Building Your Financial Legacy: A Practical Guide to Managing Your Family's Money Matters

As the new financial year wishes become reality for many families, it’s the perfect time to address a question most people avoid: What happens to your finances if you can’t manage them anymore? Whether due to illness, incapacity, or passing away, failing to plan creates chaos for those you love. Here’s how to protect yourself and your family.

The Harsh Reality of Being Unprepared

The current economic landscape adds urgency to this conversation. Recent labor market data shows the unemployment rate has climbed to 4.4%, the highest level since 2021. Meanwhile, employers announced over 70,000 planned layoffs in November alone, with the year-to-date total reaching 1.17 million—a staggering 54% higher than the same period last year. Private companies laid off 32,000 workers in November, with small businesses hit particularly hard.

But economic uncertainty isn’t the only reason to get your financial house in order. Consider this scenario: a family where one spouse handled everything—all bills, all accounts, all financial decisions. When that person fell ill for just three weeks, essential bills went unpaid. The electric bill, the mortgage, credit cards—suddenly the household was in serious financial trouble. The spouse simply didn’t know what to do or where to find critical information.

This isn’t uncommon. Certified financial planner Beth Pinsker discovered this reality firsthand when her mother needed surgical care. Despite having proper planning in place, the practical work of managing another person’s finances proved far more complicated than expected. The real challenge wasn’t the big picture—it was the granular details nobody ever discusses: Which bills are paid electronically? Which ones still come by check? Where are the account numbers? What are the passwords?

The Essential Documents You Need Right Now

Before crisis strikes, you need what experts call a “death file”—though it’s really a comprehensive financial organization system that works during life and after. This could be a physical folder on your computer desktop labeled clearly, manila folders in a filing cabinet, or a well-organized digital filing system. Whatever format you choose, the goal is the same: make it searchable and accessible.

The durable power of attorney stands as your most critical document. Unlike popular misconceptions, your spouse cannot automatically access your accounts or make financial decisions on your behalf unless they’re jointly named. Financial institutions see each person as an individual and won’t grant access without proper legal authority.

Why does this matter? Consider a home equity loan you might need during a health crisis—you can’t take one out on a joint mortgage if one party is incapacitated without power of attorney documentation. Banks will demand the signature of the person who can’t provide it. Modern financial security (voice recognition, signature verification, two-factor authentication) makes it virtually impossible to work around this without proper paperwork.

The durable power of attorney carries real responsibility. As the designated person, you must act in the principal’s best interest and can be held accountable if you don’t. This legal structure actually protects families prone to conflict—unlike simply being a joint account owner (where someone could theoretically take whatever they want with no accountability), a power of attorney creates a documented trail of responsibility.

Healthcare Decisions and Your Wishes

Beyond financial matters, two medical documents often confuse families: the healthcare proxy and the living will. The healthcare proxy authorizes someone to make medical decisions if you’re incapacitated. The living will documents your specific wishes about resuscitation, breathing tubes, and extraordinary measures.

Hospitals and doctors require written documentation. When siblings disagree about end-of-life care, written directives prevent devastating family conflict. Your parents’ written wishes should guide all decisions, not emotion or family dynamics.

The Market Environment: Why Financial Planning Matters Now

The broader economic picture reinforces the urgency. Bonds are delivering some of their best returns in two decades, with total returns exceeding 7% so far this year. For those managing money that needs to stay safe while earning returns, this environment presents opportunities—but only if someone understands your strategy.

Money market funds currently hold $8 trillion, hitting record levels. They’re offering 3.8% average yields compared to just 0.6% for typical savings accounts. For those tasked with managing your finances, understanding these distinctions between treasury-focused funds, short-term corporate debt funds, and tax-advantaged municipal funds could mean significantly better outcomes.

This year also highlighted why tax planning matters. With nearly 200 stocks in the S&P 500 trading in the red despite the broader index’s 18% gain, tax-loss harvesting became particularly relevant. Selling underperforming investments to offset capital gains while remaining within IRS limits (up to $3,000 in ordinary income) can meaningfully reduce your tax bill. For those inheriting your portfolio, such strategies need proper documentation to implement correctly.

Having the Difficult Conversation

Procrastination, not complexity, prevents most people from doing this work. Understanding the real consequences—both emotional and practical—helps overcome resistance.

Start by getting your own affairs in order. Then approach family members with empathy: “I want to help if something happens. I can’t without these documents. It’s like giving me an emergency key to your apartment. If you fall, wouldn’t you want someone who can actually reach you?”

Frame it as an act of love. You’re not being morbid—you’re ensuring that if tragedy strikes, the only hardship your loved ones face is the emotional loss, not bureaucratic chaos. When you truly need financial help, you want someone who can act immediately, not someone fumbling through papers trying to figure out which account holds what or how bills get paid.

Your New Financial Year Action Plan

As you make new financial year wishes, add this to your list: Get the documents done. Schedule time with an estate planning attorney if needed. Organize your financial information. Have the conversation with family members.

The work is hard, but not nearly as hard as what happens when you don’t do it. Your family’s financial security—and your peace of mind—depends on acting now.