personal finances — December 14, 2015

Putting the Pieces Back Together

by Bob Williams

recovering from a natural disaster

If there’s one thing that’s apparent these days, it’s that Mother Nature is NOT a happy camper. And whether it’s tornadoes, hurricanes, floods or earthquakes, our chances of being personally affected by some sort of natural disaster seem greater than ever.

Your financial recovery is just as important as your physical or emotional recovery from disaster. The quicker you can get back to normal on all those fronts, the better. And a large part of the work on the financial part can be done now – before the roof is gone, and before your living room looks like Lake Inferior.

Three Good Reasons

If you do the work now, it will save you valuable time and effort after a disaster. First, if you apply for Federal Emergency Management (FEMA) or Small Business Administration aid, you’ll need certain records to prove your loss. If you can be more accurate, you could get more loan or grant money. And you’ll get it quicker.

Your insurance policy may require certain records to prove you owned the property you lost in the disaster – including your home. And those same records may be needed to prove casualty loss on your income tax return.

Do This Now

Take pictures or a video of every room of your home or apartment. Use a digital camera if possible, and set it to imprint the date on the image. Take clear, well-focused images of all your property, paying special attention to high-dollar items (like your monster-screen TV or fancy stainless steel grill) and the home itself if you own it.

Where to store these photos? If you use Google Drive, Dropbox or the like, you already have your answer. If you're not that into that whole cloud scene, there's always the slightly older school way: burn the photos onto two or three CDs, and stash them in different places. One should be saved at another physical address, like in a safe deposit box. It's also a good idea to store a copy of your most recent income tax return, and if you can, copies of your home’s title, your car’s title, and your mortgage papers.

Don't rely on a USB flash drive, though. These little memory sticks are convenient, but can be wiped clean by static electricity. Our recommendation: Buy an inexpensive flatbed scanner and make electronic copies of all pertinent documents you have, including your property tax records, and store them too.

When Bad Goes to Worst

After a disaster, no matter what the type, the steps you can take to help get the recovery wheels in motion are pretty much the same.

As soon as it’s safe, try to take photos of your home and your damaged property to establish the extent of your loss. Use the date-imprint feature on the camera again if possible.

For homeowners, if you didn’t get copies of your escrow papers before the disaster, you’ll need to get them now – or contact your mortgage lender to obtain a copy. Your real estate agent may be able to help you establish a fair market value for your damaged home.

Check your insurance policy: most policies list the value of the building to establish a base for replacement value. If you’re not sure how to reach your insurance company, you can go here to track down the contact info for your company in your state.

If you didn’t make copies of your tax records before the disaster, you’ll need them after. File Form 4506, Request for Copy of Tax Return, to get copies of the previous four years of income tax returns. To obtain copies of the previous four years of transcripts, you can file Form 4506-T, Request for Transcripts of a Tax Return. Be sure to write the disaster designation, such as “Hurricane Hazel” in RED letters across the top of both forms to expedite processing – and to waive the normal user fee.

If you took photos before the disaster, you’re ahead of the game. Otherwise, you’ll need to draw a rough plan of your home or apartment, and draw in the locations of all the furniture and other property you’re claiming.

To figure the replacement cost of your lost personal property, retrieve any receipts you may have from their purchase; if you used a credit card, contact the card company to request back receipts or statements.

To find the fair market value of appliances and other items, it's probably easiest to check the websites of a local big box store or two.

It’s not hard to see that much of this post-apocalyptic legwork can be done before it’s actually needed. So try to gather copies of the various critical documents a few at a time, and make a sort of disaster kit that puts all those items at your fingertips.

Do the hard work now. Then, if disaster comes to visit, you can help ensure that it doesn’t move in for good.

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