In 2024, there were 27 major disasters including hurricanes, floods, and wildfires. This year has begun in much the same way with wildfires ravaging parts of California. During any crisis, people tend to feel an increased sense of anxiety and a decreased sense of control. These normal reactions underscore the importance of planning for calamities in whatever form they take. This includes reviewing your Estate Plan to ensure accuracy and completeness. A basic Estate Plan mandates what happens both during your life and at death and consists of a Living Trust, also known as a Revocable Trust (a “Trust”), a Will, a Property Power of Attorney, a Healthcare Power of Attorney, a Living Will, and a Health Insurance Portability and Accountability Act (HIPAA) Authorization. As part of the review, you can take certain ancillary acts that will provide the benefit of helping prepare for extremely unexpected events such as a fire, tornado, hurricane, or flood.
First, store the documents in a safe place. It may be a fireproof or waterproof safe, a trusted advisor’s office, or a portable safe deposit box. Utilizing one of these storage options safeguards the written expression of your wishes should a catastrophe occur by protecting the documents. Include other related documents such as copies of insurance policies, medical records, appraisals, birth certificates, marriage licenses, and passports which keep everything together should anyone need access, either to submit an insurance claim or in a worst-case scenario. In addition to keeping hard copies safe, create digital copies of these documents and store them in a secure password-protected cloud storage platform. That allows for easy accessibility and backup should something happen to the hard copies.
Many trusted advisors, including me, ask clients to create a detailed asset list as part of their Estate Plan. When making the list, include real estate, vehicles, collectibles, artwork, jewelry, and electronics along with other valuable possessions. This list should provide the location of the item and the approximate value. Creating the list prior to disaster strikes helps facilitate submission of insurance claims afterward. Even in the absence of disaster, it’s a good idea to create and update this list often as it will help your fiduciaries understand the nature and extent of your assets upon your disability or death.
I often insist upon reviewing and updating beneficiaries of retirement accounts and life insurance policies to align with an Estate Plan. This planning provides assurance that should a loved one die during a disaster, the family can access these funds quickly. The funds help the family transition and the sooner the transition begins, the faster the healing starts.
Any Estate Plan that uses a Trust works only if the individual who created the Trust funds it. Funding a Trust means transferring title of assets to the Trust. If the trust holds title to real estate, it’s vital to alert the carrier of the homeowner’s insurance and title insurance to the change. List the Trust as an additional insured on the homeowner’s policy to avoid issues with claims, especially after a disaster. Often title insurance companies include provisions in the policies that extend coverage to transfers to a Trust, but if it does not, then consider purchasing a new policy, adding an “additional insured” endorsement to the original policy, if possible, or use a Deed in Trust, Warranty Deed, rather than a Quit Claim Deed to transfer the property. Even if disaster isn’t staring down your door, if you have a Trust as part of your Estate Plan, confirm that your insurance carriers know that your home has been transferred to the Trust. Further, Review and update your insurance policies to ensure adequate coverage for your home, health, and other assets in a disaster. Consider additional coverage specific to disasters common in your area, such as fire, flood or hurricane insurance.
In summary, preparing a complete Estate Plan involves both practical and legal steps that mitigate the stress that occurs during a natural disaster while facilitating a smooth transition to “normal” after. An Estate Plan serves as a set of instructions regarding your wishes, especially if you are unable to articulate them. Those instructions help guide loved ones. Many times, I play a crucial role in advising clients on how to protect their assets and loved ones during such unpredictable events. If 2025 has shown us anything in its first few weeks, it’s that proactive steps now can help ensure peace of mind when disaster strikes. Remember, an Estate Plan should be as resilient as you.