What if Disaster Strikes?

It’s been unusual weather so far this summer in Colorado. During the ten years that I’ve lived in my little town for ten years and we’ve never had any natural disaster even tease us. However our town board decided this past winter to invest in emergency sirens. Sure enough we’ve had a real need to use them already. There wasn’t much controversy over the emergency system purchase, except I wonder what took so long?

What about you, are you prepared for an emergency? Of course you should have an emergency fund; I’m not really talking about that today. But, what about an emergency plan? If something happened to you or your home, what would happen to your finances?

You probably heard about the woman who went searching the dumpsters to reclaim her mother’s emergency system. The mother’s backup plan in case of financial emergency was a mattress. The problem was the mother never told anyone, so it was mistakenly thrown away.

Okay, so you might have a will, maybe even a living will, but how many people know where it is and how to access it?

What about other important documents such as birth certificates, banking information, etc? Again, where are they and who knows about them?

When thinking about your personal disaster plan think like a business. Smart businesses know that redundancy is essential to successful disaster planning. For yourself consider having a master document or book that lists everything and is stored in your home, plus a duplicate stored in a separate secure location, such as a safe deposit box.

Your master document should:

1. Tell a reader where to find your important document,


2. Include account information such as numbers and passwords, and


3. List all important contacts such as lawyers, accountants, etc.

The duplicate of your master document should, ideally, be stored separately from other items. Keeping it stored in your safe deposit box along with your financial documents isn’t a good idea since it won’t help someone who doesn’t know that you have a safe deposit box. You’ll want to keep the copy either filed with a lawyer or someone else that you trust.

No one ever likes to talk about death and disaster, but you never know when something might hit. If you have an emergency plan, even if you never have to use it, it will give you great peace of mind. In addition, having this system in place will help you organize all those tedious bits of information.

Two last tips:

1. Make it a habit to update all copies of the master document annually. You are sure to add or subtract documents, or change account numbers and passwords.


2. If your document is digital be sure to upgrade technology as the years pass.
   

A short list of items for your master document (just list where they are located):

birth certificates
adoption papers
custody agreements
divorce agreements
military papers
lease documentation
passports
real estate deeds
pre-nupital agreements
marriage licenses
wills
trusts
living wills
contracts
powers of attorney documents
other contracts
insurance policies

Should you have a safe deposit box?

photo by Mayitabel Retouche

Sometimes I live in the land of make believe. I "believe" that I've got everything under control. What usually happens when you live in a fantasy is that something rudely awakens you. This time I'm waking myself up before that rude awakener comes along.

Last night I was clearing out my electronic reading. That's stuff like my Google reader feeds and emails that I've saved for later reading. I came across an article about safe deposit boxes. I almost clicked delete thinking that I knew everything about them. But I read it anyway and it got me thinking...

When I used to work at a credit union safe deposit boxes were a hot commodity. You literally had to wait for someone to die to get a box. I'm not that patient so we've always had a fire proof box for important papers. Honestly, I couldn't understand why anyone would pay between $30-$75/month for a box at the credit union or bank. Well after reading a small blurb I did some Internet searching and discovered that my cheap little fire proof box is just a false sense of security.

Safe deposit box vs. Home box

Safe deposit boxes are kept in a bank or credit union's vault. The companies that manufacture safe deposit boxes and the vaults that house the boxes make them highly "resistant" to fire, flood, heat, earthquakes, hurricanes, explosions or other disastrous conditions. However, the key word here is "resistant." There's no 100 percent guarantee against damage, and substantial losses sometimes occur.

Home boxes vary in their resistance.

• Theft: A thief might pick up the entire box and carry it away to pry open later.


• Fire: Though manufactured to resist high heat, the box should be kept where it is least likely to succumb to fire/heat. The best places are lodged in cement, like in your basement or garage floor or walls.


• Earthquake, flood and other disasters: Many boxes are designed to endure one or two dangers not multiple like say a fire and a flood.

Safe deposit boxes are not covered by deposit insurance. The FDIC and NCUA do not provide insurance for the items in your safe deposit box. Your home owner's insurance also does not cover your safe deposit box. You can insure these items, however, you'll need to discuss that with your insurance agent.

Home boxes are covered by your home owner's policy since they reside in your home.

Be careful about what you put into a safe deposit box. Do not place your original will in a safety deposit box. State vary on laws regarding who can access the box. In Colorado, if you should die only a named beneficiary may open the box upon your death. (Unless the State has reason to access.)

Also don't put in documents that you need to access frequently or in a moments notice, since you'll have to wait until the credit union or bank is open for access.

At least one article that I read on this topic claimed that a safe deposit box is cheaper than a good home box in the long run. I still don't know about that. But I do know that the little box I keep in my home office isn't worth a dang.