If You Couldn’t, Who Would Manage Your Finances?

Have you ever found yourself wondering:

“What would happen to our finances if I couldn’t manage them anymore?”

It’s not a pleasant question to think about, but it’s one of the most important financial planning conversations a family can have.

When couples first get married, they develop a system for managing their finances. Sometimes they divide the responsibilities—one spouse pays the household bills while the other manages savings and investments. Other times, one spouse naturally takes responsibility for everything while the other takes a back seat. Over the years, that system becomes routine, and it works because everyone knows their role.

But what happens if the person managing the finances suddenly cannot?

Whether the reason is an illness, an injury, cognitive decline, or even an extended hospital stay, someone else will need to step in either temporarily or permanently. Often the assumption is that the other spouse could simply take over.

Sometimes that is a correct assumption. If the only reason one spouse handled the finances was because the other wasn’t particularly interested, then learning the process may be all that’s needed. This is especially true when responsibilities have already been divided—for example, one spouse handles day-to-day bill paying while the other manages investments.

However, even after 40 or 50 years of marriage, some couples know they don’t make the best teacher-and-student team. The spouse who has managed everything often has a system that has evolved over decades, and explaining it patiently isn’t always easy. Transferring that knowledge can quickly become frustrating for both people.

I’ve had several clients recognize this before it became a problem. Rather than struggling through the process themselves, they hired Triad Personal Paperwork Services to learn their money management process so I could patiently teach the other spouse how everything worked. It removed the emotional tension while ensuring the spouse became comfortable understanding the process. It also positioned us to be a support if that spouse needs to came up-to-speed.

Of course, the backup doesn’t have to be a spouse.

Many families identify an adult child or another trusted relative who could step in if needed. Others look outside the family. While a close friend is less common—many people prefer to keep their finances private—it can be an excellent solution, especially for solo agers who may not have nearby family members. In those cases, close friends often already know much of the person’s situation and may be the most practical choice.

Professional help is another option. Depending on the family’s needs, that could include an attorney, a tax professional, or a Daily Money Manager who can coordinate the day-to-day financial responsibilities.

Regardless of who you choose, the common need is to create documentation for the person potentially taking over. With habits developed over decades, much of that information is in the head of the person doing the money management. Without good documentation, even the most capable person can struggle to figure out what needs to be done.

For day-to-day money management, documentation should include:

• Every regular monthly, quarterly, and annual bill that needs to be paid.
• How each bill is paid—automatic payment, online bill-pay, paper check, credit card, debit card, or direct debit.
• When each statement arrives (either in paper form, or available online) and when payments are due.
• Which account the payments come from.
• Sources and timing of income that is used to pay the bills.

If someone will also be responsible for managing savings and investments, the documentation becomes even more important. It should identify every asset account, explain the purpose of each one, note which financial professionals are involved (if any), and describe the overall investment strategy. If withdrawals are being taken, the instructions should explain how much is withdrawn, how often, and from which accounts.

The Life Manual

In the same way that a user’s manual describes a product and how to use it in detail, a life manual is needed to document all of the aspects of your life so that someone else can pick it up and learn it.

This manual brings together the important aspects of a person’s financial life in one place. Sometimes it contains the information directly; other times it serves as a roadmap that tells someone exactly where to find the information. Either way, it prevents a future caregiver or family member from having to piece everything together while hoping they haven’t overlooked an account or missed an important bill.

In addition to the financial aspects of a household, there are other categories of information that should also be documented such as medical contacts, household maintenance contacts, pet-related contacts, personal property information and contacts and more.

That can be a daunting task to document all of this information. While some feel comfortable doing this themselves or by using one of the many documentation template systems available, others have hired me as a Daily Money Manager to assemble all of that documentation for them.

The goal isn’t simply to have good records. The goal is to make an unexpected transition as smooth as possible.

Whether your backup is your spouse, an adult child, another family member, a trusted friend, or a professional, having a well-documented plan provides confidence for everyone involved. Instead of wondering what to do next, they’ll have a clear roadmap to follow.

The best time to answer the question, “Who would manage our finances if I couldn’t?” is long before anyone actually has to.