Broker Check
Legacy Planning: How to Protect the Financial Future of Your Spouse and Loved Ones

Legacy Planning: How to Protect the Financial Future of Your Spouse and Loved Ones

December 07, 2020

What happens after you die? Admittedly, it’s something not many of us like to think about nor necessarily know the answer to. Often, one of the biggest concerns people have is whether their spouse, children, and/or loved ones will be taken care of financially when they’re gone.

In order to ensure that your spouse and loved ones remain financially secure, it is essential to have a sound plan in place—a plan that goes beyond simply writing a Will. Legacy planning offers a more holistic approach to estate planning which includes retirement planning, life insurance, and more. Follow our tips below to help protect the financial future of your spouse and loved ones.

Draft a Will to Settle Your Affairs and Distribute Assets

Wills outline very clear instructions on how to handle difficult decisions of life and death. It can name a guardian for minor children, designate who should take care of pets, as well as enable you to leave assets to charitable organizations. You can also designate how certain personal memorabilia, such as jewelry or family heirlooms, are divided within a Will.

If you die without a Will (known as dying “intestate”), your state law will decide how your assets are divided. This can lead to an extended probate process (a legal process that wraps up a person’s legal and financial affairs after their death) that can incur expensive legal fees and decrease the inheritance that is ultimately distributed to your loved ones and the speed at which they receive it.

Establish a Living Trust to Avoid Probate

Similar to a Will, a living trust describes exactly how and when your assets will be distributed after your death. One of the primary benefits of establishing a living trust, though, is that you can avoid what could be a lengthy and costly probate process, as you might otherwise encounter with a Will.

Some assets that you’ll want to include in a trust to avoid probate include real estate, death benefits from insurance policies, retirement accounts, stocks, and any assets in a pay-on-death account. Most living trusts also include jewelry, art, memorabilia, and other assets that don’t necessarily have a title on them. Some beneficiary designations, such as insurance policies, should also be changed to your trust, so the court can't control them if they are incapacitated or no longer living when you pass away.

Consider Your Life Insurance Policy

It’s critical to evaluate your life insurance policy, as the specified money or annuities will go to your beneficiaries after you pass away. With proper planning, life insurance money can help replace lost income and pay for expenses so your loved ones can move forward with less financial stress.

One widely followed rule of thumb for estimating a person’s insurance needs is based on income, which can range from policies valued at five times to up to ten times one’s annual income. For a more accurate estimate, consider completing a Detailed Needs Analysis, or “DNA test.” This test takes into account a wide range of financial commitments, including short-term needs, long-term needs, potential new obligations, and liquid assets, to help better estimate insurance needs.

Invest for Retirement and Beyond

When putting together your estate plan, it’s important to be strategic when it comes to investing and allocating assets throughout your lifetime. This not only ensures you’ll have enough money to sustain retirement, but that your spouse will have sufficient income to last throughout their lifetime as well.

The best approach is to segment money into three different buckets based on your investment time horizon, volatility tolerance, and income needs. This Bucket Plan philosophy accounts for the variables that can negatively affect the long-term success of a financial plan (like volatility, taxes, inflation, and life expectancy) and strategically segments your money into three buckets: the immediate (Now), the short term (Soon), and the long term (Later).

The “Later” Bucket, in particular, is designed for long-term growth and legacy planning. While the first two buckets are set up to buy you a time horizon, this bucket may contain investment vehicles with a longer time commitment and greater growth potential. These investments can play a critical role in legacy planning when it comes to providing income for a surviving spouse.

Work with a Holistic Financial Advisor

Often times, financial professionals operate in silos without a full picture of your financial needs, goals, and resources. That’s where the holistic advisors at The JL Smith Group can help ensure your family is well protected from all angles.

Based on decades of experience, we understand that the best financial plans are holistic in nature and incorporate all aspects of your financial life, including: investments, insurance, tax planning, Social Security strategies, Medicare and estate planning. By taking a holistic approach, we can help you avoid tax inefficiencies and missed savings opportunities and identify critical legal documents that will help you leave the legacy you want for your loved ones.

Contact us today to request a complimentary consultation to discuss your holistic planning needs today!

Financial Planning and Advisory Services are offered through Prosperity Capital Advisors ("PCA") an SEC registered investment adviser with its principal place of business in the State of Ohio. The JL Smith Group and PCA are separate, non- affiliated entities. PCA does not provide tax or legal advice. Insurance and Tax Services offered through The JL Smith Group are not affiliated with PCA. Information received from this website should not be viewed as investment advice. PCA is not responsible for and does not control, adopt, or endorse any content contained on any third party website. For information pertaining to the registration status of PCA, please contact the firm or refer to the Investment Adviser Public Disclosure web site (