Fires happen, but it is never an excuse for not having your documents, knowledge and backup. You cannot tell the TSA, I have no id, I lost it in my home fire. When you sell your home and the IRS does an audit and you don’t have your backup for your tax basis, they will not just accept your word. And when you are running your business, your investors will not find it acceptable if you do not know the details of your Operating Agreement.
According to the US Fire Administration, in 2022 there were 374,300 home fires, that caused 2,720 deaths, 10,250 injuries and damage totaling over $10.8 billion. Taking into account the total number of homes in the United States, the chance of your home catching fire over the next year is approximately 0.26%. That’s not a high risk, but it is also not zero, and this type of loss can be devastating. If you keep all your important papers at home, how will you be able to recover?
Losing important documents in a house fire can be overwhelming, but there are steps you can take to start the recovery process, some of which is outlined below as suggested from FEMA (https://www.fema.gov/fact-sheet/replacing-personal-documents-after-natural-disaster}
- Contact Your Insurance Company: Report the disaster as soon as possible. They can guide you through the next steps and help you start a paper trail
- Replace Essential Documents:
- Birth Certificate: Contact the Vital Records Office in the state where you were born. They usually require a small fee and proof of identity
- Driver’s License/ID: Visit your local DMV office or check if your state allows online replacements
- Social Security Card: You can request a replacement through the Social Security Administration’s website www.ssa.gov
- Passport: Report your lost passport to the U.S. Department of State and apply for a replacement https://travel.state.gov/content/travel/en/us-visas/visa-information-resources/lost-stolen-visas.html
- Financial Documents:
- Bank Cards and Checks: Contact your bank to replace lost cards and checks
- Credit Cards: Notify the issuing companies to get replacements
- Other Important Documents:
- Tax Returns: Request copies from the IRS www.irs.gov
- Medical Records: Contact your healthcare providers for copies
While the above list is a nice to start, it is certainly not exhaustive. What if you own your home, do you have copies of the original settlement sheet and an accounting of all the work you have done on your home, so when you do sell, you are able to maximize your tax basis in the house. If these are housed on paper, it will be virtually impossible to recreate all this information. Do you have any private investments, you will need to work on replacing these documents by contacting the sponsor. What if you own a small business, often you may keep important documentation in your home office. If this is lost and you do not have back ups, recreating this vital information, will be extremely difficult. And what about your will, if you store your original will at home, you will need to execute a new one, as trying to use copies in probate is a long and arduous process.
With many of the above items, digital copies will be enough, while others, such as your passport or original will, they will not. However, having a digital, secured virtual safe deposit box, will ensure that you always know what you have, what it looks like and allow you to take action.