The Grownup Perspective on the Fires in Australia

(Image credit: Wikimedia Commons) #Australianbushfires

As of the 10th January, 2020, the intense bushfire season in Australia has claimed 28 souls.

It has also burned an estimated 26 million acres, destroyed more than 5,900 buildings, killed over 500,000 native animals and farm stock, and led to the mandatory evacuations of thousands, of whom my wife and I happened to be two.

These fires have made global news, which is probably a good thing, given the importance of understanding their true cause and the best ways to minimise the chances of a repeat of a fire season like this.

But the fires also served as a powerful reminder, for us and for countless others, that bad things don’t just happen to other people on the news.  They can, and often do, strike without warning in our own lives. They can hit us closely -- the fires got to within three kilometres of our home in suburban Melbourne -- and without warning.  And they can affect our families, those nearest and dearest to us, whether we are prepared for them or not.

Having to deal with the catastrophe now unfolding throughout Australia, and watching the casualty count climb, gave us something else important to consider, something that I realised needed to be written about.  This is something that’s not necessarily a lot of fun to deal with, but that we realised long ago that, as adults, we simply had to address: our own mortality.

Of those 28 souls who tragically lost their lives to this deadly bushfire season, how many would you estimate have appointed someone to make things easier for their (traumatised) family members by properly overseeing their affairs in the event of their passing?  Someone to tell family members where all the ‘financial documents’ are? Where all the investments are placed? What the current tax situation is? My guess, based on nothing more than personal experience accumulated over the years as a financial adviser, is that the number is certainly lower than 25%, and possibly lower than 10%, of the total.

People simply do not like to think about the possibility of their own passing, especially if they are relatively young.  Yet bad things can happen to us at any age, as this tragic fire season has demonstrated all too clearly.

I can’t tell you how many times, following a fire, a flood, or some other major disaster that took significant human life, I’ve received a call like this: ‘We think you might be working with Bob and Mary Smith, but we’re not 100% sure.  The reason we’re calling is that Bob’s brother Mike just passed away. And we’re trying to identify either family members, or other members of the community, who would know more about what Mike’s insurance situation is’. For ‘insurance situation’, you can insert virtually any financial, logistical, or practical loose end: whether the person had a will and/or enduring power of attorney, what the funeral arrangements are supposed to be, who the other family members are who should be notified about what has just happened -- you name it.

Why do I mention all of this?

Because even in the wake of a huge disaster, we can find something positive to take away from all those grim headlines.  We can remind ourselves that grownups, almost by definition, need to think ahead. We can put ourselves in the situation of those surviving family members who are now having to deal not only with the loss of a beloved family member in a horrifying disaster, but with the preventable chaos of having no one who knows where all the important ‘stuff’ is, no one who knows what the deceased’s intentions were.  My wife and I have worked with such an accountable person.

You should, too.

It comes as a surprise to some people (including a fair number of accountants and attorneys), that being that accountable person is one of the most important jobs a financial adviser can do.  In fact, I would argue that an appropriately experienced and educated financial adviser is probably far better positioned to carry out this role than an accountant or an attorney, for the simple reason that we are, in the average situation, more likely to have a clear picture of the person’s overall financial portfolio, life objectives, and family relationships than the average accountant or an attorney would.

Now, I’m not saying that accountants and attorneys are not useful. Far from that! In fact,  collaboration is key to ensure the very best outcome possible in an otherwise awful situation!  At the end of the day, however, what matters is not whether you select a financial adviser to fulfil this important role, but that you pick someone to do this job, and that you have the essential conversations with that person sooner, rather than later. 

Today’s headlines should remind us of two critical things that apply whether we happen to be in the fire-ravaged areas of Australia, the earthquake zones of Puerto Rico, the snowbound portions of the American Southwest, or anywhere else. Yes, these events should remind us of the potential imminence of a tragic event.  But they should also remind us of the difficulty and trauma awaiting our loved ones if they are forced to deal, not just with the death of someone close to them, but also with the chaos caused by the blizzard of unanswered questions that arise about our planning, our finances, and our intentions.

This means today’s headlines should inspire us to designate an accountable person to oversee our affairs in the event of our passing.

Years ago, I had a client named Frank (a young bloke of 42) who asked me to serve in this role of accountable person.  We went through all of his finances, all of his outstanding issues, and all of his priorities. One of the big issues he brought up was the reality that he had had seven years of unfiled federal tax returns!

Frank asked me to start the process of securing the services of both a tax accountant and an attorney to negotiate a settlement on these years of unpaid taxes with the government. Of course, we did.  (We eventually reached an agreement with the government.) At the end of our meeting, he heaved a sigh of relief. ‘Hari’, he said, ‘I just couldn’t live with myself if I thought I was leaving a mess for my loved ones to deal with’.  

That was a grownup observation, from a grownup vantage point. This week’s headlines reminded me that Frank’s perspective is one that each of us should be ready to assume.

So here are some things to think about:

• Where are your important documents stored?  In hard copy? In soft copy?
• Who is your accountable person?  Do they know where your ‘stuff’ is?
• Does your accountable person know:

* Who your next of kin is?

* Whom to contact in times of dis/stress?

* Who your financial adviser is?

* Who your tax accountant is?

* Who your attorney/lawyer is?

Let me know what you thought of this article.  You can reach me at [email protected] or on Twitter (@HariMaragos)