In light of all the damage and potential effects of the tsunami in Japan, what should survivors do first regarding their finances?
People have to prepare themselves mentally first. They’re in shock, going through a catastrophic event. They also need to take care of necessities, like shortages of food and water. In terms of finances, with the advent of the Internet and online banking, they can check on their finances online. If they own a business, they should see if they have business interruption insurance.
How do people replace financial records that were destroyed and which ones are really necessary for them to have?
In the U.S., you can always request copies of documents from the IRS and banks. One of the most important financial documents to access during a disaster will be copies of insurance policies which the insurance company should have. For those who own a business, it will be important to get access to all financial documents necessary to file a business interruption claim.
What could people do to prepare for a natural disaster that could ruin financial histories, records, proof of assets, etc.?
They should have all of their records in an online vault so that they are secure and can be accessed from anywhere. Be sure to frequently back up your hard drive – using an online data backup program is a good solution so you don’t have to worry about damage to or loss of an external drive. Also, as part of leave-town emergency procedures, keep a folder of financial documents, including wills, power of attorneys, insurance policies, etc., in a to-go box that contains other survival essentials like flash lights, water and extra gas money.
How can CPAs help?
The first thing we can do for our clients and vendors in Japan is to reach out and see what their needs are. The number one thing people need in a disaster is someone to talk to and someone who will listen. You give people confidence and clarity by listening to them and understanding their problems. You say to them, “yes, the situation is terrible but there is a future.” Listen and formulate a strategy and/or plan, develop some stages. Help them craft individualized strategies and steps within those strategies which are achievable. For example, help file business interruption claims, including assessing loss of business income. The AICPA Personal Financial Planning section offers consumers several free resources on disaster financial issues.
Eric Rigby, CPA/PFS/CFF, is a partner with the firm Rigby Financial Group. He lives in New Orleans and has more than 20 years of experience in accounting, tax services, business consulting, dispute resolution, financial planning and wealth management.