California is no stranger to natural calamaties. From wild fires, like the recent inferno in Los Angeles, to the ever-present possibility of an earthquake, we must be vigilant in our preparations for such events. While it is commonly thought that estate planning isn’t just about securing your legacy, it is also about protecting your assets and loved ones when disaster strikes.
Updating an outdated Estate Plan or creating a new one provides a set of instructions for your family regarding what you want to happen during your life if you lose the ability to communicate that and at death. It provides comfort and a sense of control. In this post, we will show how to get more out of your Estate Plan during a disaster.
In 2024, there were 27 major disasters including hurricanes, floods, and wildfires. As noted above, this year began in much the same way with wildfires ravaging parts of Southern California. During any crisis, people tend to feel an increased sense of anxiety and a decreased sense of control. These normal reactions underscore the importance of planning for calamities in whatever form they take. This includes reviewing your Estate Plan to ensure accuracy and completeness.
A basic Estate Plan mandates what happens both during your life and at death and consists of a Living Trust, also known as a Revocable Trust (a “Trust”), a Will, a Property Power of Attorney, a Healthcare Power of Attorney and a Health Insurance Portability and Accountability Act (HIPAA) Authorization form. As part of the review, you can take certain ancillary acts that will provide the benefit of helping prepare for extremely unexpected events such as a fire, tornado, hurricane, or flood.
First, store the documents in a safe and secure place. We recommend either a fireproof and waterproof home safe or a safe deposit box at a bank or credit union. Utilizing one of these storage options safeguards the written expression of your wishes should a catastrophe occur by protecting the documents. Include other related documents such as copies of insurance policies, medical records, appraisals, birth certificates, marriage licenses, and passports which keep everything together should anyone need access, either to submit an insurance claim or in a worst-case scenario. Just make sure that your named successor trustee, power of attorney agent and will executor know how to get access to them.
In addition to keeping hard copies safe and secure, create digital copies of these documents and store them in a secure password-protected cloud storage platform. That allows for easy accessibility and backup should something happen to the hard copies. Againyour named successor trustee, power of attorney agent and will executor know how to get access to this digital information.
You may want to create a detailed asset list. When making the list, include real estate, vehicles, collectibles, artwork, jewelry, and electronics along with other valuable possessions. This list should provide the location of the item and the approximate value. Creating the list prior to disaster strikes helps facilitate submission of insurance claims afterward. Even in the absence of disaster, it’s a good idea to create and update this list often as it will help your fiduciaries understand the nature and extent of your assets upon your disability or death.
It is a good idea to review and, as needed, update beneficiaries of retirement accounts, annuities and life insurance policies. This planning provides assurance that should a loved one die during a disaster, the family can access these funds quickly. The funds help the family transition and the sooner the transition begins, the faster the healing starts.
Any Estate Plan that uses a Trust works only if the individual who created the Trust funds it. Funding a Trust means transferring title of assets to the Trust.
PLEASE NOTE: If a trust holds title to real estate, it’s is importante to notifiy the homeowner’s insurance and title insurance carriers of the change. Ask your agent about adding the trust as an “additional insured” on the homeowner’s policy to avoid issues with claims, especially after a disaster.
Often title insurance companies include provisions in the policies that extend coverage to transfers to a Trust, but if it does not, then consider purchasing a new policy, adding an “additional insured” endorsement to the original policy, if possible, use a Grant Deed or Warranty Deed, rather than a Quit Claim Deed to transfer the property.
Even if disaster isn’t staring down your door, if you have a Trust as part of your Estate Plan, confirm that your insurance carriers know that your home has been transferred to the Trust. Further, Review and update your insurance policies to ensure adequate coverage for your home, health, and other assets in a disaster. Consider additional coverage specific to disasters, such as fire, flood or hurricane insurance. In California, coverage for earthquakes requires a specific earthquake policy as it is not included in the standard homeowner’s insurance policy.
In summary, preparing a complete Estate Plan involves both practical and legal steps that mitigate the stress that occurs during a natural disaster while facilitating a smooth transition to “normal” after. An Estate Plan serves as a set of instructions regarding your wishes, especially if you are unable to articulate them. Those instructions help guide loved ones. Estate Planning attorneys play a crucial role in advising clients on how to protect their assets and loved ones during such unpredictable events. If early 2025 has shown us anything, it’s that proactive steps now can help ensure peace of mind when disaster strikes. Remember, an Estate Plan should be as resilient as you.
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