FINANCIAL PREPAREDNESS: THE RED FILE
In the face of any disaster – whether it’s a fire that affected just your home or a flood or tornado that affected your entire community – you need to have access to all of your financial information.
The Red File is a combination of documents that will help you reestablish your financial and physical lives if or when needed.
The Red file is a set of documents of which you will make two copies. You put one set in an envelope or a case or a trunk (depending on how many documents you have!) and hold on to them either at your home or your office. You send the other set to a trusted friend or family member, in another city who can hold on to the file and not open it until you call to say you need the information.
When you call asking for certain documents, you are giving them the authority to open the Red File. You may make that phone call or in some cases it may be someone else because you are incapacitated. You need to tell that person who else can request that information in your absence.
What documents do we find in the Red File?
There’s a checklist that you can download > but there is a comprehensive overview below. Make copies, preferably in color, of all the documents in all the categories below:
• Birth certificates
• Social Security Cards
• Marriage license(s)
• Religious certificates such Baptism or Ketubah
• Adoption papers (if applicable)
• Drivers licenses for everyone in your household
• Passports for everyone in your household
• Wills, Living Wills, Letters of Instruction, and Powers of Attorney
• Trust documents for entities for which you are a trustee
• Trust documents of entities in which you have a beneficial interest
• Contact information for all advisors, executors, trustees and guardians
• A complete list of assets and liabilities containing details of ownership and the contact information for all persons and entities relevant to the ongoing status of that asset or liability)
• Photographs of everyone in the household and all others for whom you are responsible
• Credit and Debit-ATM cards
• Tax returns for a minimum of three years
• Recent bank statements and brokerage statements
• Several blank checks from each checking account
• Extra ID cards issued by your banks
• Documents that prove ownership of private placements and alternative investments
• Location of safe deposit boxes with the names of authorized signatories
• Location of the keys for the safe deposit box
• List of user IDs/Passwords for all electronic based banking/financial
• The deed for your residence
• The municipality ID numbers for the location of the property
• Mortgage documents and other loan documents
• Title for cars owned by everyone in your household
• Policy numbers of life and property insurance policies
• Insurance agent/agency contact information
• Complete inventory list of household items
• Complete list of personal items at your office
• A photographic inventory of household and office items
• Health insurance documents, prescription and/or other benefit cards
• Photographs and copies of health records and licenses for household pets
• Names and contact information for all personal physicians and caregivers
• Extra originals of health care proxies
Where do you keep the Red File? Do you feel better about keeping that set of documents at home in a safe or in your office in a locked file cabinet? That is entirely up to you. However, the second copy of the Red File should be in the hands of someone not living in the same city who can access it when needed.
I do not recommend keeping information on the cloud or anywhere else on the internet as I’ve not found any website or any cloud-based service that can guarantee being absolutely “hacker-free.” However, if you do want to keep information on a computer disk, thumb drive, or some other digital format, I would include a copy of that in the Red File envelope as a backup to the paperwork. I am a firm believer in having important information on paper.
Who has access to the Red File? If you have grown children, they should have access to the Red File. Your spouse should absolutely have access to the Red File. You can learn a lot about your family members if they access or attempt to access the Red File for other than an emergency situation!
How much ready cash do you need? You need cash for the emergency aspects of surviving a disaster incident such as food, shelter and other basics of life. As a guide to determining how much cash you may need:
• Count the number of individuals for whom you are responsible
• Determine the basic items you need to buy or have available
• Estimate how much those items cost per day during a non-emergency
• Multiply that number by 3, or 5 if you are a pessimist.
• Then multiply that by the number of days needed - at least 7 days
In emergency situations the $1 or $2 bottle of water might very well sell for $5 or $10. Because of that, I would suggest keeping cash in small denomination of $5, $10, and $20 bills, because it is unlikely that you will get change.
Tell all of your family members who live with you where the cash is hidden. In so doing, it’s an interesting study in the nature of your children when you get to the point of keeping cash around the house. Treat it as a “test” of the character of your family members. Check the “stash of cash” every so often to see if there has been any shrinkage! If any of the cash is missing, hold a family meeting and see if anyone will “own-up” to having taken the cash and why they took it. Then, either try the experiment again, or just put the cash in a location that only you know about.
Bank Accounts: Here are the things you need to do to access your money.
• Find out what documentation your bank requires for identification
• Put copies of that documentation in the Red File.
• Maintain an account at a national bank with branches in another city.
• Find out where your bank’s data is located and that it is secure.
Life and Death Documentation: It's also a good idea to keep copies of :
• Living will
• Healthcare proxies for all family members
• HIPAA release forms
• Power of attorney documents
• Any letters of instruction.
• Lockets of hair for each family member
This may seem a bit morbid, but it may prove to be essential. You can go to a local precinct and the police officers will fingerprint your family. It is also very important to have a locket of hair, or some other DNA identifier for every member of your family as part of the Red File. This is useful if there is a missing child or adult. It is very helpful to have a DNA or fingerprint identification available so that you are not more stressed than you will already be in this situation.
Those are the basics of the Red File. I suggest that you create your Red File now for your sake and the sake of your family because if you do not do this and you are faced with the aftermath of a disaster, it will be much more difficult to reestablish your financial and personal life.
DID YOU KNOW?
OAKLAND HILLS FIRESTORM
3,450 homes destroyed
25 people die
150 people injured
1,520 acres destroyed
$1.5 billion in losses
2,000 degree temperatures
2,000 vehicles destroyed
1,000 families homeless
7,800 lose electrical power
8,000 without gas service