Preparing and Individual Disaster Plan

Among the many consequences of 9/11 is a heightened awareness of the need for individual estate and financial planning. The tragic events of that day brought home both the unpredictability of life and the realization that many, perhaps most, people are woefully unprepared for a sudden disaster and the effects it can have on their families.

In New York, estate and financial planners found themselves playing a critical role in attempting to restore stability and security to surviving family members. In many cases, the trauma of the disaster had left survivors ill-equipped to make important decisions, let alone undertake the tasks of gathering required information, documenting and filing claims, and locating key documents such as wills, trusts, powers of attorney and benefit plan designations.

While the chances of being involved in a terrorist incident are remote, planners point out that earthquakes, fires, floods and other natural disasters can also have a major impact. The wholesale destruction experienced at the World Trade Center, where people and property will never be found, raised a number of issues among our colleagues in the estate and financial planning community. And while it is impossible to anticipate everything that could happen, thoughtful planners now agree on the importance of creating an “individual disaster plan” to provide for surviving family members.

Here are some of the suggestions that have arisen:

• Establish spousal support trusts to take care of children and surviving spouses.
• Determine where you should keep your important documents and be sure other family members know where to find them. Make copies.
• Provide for backup communication in case family members are separated by a disaster. This might include additional cell phones, multiple e-mail accounts or agreed-upon meeting locations.
• Appoint guardians for minor children. (If you do not, courts may make this decision, as they were forced to in New York.)
• Appoint different guardians for different issues, i.e., one guardian for financial and estate decisions and another for personal matters (schools, healthcare, clothing, etc.).
• Prepare flexible variations of the typical Durable Powers of Attorney that deal with the possibility that the usual means of proving death may not be possible, as the circumstances in New York showed.
• Coordinate planning documents to ensure clarity of who has the power to do what. Be sure that there is no conflict or ambiguity between multiple documents that may be activated simultaneously.
• Consider the use of “trust protectors” or committees when disaster situations call for action and there are questions as to the whereabouts or existence of settlors, trustees or beneficiaries.
• Provide your advisors (attorneys, accountants, bankers, etc.) with direct instructions as to who handles what and how they are to work together.

These are just some of the basic ideas we all should consider in preparing an individual disaster plan. Your unique circumstances and desires will dictate what your plan should include. Whatever you decide, remember that responsible and prudent planning dictates periodic reviews and updates of your total plan to ensure that your goals and objectives can be carried out as you wish.

This article is for information and education purposes only and does not constitute a personal recommendation or take into account the particular investment objectives, financial situations or needs of individual clients. Clients should evaluate the merits and risks associated with relying on any information provided.