for naming people who can access your account in an emergency, Colin said. Some banks won’t recognize a power of attorney and have their own forms that must be filled out, he said.
Once you have your document drawn up, go to your bank and ask if they will accept it, Colin said. If it is not satisfactory, you can complete the correct paperwork immediately.
Last will and testament: Having a will is especially important for people who have assets they want to pass on. It’s also where you can itemize things like funeral arrangements so your family doesn’t have to wonder what you’d like while you’re grieving.
“It’s really hard to think straight when you’re grieving and funerals aren’t cheap,” said Patti Black, CFP, a partner at Bridgeworth Wealth Management in Birmingham, Alabama. Specifying her wishes, and even prepaying for the arrangements she wants, can go a long way for her family, she said.
Once you have a will, be sure to update it every five years, or whenever you have a major life change, Shagawat told AdvicePeriod.
Other important documents
In addition to your health care directive, durable power of attorney, and will, there are a few other items that counselors recommend you keep safe.
This includes your Social Security card and birth certificate, passport, a copy of your driver’s license, statements from any investments, statements of debts such as a mortgage, insurance policies, and a recent income tax return. These documents, in addition to estate planning, can be helpful to your family in the event of your death or disability.
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, online pictures, and more) to accompany your estate planning documents.
Because these documents contain sensitive information, they should be stored in a safe and secure location known only to those who need access. This could be a safe deposit box at a bank, though it can be difficult 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 physical copies are lost or stolen. Many advisors have online vaults for that important information and will help make sure your documents are up to date.
For online accounts, advisors recommend using a password manager like LastPass or Dashlane. These services help you keep track of your passwords securely and allow you to name a kind of beneficiary, someone who can access your accounts if you die.
Of course, everyone will need to come up with a personal plan for how best to store and notify their family of these documents.
“There is nothing foolproof about any of this,” Black said, adding that each person and family should discuss the best way to keep track of their information other than having the documents in place.
What to do if you lose important financial information
If you find yourself in an emergency where you lose these documents or other important financial information, like your credit and debit cards, it’s also good to have a plan of action.
For things like credit cards, debit cards or certain memberships, you can contact the company and notify them of missing cards and request new ones with new account numbers, Shagawat said.
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’ve lost your driver’s license. This can help protect you from fraud or identity theft, Shagawat said.
Shagawat also recommends keeping a list of important phone numbers, like your bank or credit card companies, on your phone, which hopefully you can still access after an emergency. You should also have saved the names and numbers of any financial professionals you work with, such as a lawyer, accountant, insurance professional, or financial advisor, as they can also help if you need help.
While it’s not necessarily a fun exercise, taking the time to have a plan and the information you need can save you and your family from additional difficulties later on.
“It’s just as important as having water, food, flashlights and all those extra batteries,” Shagawat said.
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