Estate Planning for Military Families

Whatever the time of year, it is always good for members of the military and their loved ones to create or revisit their estate plan. Military families face unique estate planning considerations that others do not, especially when a family member is deployed overseas or receives a temporary duty assignment. In addition, service members have access to special benefits and resources that can add complexity to the planning process, so seeking help if you are a military family is important.

Whether you are beginning your military service or have been serving for some time, the following may be important in your estate planning.

Factors to Consider

Estate plans should be customized to each person’s particular circumstances. As you create or update your plan, consider whether it addresses the following:

• Do you own real property and, if so, is it located in different states or countries?
• Are you married?
• Do you have minor children or children with special needs?
• Do you have retirement savings, such as a 401(k), an individual retirement account, or a Thrift Savings Plan?
• Are you planning to make charitable gifts?
• Do you anticipate multiple moves across states or international borders?

Each of these considerations can significantly impact the structure and effectiveness of your estate plan.

Estate Planning Necessities

Many of the benefits offered to military families can help with estate planning. These include the following:

• Life insurance. Life insurance is an important part of an estate plan intended to benefit those who are financially dependent upon you when you pass away. Active-duty members often have access to low-cost life insurance for themselves and their loved ones from Servicemembers’ Group Life Insurance. You can find more information on the Department of Veterans Affairs (VA) website. When examining how your life insurance fits into your overall estate plan, work with us to ensure that the beneficiary designation works as expected.
• Last will and testament. Also known as a will, this crucial document outlines to whom, how, and when you want your assets(money, accounts, and property) distributed following your death. It also allows you to designate who you want to wind up your affairs after you pass away (referred to as an executor or personal representative, depending on the state) and specify who will care for any minor or special needs children.
• Revocable living trust. A trust is a separate legal entity that can hold property and accounts for the benefit of one or more people or entities. Similar to a will, a trust allows you to dictate who will receive your property at your death and how that property is to be administered. For a trust to work as intended, your assets must be retitled into the name of your trust, and your trust must be designated as the beneficiary of the assets that must remain in your name (e.g., life insurance and retirement accounts). While you are alive and well, you will likely be the initial trustee, which puts you in charge of managing the assets you have transferred to the trust. An added benefit of a trust is that it also provides instructions on who will step in and manage the trust assets during any period of your incapacity(inability to manage your own affairs) and after your death. For most families, a trust-centered estate plan is a better fit, but a will can be adequate for some families depending on their circumstances.
• Other benefits for survivors. Survivor benefit plans (SBPs) are pension-type plans in the form of an annuity that will pay eligible survivors—typically your surviving spouse and dependent children—a monthly benefit at your death. Likewise, Dependency and Indemnity Compensation (DIC) is a tax-free monthly benefit paid to eligible survivors of service members or Veterans who (1) die while on active duty, active duty for training, or inactive duty training; (2) died from a service-related disease or injury; or (3) were receiving, or entitled to receive, VA compensation for a service-related disability rated as totally disabling (100 percent) for a specified period of time before death. When evaluating any financial service or insurance product, it is a good idea to work with an estate planning attorney to ensure that any associated beneficiary designations align with your overall plan and provide the maximum benefit to your family.

You Need Specialized Help

Members of the military often experience frequent moves, have access to several forms of government benefits after service, and can be subject to some unusual tax rules. For these reasons, estate planning for military families is more complicated than it is for most others.

An estate planning professional can assist you in setting up the following:

• Powers of attorney for financial matters and healthcare decisions (very helpful tools when a spouse is deployed)
• Living wills and other medical directives
• Powers of attorney or delegations of parental authority for minor children or separate guardian nominations
• Funeral and burial arrangements
• Wills
• Organ donation authorization
• Family care plans
• Life insurance
• Trusts
• Survivor benefits

An estate plan has multiple objectives: to provide for your family’s financial security, to ensure your property is preserved and passed on to your loved ones in the way that you desire, and to determine who will manage your assets upon your death and if you become incapacitated, among others. We can guide you through the best options available to you and your family. You can reach us at (408) 371-6000 or info@sowardslawfirm.com.