Personal Finance

How to protect your critical papers from disasters

Key Points
  • Your plan for important documents should safeguard originals and create digital copies that can be accessed from anywhere.
  • Key documents include those that are tough or inconvenient to replace, and those you'd need to help recover after an emergency.
Wildfires rip through Northern California

Could your important financial documents weather an emergency?

The wildfires currently ravaging California have killed at least 23 people and destroyed more than 3,500 homes and commercial buildings.

They're the latest in a string of devastating disasters this year. During the first nine months of 2017, the U.S. experienced 15 different "billion-dollar" weather and climate events, according to a report from NOAA's National Centers for Environmental Information. Those include hurricanes Harvey, Irma and Maria and spring tornado outbreaks in the Midwest and South, among others. (See graphic below.)

Experts say such disasters underscore the need to have a plan to safeguard critical personal and financial documents.

Think of your preparation in two parts: Safeguarding original documents and creating digital copies that can be accessed from anywhere, said Leonard Wright, a certified public accountant. He's also a co-author of "Disasters and Financial Planning," a free digital consumer guide from the American Institute of CPAs, the American Red Cross and the National Endowment for Education.

"Some of the traditional ways of keeping your records — in your home, or in a safety deposit box — both of those places could have been burned down or flooded," Wright said. "It calls attention to the importance of the cloud."

Key documents you should gather include those that might be difficult of inconvenient to replace (like wills, birth certificates, Social Security cards and passports) as well as those you'd need to recover (insurance policies, property deeds).

Having everything in one place makes it easy to grab documents quickly in an evacuation. You might secure those originals in a fireproof, watertight safe in your home, or off-site in a safe deposit box, said Wright.

Creating digital copies to store in the cloud ensures you will still have access to important records if a disaster occurs while you're away from home, you aren't immediately able to return after a disaster or your originals sustain damage.

"It can be extremely critical," said Steve Schult, senior director of product management for LastPass, a digital password manager. "You may not grab that laptop on the way out the door."

A filing cabinet is left standing in the charred remains after wildfires swept through a Santa Rosa, California neighborhood.
Mark Neuling | CNBC

Not all cloud storage services are equally secure. Look for one that encrypts your data, to use for sensitive financial papers, Wright said.

Consider how you can share access to that trove with family members and other trusted contacts, Schult said. (LastPass, for example, lets users create shared family accounts and set emergency access protocols.)

"You're not the only person necessarily who needs access to that information," he said.

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