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Emergency Plan for Your Finances

Catherine Hooper

Catherine Hooper knows from disaster. Right after moving in with her fiancé, Andrew, in 2008, news broke of the biggest Ponzi scheme in history. Unfortunately, Andrew's last name was Madoff – yup, that Madoff. He's Bernie's younger son.

Playing off a longstanding interest in disaster preparedness, Hooper last year founded Black Umbrella, a company that puts together emergency plans and packages for families. Many of the tools and principles she applies to crisis readiness for her clients can easily be adopted on your own. Here she shares some of her top tips for managing your finances in case of a disaster, whether it's a terrorist attack or a catastrophe such as the one unfolding now in Japan.

With respect to your finances: What’s the first thing you should do if you’re confronted by a disaster?

Financial preparedness is just like the steps you take to protect life and limb; you want to be thinking about the disaster long before it happens. If there’s a wall of water coming at you or a terrorist attack, that’s not the moment to begin considering what you should do. But when you have a clear moment of forethought in advance, that’s when you should make those preparations.

So the first thing is to make sure that all the documents you have that protect the continuity of your family — wills, insurance policies, trust agreements, power of attorney, etc — are all up to date. It’s very easy to let them get out of date, since it’s not particularly pleasant to revisit some of them. But you shouldn’t just put them in a drawer somewhere. They’re really a living part of your emergency plan.

OK, what next?

The second step we recommend for our clients, and this is something anyone can do for themselves, is to scan those documents and then store them. You can do store them on your hard drive or preferably in a cloud that’s protected. But you also want to have them on a thumb drive you can keep with you at all times. The thumb drives we use at Black Umbrella are made by a company called Iron Key and are excellent. They’re made to military specifications, so they’re encrypted, password-protected, and they destroy all the information on them if someone who’s not their rightful owner tries to access them. They’re also waterproof and relatively indestructible.

Once you update your documents and scan them and put them on one of these drives, you can throw it in the bottom of your purse or briefcase and really forget all about them. And in an emergency, you’ll be able to access all of them as soon as you can get to a computer.

How much do these Iron Key drives cost?

They’re expensive — between $100 and $200, depending on the model. But they’re relatively indestructible and so this is a one-time investment in something that could make a critical difference. Also, because you’re putting lot of information on to this drive that could be used by someone trying to steal your identity, you want it to be stored in a way that’s secure and encrypted.

OK, what about other critical information?

In addition to the documents I discussed, it’s also crucial to have copies of all the important identity papers — birth certificates, Social Security cards, etc. — kept on the Iron Key for every member of the family. So for instance, last spring in New York City there was a seven-alarm fire in Chinatown, and if you were a resident of one of those buildings, you were not able to access city services for helping you relocate and get emergency supplies and shelter unless you could prove you lived in that building. Which makes sense, but how many people are going to be running out of a fire and think to grab a utility bill to prove their identity? So if you have those kinds of things in your purse and just ready, that could really be the difference between a huge headache and a smooth transition.

What about if you had a potential nuclear meltdown situation, like in Japan, and you just had to flee immediately?

With our clients, we help them put all these scans in their data cloud, so that’s something they can access from a remote computer. And we also help them to put together their emergency ‘go bags’, which are located in an accessible place near their front door and have copies of all these documents inside. People can do all this on their own, too — once you’ve scanned these documents, you can print out copies and put them in a large Ziploc bag, or water-resistant pouch, in your own go bag.

There are obviously situations where you won’t be able to grab your go bag, or can’t access the data cloud, but a situation where all three of your failsafes [the thumb drive, the printouts, and the online backup] don’t work for you is highly unusual. There’s a saying in the survival community: “Two is one, and one is none.” So whatever system you have, having one or two back-ups could really make a big difference.

Anything else you’d recommend?

Yes, assemble the names and best phone numbers for what we call the family crisis management team. These are the people that are critical to your family’s continuity and welfare. They’re not necessarily your closest relatives or best friends — but doctors, lawyers, pharmacists, veterinarians, the staff in your building, your insurance broker, accountant, etc. All these people are very important to your family, and they may also have their own copies of these documents we discussed.

We engrave those names and numbers on an aluminum wallet card — it looks exactly like a credit card and it’s something you’d keep in your wallet at all times. But people can put this together on their own by writing or printing that information on a piece of business card-sized paper and then laminating it — it performs much the same function. Assembling this list is also great because you’re communicating to your spouse, and to your children who are old enough to understand, that these are the key people to contact, what roles they perform, and how to reach them. So we have wallet cards for every member of our family and for our babysitter.

Speaking of disasters, what did you and your fiancé do when the Bernie Madoff situation broke?

As you know, the situation is still unfolding and there’s a lot of constraints in place, so I can’t answer that. What I can say is that with any family in a crisis, the most important first step is to be together as a family. Obviously financial continuity is important for all of us, but material things are unimportant if we don’t have each other.

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