Build Your Personal Disaster Plan Today

July 18, 2022 ABA FEATURE

Author: Tazewell Shepard

I like to start my articles on a positive note. So wouldn’t it be great if we could all live in good health to 100 years or more?

We know that’s not realistic. Each of us faces a significant chance that our health will be limited by some disease or that we’ll die from an accident long before we reach 100. We senior lawyers are likely to be more aware of our physical limitations than young lawyers, who may feel like they could indeed live forever.

Many articles have noted that lawyers extol to their clients the advantages of having a will and a healthcare directive. Unfortunately, many of us never get around to executing these documents for ourselves.

And even less attention has been given to a third important document every lawyer should have—a personal disaster plan. As a result, few lawyers, whether young or senior, have a well-thought-out and documented plan.

I’m here to change that.

The Plan Defined

A personal disaster plan, which I’ll refer to as a plan in this article, is a set of instructions and information to guide someone who’ll act on your behalf while you’re incapacitated. I’ll call this person your surrogate. The plan will also be useful to your family if you die since it includes practical information a will typically doesn’t contain.

The word disaster may conjure images of hurricanes, floods, blizzards and earthquakes. The term personal disaster, as I’m using it here, can include such events but mostly refers to bad things that may happen to you as an individual, such as a car accident or cancer diagnosis.

It’s important that you attach to your plan a signed power of attorney for the person whom you expect to be your surrogate while you’re incapacitated. Depending on the laws of your state, the power of attorney may be vital for your trusted person to take care of your finances and to safeguard your property until you recover.

Some plans are more complicated than others, depending on the complexity of a person’s financial affairs. Here, we examine several important features of a plan; you can always add more features you deem appropriate for your situation.

Instructions—This section can be a very useful part of a plan because it gives you the opportunity to give practical advice to your surrogate that wouldn’t usually appear in other types of documents. You can specify where to find your important documents, such as your birth certificate and your Social Security card.

An example of a useful instruction would be, “Be sure to keep paying quarterly premiums on my life insurance because I couldn’t qualify for it if I had to start over.” An example of an unnecessary instruction would be, “Don’t forget to feed the cat.”

Your important contacts—Chances are you have a list of contacts in your phone or your head. Chances also are that your list wouldn’t be accessible to someone acting on your behalf or may be so incomplete that they won’t know what some entries mean. Consider the difference between these two entries for the same contact:

Bobby 800/123-4567
Bobby Jones 800/123-4567 Financial Advisor
Trust Advisors, 123 Irby Drive, Allenville, PA

I expect your list of important contacts looks like the first version. Now consider that you may have more than 100 such contacts. The person who acts on your behalf might have to make more than 100 calls to learn who each person is and what they do for you just to identify the 10 or 20 most important contacts.

To remove this burden from your surrogate when they act for you, your plan should contain a list of important contacts that look like the second version above.

It would be embarrassing to have useful information trapped on your computer when your surrogate doesn’t have the login information to access it.

Who should be in your list of important contacts?

Here’s a sample list to help you start thinking about it. Some will apply to you and some won’t.

  • Personal or family attorney
  • Personal or family physician
  • Medical specialist, such as cardiologist or oncologist
  • CPA
  • Banker
  • Stockbroker
  • Financial advisor
  • Life insurance agent
  • Health insurance agent
  • Property insurance agent
  • Rental agent (if you own rental properties)
  • Home and yard maintenance person
  • Auto mechanic
  • Housekeeper
  • Pest control person

Also specify your contact for flood and fire insurance in case your incapacity is the result of a natural disaster rather than a personal infirmity, depending partly on where you live.

Usernames and passwords—It’s very important that you maintain an up-to-date list of the usernames and passwords for your financial activities. Of course, some of us are more tech savvy than others. Here are a few examples of my own online financial activities:

Online billing—I receive by email the bills for both my country club and my local Rotary Club. Since the dollar amounts vary from time to time, without access to these bills, it would be hard for me to know how much to pay.

Online banking—I handle my banking and my stock investing with online accounts. It’s not unusual, when I don’t have enough money in my bank account to pay all my bills, for me go online to move money from the stock to the bank account. This takes about 10 minutes.

Without access to my online accounts, I’d have to call the stock account people and ask them to mail a check to my bank. This process can take a week or more.

Credit cards—My wife and I only have three credit cards between us, but they’ve all stopped sending paper statements and expect us to pay the monthly balances online. As with our billing and banking, it would be a great hardship if we didn’t have the login information for these online accounts.

Since your plan will include the usernames and passwords for your financial accounts, where should you keep this important information? Certainly not where the wrong person could find it, such as a printed copy in your desk drawer or as a document on your desktop—essentially the front page—of your computer.

One solution is to print out the plan and put it in your bank safety deposit box, if you have one. You can also give it to a trusted family member or to your personal attorney or CPA. You can, if you prefer, download your plan to a portable, password-protected thumb drive and give it to your trusted person or professional.

Whether you choose the paper or electronic version of your plan, make sure it’s stored in a waterproof and fireproof container. You may also want to make a copy, giving the original to a trusted person and keeping the copy in your bank safety deposit box or fireproof home safe.

While we’re on this topic, be sure to include in your plan the username and password for your cell phone and computer. It would be embarrassing to have useful information trapped on your computer when your surrogate doesn’t have the login information to access it.

The same is true of your bank safety deposit box. Specify the name and location of the bank, your box number, and the location of your box key.

Your assets and liabilities—For many of us, it may be sufficient to attach a copy of an up-to-date financial statement to your plan or to have the same information on file with your CPA. However, there are special instances where more disclosure in the plan can be helpful. Here are examples that may not appear in your financial statement:

  • Does someone owe you money, including a relative or a friend?
  • Do you and your spouse have different home addresses or both shared and separate assets?
  • Do you own stock that isn’t publicly traded or an interest in a business that’s difficult to value?
  • Do you have security deposits with a landlord, a utility, or others?
  • Do you have a trust, a life estate, or a future or equitable interest in real or personal property?
  • Are you a party to a pending lawsuit?
  • Do you have a personal injury or other potential claim you haven’t filed yet?
  • Do you have property or investments outside the United States?
  • Do you expect to receive or are you litigating over a potential large refund with the Internal Revenue Service or your state revenue department?
  • Are you a party to a contract for the sale of real or personal property that hasn’t been consummated?
  • Are you required by court order or an agreement to provide support to anyone?
  • Are you serving in a court-ordered role, such as a trustee, receiver, guardian, conservator, executor, or personal representative?

As I mentioned, this article isn’t meant to cover every conceivable issue you may face when drafting a personal disaster plan. But I do hope it has provided enough explanation and examples to allow you to get started. You may also want to confer with your personal attorney or CPA to fill in areas I haven’t addressed.

Whomever you consult, please, please be sure to have an up-to-date will, healthcare directive, and personal disaster plan and that you inform your spouse or other trusted person about, including where they can find these documents when they need them.

Disasters are never planned, and none of us knows when we’ll get sick or die. The best thing you can do for yourself and your family is to hope for the best and plan for the worst.

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