If you suddenly cannot manage your money, who will do it for you?

New business data points to the fact that Most financial planning for emergencies revolves around having health insurance and an emergency fund.

But there is another question worth asking: what happens to your money if you are alive, but temporarily or permanently unable to manage it yourself?

You could have enough savings to pay for treatment and household expenses, but that money is not much help if nobody knows where it is or has the authority to deal with it.

This is why planning for incapacity deserves a place alongside writing a Will and buying insurance.

Start by making your finances easier to find

Someone you trust should know which banks you use, where your investments are held, what insurance policies you have and where important documents are kept.

That doesn't mean sharing every password or PIN.

Keep an updated financial record containing basic details of bank accounts, set deposits, mutual funds, demat accounts, EPF, NPS, insurance policies, loans and property.

The aim is simple. If you cannot explain your finances yourself, your family shouldn't have to search through years of paperwork to work out what you own.

Look at how your bank accounts are operated

If all your important money is held in accounts that only you can operate, consider what would happen if you were suddenly unable to sign documents or visit a branch.

A suitable joint account may make everyday money easier to manage in some circumstances. For example, an account operated on an "either or survivor" basis can allow the other account holder to continue carrying out permitted transactions.

Don't add someone as a joint holder simply for convenience, though. Understand the rights you are giving them and choose someone you trust completely.

Additionally make sure your bank's KYC records and contact details are current.

Nomination is another piece of financial housekeeping that is easy to postpone.

Review nominations across bank accounts, mutual funds, demat accounts, insurance policies and other investments.

But remember that nomination and authority to manage your money while you are alive are not necessarily the same thing.

There is, that stated, an important provision for securities investments. SEBI's current nomination framework allows a single investor to designate one nominee to operate a demat account or mutual fund folio if the investor becomes physically incapacitated but still has the capacity to contract.

That facility can be useful, but it needs to be arranged before it is required.

Consider whether you need a Power of Attorney

A Power of Attorney, or PoA, allows another person to carry out specified actions on your behalf.

Depending on how it is drafted and accepted by the institution concerned, this could include handling certain banking, investment or property matters.

A PoA can be broad or limited to particular tasks.

But don't download a standard document and assume it will solve every problem. The powers being given, the circumstances in which they can be exercised and the requirements of banks or other institutions need to be considered carefully.

It is worth taking legal advice when putting one in place, particularly if substantial assets are involved.

A Will doesn't solve this problem

Having a Will is important, but it deals with what happens to your assets after your death.

It does not by itself give someone the ability to run your financial life while you are alive but unable to manage it.

You as a result need to think around the two situations separately.

Your estate plan should explain what happens to your assets after death. Your incapacity plan should consider who can deal with money while you are still alive.

More complicated finances may need more planning

If you have substantial assets, live alone, own a business or are worried around how your finances would be managed during long-term incapacity, basic arrangements may not be enough.

A properly structured private trust may be worth discussing with an estate-planning lawyer. Trusts can be designed so that trustees manage specified assets according to the terms laid down in the trust deed.

This is a more complex step and isn't necessary for everyone.

For many families, the starting point is much simpler: organise your financial information, review account operations and nominations, and work out who could legally manage important financial matters if you couldn't.

The best time to make these arrangements is while you are perfectly capable of handling everything yourself.