Tips on reconstructing financial lives after a natural disaster

That’s what happened to thousands of families when Hurricane Katrina hit the Gulf Coast last week. Some of the more fortunate ones may have had backup documents stashed with relatives or friends outside the area. Or their safe deposits boxes may survive — even if they can’t yet get to them.

But many families will have to reconstruct their financial lives. Experts say the first step is to stabilize the family’s living situation and then seek the help of the government, employers, banks, relatives and friends in putting their financial houses back in order.

Anat Kendal, director of financial planning for the American Institute of Certified Public Accountants, headquartered in New York, said that many families quickly discover they need cash for day-to-day living.

“Contact your insurance company right away make them aware you’ve had damage to your property, make them aware of the severity of that damage,” she said. “If you can’t stay in the house, make them aware you’re going to be staying somewhere else and that you’re going to need some cash or their coverage for temporary living expenses.”

A second possible source of money is the company where you work, Kendal said.

“Contact your employer and see if you can get an advance on your paycheck,” she said. Although many Gulf Coast businesses are damaged and shuttered, some may have headquarters elsewhere that can help, she pointed out.

Families also can take advantage of debit and credit cards to cover temporary living expenses, and many banks and savings banks are waving ATM fees and cash advance fees as well as extending emergency lines of credit to customers who call.

Kendal also suggested that families get to the disaster recovery centers set up by the Federal Emergency Management Agency and the American Red Cross, which can provide funds to cover living expenses.

The AICPA has more suggestions in its publication titled “Disaster Recovery — A Guide to Financial Issues” on its Web site at http://www.aicpa.org.

Another step some families may want to do quickly is to recreate an inventory of their home furnishings and possessions so they can file insurance claims.

Connie Bracher, head of the disaster committee of the California Society of Enrolled Agents, suggests that families tackle this together. Enrolled agents are licensed by the Internal Revenue Service to deal with tax issues.

“Try to mentally reconstruct your house,” she advised. “Draw a little map, then try think about every single wall. What picture was on the wall? What chest of drawers? What was in those drawers?”

Families can estimate replacement values for things by going through catalogues or checking Web shopping sites, she said. Publications such as Kelley Blue Book and its Web site, http://www.kbb.com, list new and used car prices.

If the family has photos of the home and its contents, that will be helpful, added Bracher. “If your photos are lost, go back to relatives and friends and ask if they have pictures of parties in your house, anything that would show it before the storm,” she said.

When it comes to reconstructing other records, families should try to reach the financial institutions that produced them in the first place, Bracher said. She said these could include:

— The escrow company involved in the purchase of your home, which should have copies of closing documents.

— Building contractors, who can provide copies of bills for major improvements or an affidavit of the work done and the cost.

— Banks, brokerages and credit card companies, which can make copies of previous bills and statements.

Bracher said that the IRS also can be a good source of historic financial information.

Taxpayers can file IRS Form 4506 requesting copies of previous tax returns, she said. The IRS has announced the families who write “Hurricane Katrina” in red across the top of the form will not be charged for the service. The IRS has a special hot line, 866-562-5227, to deal with disaster victims.

James Walsh, editor of “The Personal Security Handbook” from Silver Lake Publishing in Los Angeles, urges families to be aggressive in dealing with financial issues, especially since the reconstruction of many of the hurricane-damaged cities could take months.

“More people may be out of work for longer periods that in prior disasters,” he noted. “An affected person should not wait for his or her employer to get in touch — be proactive and contact work, even if that means calling a home office or other regional location where you don’t know anyone. If nothing else, do this so that you can have your health insurance and other benefits (providers) notified that you’re alive — and where you are.”

Walsh also recommended that affected families be wary of con artists.

“Crooks move into disaster areas almost as quickly as relief workers do,” Walsh said. “These scammers will run every kind of rip-off, from conning people into signing over emergency benefits to signing usurious loans to fronting construction work that’s never begun.”

Even in a disaster, the buyer must beware.

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On the Net:

http://www.csea.org

http://www.silverlakepub.com