Contributed by Rosie Cisneros
You may need to rebuild your financial life someday. Natural disasters such as tornados and earthquakes can cause widespread destruction and put entire cities and businesses out of commission in the blink of an eye. Even more commonplace disasters, such as house fires, can be devastating if you don’t have copies of your important documents and data in one safe place. Just imagine trying to file an insurance claim or your taxes, if your computer, your home and all of your documents have been obliterated.
Disaster preparation expert, Michael Emmerman, advises creating a “red file” that can be sealed in an envelope and mailed to a relative, friend or professional fiduciary. In that file, you’d include copies of everything you or your heirs would need to rebuild your financial life. Emmerman says that in the past, it was recommended to keep your “red file” at work. That was before a World Trade Center tower fell nearly on top of him while he was helping coordinate the emergency response at its base. The incredible devastation of that day — and the troubles faced by people and the businesses that didn’t have adequate and remote record backups — convinced Emmerman that we need to do more.
Emmerman now recommends you put your red file into a larger envelope, and overnight the package to the person you’ve entrusted with its safe-keeping. Instruct the recipient to leave the inner envelope sealed and to send it back, on request, if a disaster should wipe out your originals. Just remember to pick someone whom you trust and who lives away from your area. Otherwise, the same disaster could wipe out those copies as well. While no one wants to contemplate a disaster, taking time to create a “red file” will make the process of reconstructing your financial life easier, in case disaster actually strikes.
Creating a “red file” Include copies of all documents and data you or your heirs would need to rebuild your financial life, such as:
- Birth, death and marriage certificates
- Identification (driver’s license, passport)
- House deeds, mortgage, home equity notes
- Car title, lease or loan information
- Insurance policies and agent contact info
- Credit and debit cards (front and back)
- A household inventory
- Tax returns for the past three years
- The location of wills and trusts, as well as contact info for executors, trustees and guardians
- A list of your financial advisers
- A list of user IDs and passwords for online financial accounts
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