Top 10 Ways to Protect Your Spouse
Are you the person in your household who handles most or all of the financial and planning matters, or are you the one who has relied on your spouse to manage these things for years or even decades? If you are the latter and don’t want to be left in the dark someday, please grab your wife or hubby and read through this together.
In the spirit of David Letterman, today I’ll discuss the top 10 proactive steps a loving spouse can take, right now while both are alive, to ensure his/her partner would be left in the strongest possible financial position if he/she were to pass away unexpectedly. Taking these steps will minimize stress, reduce costs (like probate or taxes), provide immediate resources, and give the survivor a confident path forward rather than having his/her life thrust into complete disarray. These measures draw from established estate planning principles and focus on seamless asset transfer, income replacement, organization, and professional support. Laws vary by state so please engage professional counsel or do your homework before making changes to legal documents.
I’ve had a number of clients lose their spouse over the years and I can confidently say the emotional distress of such a loss is more than enough for most people to handle. Adding uncertainty due to a lack of planning is, at best, irresponsible. So, if some or all of these action items remain undone, stop making excuses, come to terms with your mortality, and make a date with yourself (or me) to promptly address them.
Let’s dive in…
10. Build liquidity and minimize unnecessary debt.
Maintain an emergency fund (3 to 6 months of living expenses) in joint bank or investment accounts. Returns are secondary to liquidity here, although utilizing money market funds or short-term treasury bills are superior to simple savings accounts. Pay down high-interest debt where possible, ensure credit cards are in both names as owners (not just authorized users) for independent credit history, and document all debts with payoff details. Having immediate access to cash will calm nerves and enable better decision making and knowing what debts need to be serviced or paid off will keep you out of credit trouble.
9. Document funeral wishes and set aside final expense funds.
Write down your preferences (burial/cremation, service details, donations vs. flowers, etc.) and consider funding a dedicated account to cover funeral/celebration of life expenses. Pre-planning prevents emotional overspending and relieves your spouse of tough decisions during grief.
8. Review and update all beneficiary designations.
Name your spouse as primary (and adult children or a trust as contingent beneficiaries) on life insurance, retirement accounts (IRA, 401(k), SIMPLE, SEP, etc.), annuities, bank accounts and investment accounts. You can name beneficiaries on bank accounts using a POD or Payable on Death form and on investment accounts using a TOD or Transfer of Death form. These designations override your will and provide direct, tax-efficient, probate-free transfers. Review these periodically, especially when important relationships change. I once asked a client who the beneficiary of her life insurance policy was and received a blank, terrified stare in response. She then told me it was her ex-husband and promptly excused herself to call her insurance company immediately to remove him.
7. Title assets strategically for easy transfer and tax benefits.
Use joint ownership with rights of survivorship (JTWROS) or place assets in a trust. Assets passing via trust are conveyed privately, quickly, and with little to no expense. There are many kinds of trusts so consult a qualified attorney to determine which is best for you. In community property states, proper titling as community property allows the surviving spouse to receive a "double step-up in basis" on an entire asset, for example, real estate. This maximizes capital gains tax savings when the survivor later sells. Example…you buy a rental property for $400,000. Years later, one spouse dies when the property is worth $800,000. The survivor’s basis in the property becomes the full market value at the date of death, or $800,000. Should the survivor then elect to sell the property, there would be no gain, and therefore no capital gains tax even though the property had doubled in value. Click here to see if your state is a community property state. If your state is an Opt-In community property state, Opt-In simply refers to the ability for married couples to voluntarily choose community property treatment for some, or all their assets (often via a trust or agreement) should that enable a favorable outcome.
6. Create or update your will and trust.
You may be surprised to learn that when a married person dies without a will, their assets do not automatically go to the surviving spouse. Instead, the state’s intestacy laws dictate. Generally speaking, assets titled jointly, investment accounts and insurance policies with a spouse named as beneficiary, and assets owned by trusts with spousal beneficiaries, will pass directly to a spouse. For probate assets (assets not passing via trust, title, or named beneficiary) the rules vary. Rules are different in community property states vs common law states. There is too much complexity to detail it all here, but the message I want you to receive is that you should promptly create a will and possibly a trust if you haven’t done so already. Also be sure to draft and execute durable powers of attorney for property and healthcare, as well as a living will. For a bit more detail, check out my commentary from October last year. If you already have these documents, be sure to review and revise as needed over time. The most common reason for updating such documents are family and relationship changes, changes in assets, and changes in tax laws. Many professionals suggest a review every three years or so.
5. Inventory all assets, debts, and personal items—and share the list.
List physical items (home, vehicles, jewelry, heirlooms), financial holdings, pensions, Social Security details, etc. along with any specific bequests. Provide copies to your spouse and executor. This complete picture supports accurate tax filings, benefit claims, and equitable distribution while minimizing disputes.
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4. Secure adequate life insurance.
Life insurance is rarely a need but very often a want. A loving spouse will commonly want to be sure his/her surviving spouse has adequate financial resources to maintain the lifestyle he/she has become accustomed to. There is no magic formula for deciding how much life insurance you should have, but I encourage you to have enough to replace your income, cover debts/mortgage, funeral costs, and provide a buffer for the survivor. Calculate amounts based on your family's lifestyle, children's ages, and existing assets. If you would like help, call me and I’m happy to assist. We’ve built a spreadsheet on which we can vary inputs and quickly determine appropriate insurance amounts. Life insurance delivers immediate, tax-free cash when it's needed most. Do this as soon as you recognize you want it. Don’t wait until you get around to writing a will or trust which sometimes takes months or years (depending on how motivated you are). Better to have money with no documents than documents with no money.
3. Involve your spouse in the finances regularly.
Hold periodic (monthly or quarterly) meetings to review accounts, budgets, bills, and investments. Even if your spouse prefers not to handle day-to-day details, this builds familiarity and confidence so they aren't starting from zero while still grieving. It prevents the common scenario where one spouse has handled everything, leaving the survivor overwhelmed at what is likely the most difficult time of his/her life.
2. Assemble and introduce your spouse to your professional "A-Team."
Work with an estate planning attorney, financial advisor, and CPA/tax advisor. Introduce your spouse now so they have trusted relationships and won't fall prey to opportunistic “advisors” later. These experts will help you create and stick to a financial plan, invest assets commensurate with your comfort level with risk, minimize taxes, optimize Social Security benefits, assist with life insurance and long-term care planning, and keep your wills, trusts, and related documents up to date. Review the full plan together every 2–3 years or after major life changes.
1. Organize and document everything in one accessible place.
Create a comprehensive binder or digital folder (with secure backups) listing all accounts, policies, passwords, online logins, debts, assets, contacts, and a "letter of instruction" explaining what to do first. Include copies of key documents. Store originals safely but share access info with your spouse (or a trusted person). Update annually. This single step eliminates chaos and allows quick access to cash and benefits. I have a form for this that is yours for the asking. Email me at ken@elevatecapitaladvisors.com.
Taking these steps is one of the deepest acts of love and stewardship you can perform. Start with organization and professional consultations—they compound into lasting security. Review everything annually or after big changes (marriage, birth, inheritance, law updates). Your surviving spouse will face many emotional challenges; these preparations remove financial ones so they can focus on healing. Consult licensed professionals in your state for personalized advice, as this is general guidance.
I pray you or someone you care about will find this commentary useful. Thank you for taking time to read it.
Ken Armstrong, CFP®, RICP®, ChFC®, CLU®, CASL®, CLTC
CEO & Senior Wealth Management Advisor
Elevate Capital Advisors
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