Q&A: Legacy Planning Explained

First Service Credit Union
8/1/2018 12:00:00 AM - 4 min. read

Planning your financial future doesn’t end once you’re comfortably into retirement. Create a legacy plan to ensure both your loved ones and hard-earned money are safe once you’re gone. With a legacy plan, you’ll know your inheritance will be used according to your wishes.

We sat down with veteran financial advisor Michael Alexander for advice on the matter. Michael is a CUSO Financial Services, L.P. registered investment advisor who helps First Service Credit Union members achieve their financial goals.30

Here’s what he had to say.


What are the key elements of a legacy plan?

For the majority of people, the key elements will include a will, life insurance, long-term care insurance, and named beneficiaries on all of your assets. Individuals with a high net worth may also need a trust.


How does someone create a will?

In Texas, a person may handwrite a will; however, I strongly recommend using a legal service. Some legal offices offer services online, while others will meet with you in person. I normally recommend four key documents be signed: a will, a durable power of attorney for financial matters, a durable power of attorney for health matters, and a living will. I strongly recommend talking to an attorney specializing in wills to get answers to all your questions about wills, powers of attorney, and living wills.


How much life insurance should a person purchase and what kind?

There is a broad range of opinions on this subject. I normally recommend no less than five times your annual income, including group term insurance available through work. I also recommend getting as much of that available through work, but not all of it. With frequent job changes today, once out of a job, you are also out of your group term coverage. This will allow your loved ones to continue a comfortable lifestyle after you’re gone.

And don’t overlook the stay-at-home or underinsured spouse — I always recommend getting at least $100,000 on the spouse, if there are children in the home.


What’s a trust and who needs one?

Normally trusts are recommended for three reasons: privacy, minimizing estate taxes, and ensuring the assets are distributed exactly as you want.

Trusts are essential for those with high net worth estates. For the combined gross estate, assets in excess of $5,490,000 are subject to estate taxes. Putting assets in a trust at least five years before death, may help abate some of that tax. I strongly encourage seeking an estate-planning attorney to get answers to all trust questions.


If someone doesn’t have many assets, do they need to create a legacy plan?

Yes. By having a plan, you can ensure that your assets, whether big or small, go exactly where you intend for them to go after your death. A legacy plan can consist simply of your will and investments or savings.


How can a person make sure their legacy plan is carried out when they’re gone?

Legacy planning elements are legally binding documents that must be carried out as documented; however, they cannot be executed unless someone knows where to find them. Once you’ve created a will, purchased life insurance, and taken care of the other legal documents, be sure to let your spouse and a close family member know where your documents are located. Keep them in a safe area.


What other advice do you have for someone creating a legacy plan?

It’s important to bear in mind your current financial needs when legacy planning. Make sure you have enough to live on, first — that should be your priority. Also, rely on your financial advisor to be your trusted resource guide for legacy planning. They should be able to point you in the right direction for legal and tax professionals, as well.

[30] Non-Deposit Investment Products: First Service Wealth Management Financial Professionals are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty States of the United States of America. FR2877186.1-12119-0122.