Hurricane Harvey Help
Friends of Avidian Wealth, Truett Allen (took picture) and others helping those in need during Hurricane Harvey.
All of us as at Avidian Wealth hope that you and your family were not severely impacted by the events of last week related to Hurricane Harvey. We would also like to thank all first responders (including civilians like Truett Allen, above) that helped so many during this tragedy. Several of our clients and employees at Avidian Wealth were severely impacted. With that in mind, we wanted to put together a list of both action plans and resources for your reference in hope that it may help you in this time of need.
Even while Harvey was still showering Houston with unending rain, several journalists from InvestmentNews, CNN Money, and Wealthmangement.com reached out to us to see how we were looking out for our clients during this time of need and worry.
After a disaster like Hurricane Harvey, many struggle with keeping track of finances and things that need to be done. This is very understandable considering all the decisions that need to be made. Many of you may be VERY anxious right now and it may seem overwhelming. To help you get from worry to action, I suggest that you start by writing down all you need to do and then just begin attacking this list one item at a time (writing a list and making progress in the list can be cathartic). One thing we did at Avidian Wealth to help our clients and employees was to compile a list of emergency contacts so that they could reach the emergency assistance if needed.
To get started, we have made a list of action items and additional resources that are intended to aid in your recovery related to Hurricane Harvey:
First Things First
Property and casualty agents are usually overwhelmed when major disasters strike. If you cannot get in touch with your agent, here are some things to consider:
- Make only the repairs needed to prevent further damage such as covering holes in the roof. The adjuster will need to see the damage, so don’t make extensive repairs or get rid of damaged high-price items. Take plenty of pictures.
- Save all receipts for replacement housing including food costs, additional costs for transportation, and storage expenses. The client may be eligible to receive an advance from the insurance company for these expenses. Anything not reimbursed may be able to be claimed as a deduction on your taxes as a Casualty Loss (you can generally deduct losses above 10% of your Adjusted Gross Income on IRS Form 4684).
- Make a list of the damage as soon as possible. It may be helpful to draw a floorplan of the home to help recall what filled the space.
- File the claim as quickly as possible and document all interactions with insurance companies, FEMA, or anyone else related to helping with the disaster.
Help With Damage Expenses
If the damage from a storm is from the roof down, homeowner’s coverage applies. However, if the damage is from the bottom up, such as the floods in Texas, only flood insurance will pay. The National Flood Insurance Program provides basic coverage of up to $250,000 for building property and up to $100,000 for contents. Most people do not buy additional coverage.
For losses not covered by insurance, other help might be available. If your area has been deemed a federal disaster by the President (many counties in Texas have), you should be eligible for federal disaster relief – www.disasterassistance.gov is the go to area to research and apply for aid.
If you own a small business that has been affected by a disaster, the U.S. Small Business Administration provides low interest disaster loans in declared disaster areas. The application is completed online. These loans can be a lifeline especially where conventional financing is not available.
Importance of Advance Home Equity Lines of Credit
It is in times like this where financial planners like us ask you to plan to have an “emergency fund” of 6 months expenses. If you do not have the liquidity to deal with emergencies, a home equity line is one avenue to obtain needed cash. However, a home equity line will not be approved if a home is already damaged or under repair. We encourage all clients without resources to rebuild to have a home equity line available in the event of a major disaster. If you do not have one, consider applying for one now or after the repairs are complete.
Other lines of credit (like credit cards) can be used, but make sure you prioritize your expenses so that you don’t find yourself in a larger hole than you can handle.
Time to Make Insurance Claims (Do it ASAP)
In the event of a natural disaster, the possibility of having your property damaged is very real. Whether it’s your car or home, you’re going to want to make sure your major possessions are covered. Contacting your insurance provider promptly after the storm has passed might help to expedite the process and give you some peace of mind. You will also want to take pictures of your home and possessions that were damaged or destroyed BEFORE having them hauled off. Also, avoid signing any documents while under stress.
A new law, set to took effect Friday September 1st and it aims to crack down on frivolous insurance lawsuits. But House Bill 1774 also reduces the penalty fees that insurance companies face for late payments if the policyholder files a lawsuit. Although I feel that this will be delayed, I would suggest that you file your claim as soon as possible if you have not done so already.
