How to create a family contingency plan

2020 vision

With the start of a new year and a new decade, we tend to focus more than usual on important personal goals and objectives. One goal to consider is creating a family contingency plan.

Your plan can be short and simple, or lengthy and detailed. In brief, it entails creating a list of critical information of who, what, and where. Who to call in an emergency, such as close relatives, key professionals including doctors, accountants, lawyers, and other professional advisors. What you own, such as bank and investment accounts, retirement, pension, and other plans, insurance, real estate, personal effects, including art, jewelry and other valuables and collectibles, and how assets are structured if there are any holding companies, trusts or other entities, and at which financial institutions property is held (including any safe deposit boxes), as well as any liabilities, such as mortgages, loans, lines of credit and credit cards.

Without critical information easily accessible, family members can be left in the lurch at what may already be an overwhelmingly stressful time, such as an unexpected medical emergency, including an accident or death.

In our digital age, it may be impossible to follow a paper trail of bank and investment accounts because if they are only online, a paper trail may not exist, adding to an already difficult situation. As an example, in one matter on which our firm advised, all financial information was online, the details of which the deceased’s spouse had no knowledge. This left her in a precarious situation, including the challenge of locating at which financial institutions accounts were held, as well as continuing an active business, which also involved making the payroll due only a few days after her spouse’s death.

Part of good business planning in order to protect the business and allow it to continue to function is having a contingency plan and critical information available to access on a need-to-know basis in the event a key person doesn’t make it to the office one day due to incapacity or death. Each family also needs such a plan as well to protect it, save it from harm, and allow family members to continue on as best as possible, and in certain cases allow for a successful transition of decision-making or succession of property, so no one is caught unprepared.

Information is power. Knowledge is power. Lack of both is disempowering. Having a family conversation is an important part of creating an effective contingency plan in order to get the process started and to empower those who will be the key decision-makers with essential information.

To get you started, our firm has created a document to help you prepare a listing of critical information which can be completed, shortened or expanded and tailored to your individual situation. It provides important headline topics to complete as relevant – our 2020 gift from us to you.

We hope our readers will use it for themselves and also pass it along to family members, friends, clients and colleagues, and that as a result many family contingency plans will be created. If that happens, key family members will be able to see things clearly – with 2020 vision.

Margaret O’Sullivan is the principal of the Toronto-based trusts and estates law firm O’Sullivan Estate Lawyers. She practices exclusively in the areas of estate planning, estate litigation, advising executors, trustees and beneficiaries, and administration of trusts and estates. This article originally appeared in the O’Sullivan Estate Lawyers blog. Reprinted with permission.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. It is not intended to provide specific personalized advice on any individual situation, including, without limitation, investment, financial, legal, accounting or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your particular circumstances.