Preventing exploitation: Being ready for the unexpected

It’s probably not healthy to think about disasters too much, but unexpected things like sudden medical emergencies, unemployment, unexpected house repairs, and family crises can become personal disasters when there’s no money in reserve. Ken Kolesar, vice president at People’s Bank, tackled the subject “Planning for the Unexpected” at the fourth financial education workshop presented by The Greens at Cannondale on Jan. 29. 

It came as a surprise to some in the audience that it’s advisable to have six months worth of available money in reserve at all times. For older adults, it’s imperative to have a living will of your personal choices regarding your future medical care. A personal will is also a necessity so that your money and possessions will be designated to the people you have chosen.

Mr. Kolesar simplified what could be an onerous responsibility by zeroing in on basic questions that need to be answered to face whatever happens. The good thing is that being prepared for emergencies assures that your wishes about the future will be followed.

There are seven basic questions to help you assemble a financial inventory:

• Who’s on your team? The person you choose as your trusted representative should know how to reach your accountant, attorney, financial planner, and physicians.

• Do you have a will? How recently was it written? Who is the executor, and where is the original document? If the will is more than five years old, it should be reviewed in case there are any changes.

• Do you have an advance directive and power of attorney? The directive makes sure your decisions about life support are followed. The power of attorney gives your chosen deputy the authority to represent you regarding major decisions.

• Are your beneficiaries up to date? Designated beneficiaries on insurance policies, pensions and investments trump the designations in your will. Make sure all your beneficiaries are consistent.

• What financial accounts do you have? This includes banks, brokerage, mutual funds, account numbers, user names, and passwords. All this information is part of your financial inventory.

• What insurance do you have and where are the policies? Health insurance, Medicare, life insurance, auto,

homeowners, disability, long-term-care, all this is essential information that should be included.

• Where do you keep your financial paperwork and tax files? This includes title to your house, car, property, and loan documents. Tax files for the past seven years should be retained and obtainable. Credit card information, your safety deposit box number and key, insurance contracts, and Social Security information should be easily located.

Mr. Kolesar recommended that setting up direct deposits for income and benefit checks is safer than receiving them by mail. He advised automatic payment for important, recurrent bills. Birth certificate and originals of important contracts should be in your safety deposit box. Your passport, medical care directives and will should be at home, preferably in a fireproof safe.

Planning ahead gives you control of your money, helps avoid financial setbacks and allows time to gather information. You may not ever experience an earthquake or a typhoon, but personal emergencies can turn life upside down. With prior preparation, you remain in control.

Probably no one in the audience had an emergency evacuation bag or an airtight, waterproof container for important documents, but it set people thinking. A financial inventory is the backbone of preparation for the unexpected and can help prevent unavoidable crises from turning into disasters.