Review Assets, Liabilities and Start a Budget
Natural disasters can bring about all sorts of financial complications, so take some time to assess your financial standing. Go over your bills and set priorities so you can manage your fiscal responsibilities while money is tight. This can be especially helpful if your income is interrupted and you think you’re going to have issues paying credit cards or other loans. You may be able to negotiate a temporary payment plan or grace period, providing you notify them quickly and can give a date for when you think you should be able to make normal payments again. Be proactive in contacting ALL your creditors BEFORE you are delinquent. You will find that many already are ready to give you relief due to the impact of Hurricane Harvey.
Apply for FEMA Disaster Assistance
After Harvey, most of Texas and some of Louisiana are in Presidentially declared disaster areas. With this, you might qualify for federally funded disaster assistance. To find out, check with the Federal Emergency Management Agency (FEMA) by visiting its website at Fema.gov. As with insurance, the sooner you contact them, the better.
Start the Rebuilding Process
Chances are a natural disaster will force you to use up a lot, if not all, of your emergency savings. Having an emergency fund can be monumentally helpful in maintaining financial stability, so it might be in your best interest to build it back up as soon as possible. If needed, you may want to find a little side job that, while not taking up too much of your time, can provide some extra cash. Additionally, diligently and consistently tracking your expenses can help you uncover a variety of new opportunities to save more money. Also, consider everything that may be available in terms of National Disaster Relieve (such as a delay in filing taxes and a reduction in 10% penalties if you need to withdraw funds from your IRA, etc.).
Beware the Fraudsters and Scammers!
According to this AP Report, Federal prosecutors will lead a new Houston-based group created to help law enforcement agencies respond to an inevitable wave of fraud and other criminal activity set off by Harvey’s punishing rains.
Authorities are warning residents, volunteers and officials in flood zones in Texas and Louisiana they could be targeted by storm-related scams, contract corruption, document fraud, identify theft and other crimes. They emphasize that the easy availability of personal information and documents on the internet has widened criminal activities and potential victims to anywhere in the U.S.
The new working group will combine Justice Department prosecutors, FBI and other federal law enforcement agents with Texas and Louisiana state officials in a team aimed at quickly identifying criminal trends and deploying resources for investigations and prosecutions.
Also, please check out FEMA’s Hurricane Harvey Rumor Control. Per FEMA, the top scams in Houston have been:
- Flood Insurance Premium Robo-Calls (lying that premiums are past due),
- Inspector or Contractor Repairs (that FEMA charges for inspections)
- Homeland Security Inspections (impersonating Homeland Security)
Review other Potential Government Resources to Help you Rebuild
- The IRS has already made provisions for easier Retirement Plan Hardship Distributions and Loans. Please note that the 10% penalty on early distributions still applies (age 59 ½ in most cases) as this needs to be passed by Congress.
- The IRS has extended time for us to file our 2016 Taxes that would have been due on October 16, 2017 (if you filed an extension). You can now file as late as January 31, 2018 (Not an excuse to procrastinate…but rather a time for you to get your records in order). They also give flexibility of the timing of claiming Casualty Losses.
Federal Government Resources for Hurricane Harvey: There are many Federal resources available to help you in the areas of:
- Benefits Grants and Loans
- Food Assistance
- Affordable Housing
- Unemployment Benefits (for those that have lost their jobs)
- Small Business Loans (for businesses that were impacted by Harvey)
- Jobs helping FEMA (if you need a temporary job)
- Other FEMA Resources for Hurricane Harvey
Legal Issues – Baker Botts Harvey Crisis Response Guide
Our article above deals primarily deals with financial issues. There is also the legal issues that you may need to address. As part of their Harvey relief efforts, Baker Botts has put together this linked “Harvey Crisis Response Guide” for those who have been impacted by Hurricane Harvey. Baker Botts compiled the information from hundreds of sources to make it accessible in one resource.
The Guide covers a broad variety of topics, such as how to file flood claims, renters’ rights, how to replace your passport and/or credit cards that may have been lost or damaged in the storm, information about schools and about small business administration loans, and tips to avoid home repair fraud. It also contains a broad list of other resources and includes contact information for them.
As always, your team here at Avidian Wealth is here to help. Please call us if we can be of assistance.
Executive VP, Financial Planning
Avidian Wealth Management
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