Thursday, May 27, 2010



By: John Trapani, CPA

We live in Wildland Fire and Earthquake Country; California is often referred to as the Shake and Bake State. Two years ago, the Governor declared that we have a year-round fire season. For over two years, Cal Tech and USGS seismic scientists have been warning that the southern leg of the San Andreas Fault is due for a large eruption. It has been relatively quiet for over three hundred years and is at least 150 year “overdue.” Many aware families and companies have developed disaster plans. These usually include preparing disaster kits to help survive the first few days and even weeks after a catastrophic event bestows its wrath. Each event is different, preparation and warnings are not the same. Usually there is some time to react before a fire destroys a home, but there is no effective warning for an earthquake. A fire may destroy the whole home and its contents, while an earthquake may cause severe damage, even destruction, but there may be debris that can be searched for valuables. Unfortunately, in California we have to prepare for at least these two distinct possibilities. Yet we cannot forget windstorms, mudslides, freezes and more.

The Red Cross is a valuable resource to get help on preparing for the physical and personal safety aspects of a catastrophic event. The Federal Emergency Management Agency (FEMA) has an excellent website for preparing family disasters plans and emergency kits (www.Ready.Gov).

But, there is more to being ready. Sit back and think, your kit is prepared, you have a kit in the car and one at work also. You have prepared your family disaster plan. Everyone in the family knows where to meet. Out of town contacts have be set up for all family members to call. Now what will actually occur after the catastrophe strikes? Your plan works flawlessly. Everyone is safe. Now recovery starts. What do you need for the recovery process? When does that process start?

Here is a list to consider. It has the answers to the questions that you will be asking after the catastrophe strikes. The list includes the items that you can assemble today that will be of assistance in the recovery process. These are items that you already have, but maybe disbursed and stored in many places. These items are what people will ask you for after the event. Bringing them together, in the manner described, will speed your recovery, relieve anxiety, and relieve some of the stress that you will be experiencing due to the situation.


Once you have built your kits and prepared your family disaster plan, every six months:
Check your “kit” - replace any perishable items as needed. Check your “plan” – update any information as needed.

Now is a good time to review or prepare a will or create your living trust. You should also update and maintain an “Advance Health Directive.”

1. Phone service:
a. 911 calls from many cell phone locations may go to the Highway Patrol or State Police first, not the local 911 dispatch.
b. Keep a roll of quarters in each of your disaster kits to use in pay phones.
2. Maintain a compact digital camera and battery charger to record damage and the recovery.
3. Maintain a blank journal and pen to document every post-event conversation and discoveries.

a. Set aside enough cash for your family for at least three days purchases of food, shelter and fuel in the event you cannot get home, or to a bank / ATM; power may be out and ATMs may not be operational.
b. Maintain an active credit card that has no balance due that can be used in case of an emergency.

5. Assemble the original documentation and store it in a watertight, fire safe at an offsite location, not a bank safe deposit box that may not be accessible after a disaster.

6. If you have significant valuables that are subject to appraisal, have an appraisal prepared at least every three to four years.
a. Have the appraisal prepared in both hard copy and as a PDF (digital) copy.

Assembling Evidence You Will Need:
7. Cost records for real property and major items of contents, including jewelry, cameras, electronics, computers, tools and art works.
a. Extensive photographs of all the items for the cost records.
b. Have the photos in both hard copy and in digital form.

8. PERSONAL DOCUMENTS: Financial documents to consider securing and recording in digital form:
 Cost records for real property (escrow statements) and major items of contents, including jewelry, cameras, electronics and art works.
a. Record the cost of significant assets in every room of your home and office in a ledger or journal.
 Make copies of wills, and living trust documents, grant deeds and property escrow settlement statements.
 List of emergency contacts, including doctors, financial advisers, and family members.
 Birth, death, and marriage certificates.
 Copies of drivers’ licenses.
 Copies of power of attorney, living will / medical powers.
 Trust documents.
 Copies of important medical information, including your health insurance card, doctor’s name and phone number, immunization records, and prescriptions (including prescriptions for glasses and contacts).
 List of insurance policies (life, health, disability, long-¬term care, auto, homeowners, renters), including the type, company, policy number, and name of insured, agent contact information, claims contact information.
 Adoption papers.
 Passports.
 Social Security cards.
 Divorce and child custody papers.
 Military records.
 Mortgage/property deeds.
 Stock and bond certificate-s.
 Vehicle and boat title documents.
 Inventory of your possessions.
 Warranties and receipts for major purchases Credit card records.
 Retirement account records.
 Recent checking, savings, and investment account statements.
 Recent pay stubs and employee benefits information.
 Rental agreement/lease and/or mortgage documents.
 Safe deposit box information (location, contents, and key number).
 Store negatives of photographs, protected in plastic sleeves, separate from the prints.

a. Have you read your insurance policies lately?
b. Do you have coverage for Earthquake damage?
c. Do you live in an area that is susceptible to mudslides or flooding? Consider the need for coverage under the National Flood Insurance Program.
d. Is your coverage consistent with your present risks?
e. Do you know what is not covered?
f. Was your home built many years ago, under a building code that is now outdated?
g. Do you know if your cost to replace your assets is adequately insured?
h. What is current replacement cost of assets, including compliance with existing building codes?
i. Do you know that the cost to replace your home in a major disaster event will rise significantly? The cost to replace a “production line built home” in a tract of homes will rise significantly when you are trying to duplicate it with a “single edition” of the same home.
j. Is your coverage for “Scheduled Property” adequate? Are all the items that you have appraisals for adequately insured?

10. Create PDF files of the documents including Federal and state income tax returns and Insurance Policies.
a. Store the PDF’s on data CDs and flash drives – create multiple copies. Send copies of the CDs to trusted individuals who will be outside of any potential hazard area.
b. Check on the efficacy of the CDs periodically.
c. Keep a copy of the CDs in your family disaster kit.
d. Update the CDs at least semi-annually.

With the possibility of fire, mudslide, earthquake, tsunami, and severe winds, all of California is subject to some form of natural disaster – Do not ignore the possibility.

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