Anyone who has a family must consider their plans for the future. This should include how their family members will manage if the head of their household unexpectedly dies. But for military service members, the thought of how they will take care of their families if something were to happen to them can be even more pressing.
In this guide, we will go over the circumstances of Estate Planning as it relates to veterans and active military service members. We will also explore the unique benefits that they and their families may qualify for.
Wills for Military Service Members
One of the shared traits among all military families is adaptability. Between long training periods, new orders, relocating across the country, or to a new country entirely, military families take on many challenges and give them their all—together. That also means preparing for the future and everything it may have in store.
Military life is full of the unexpected, and service members and their families need to be prepared for anything. A Will is a vital legal document that allows you to specify who will handle your affairs after death, determine how to distribute your assets, and designate who will take care of your children.
Having a Will allows you to do your job, knowing that those to whom you hold dear will be protected if anything should happen to you, on or off the job
Establish Powers of Attorney
A Power of Attorney is a legal document establishing a person responsible for making business, legal, and financial decisions on your behalf. If you are incapacitated or otherwise unable to manage your affairs, your Attorney can do it for you. This includes paying your bills, making repairs to your home, and selling your assets, including your home and cars.
Name Legal Guardians for Children
If you and your spouse are both military service members, or you want to have a contingency plan just in case, a Will allows you to name a Legal Guardian for your minor or special needs children. Many parents find it comforting to know who might take care of their children if the unthinkable were to happen. Who might provide for them, love them, and see them through all of life's moments, big or small.
Hand Assets Down to Your Loved Ones
Your Will is the simplest way to leave important items and cherished assets to your family and other heirs. Military families have sentimental medals and achievements earned through hard work and sacrifice. Passing these items down to your children, who will someday pass them onto theirs, is one of the most meaningful ways to honor the work you have done for your country.
In addition to sentimental items, you can also pass down property, like the home you and your family finally settled in after you retired from active duty. You can also designate who should receive your financial accounts, like your checking, savings, and retirement accounts, in your Will.
Trusts for Military Service Members
A Trust is similar to a Will in that it also allows you to specify who will receive your assets if you die. However, there are other benefits of establishing a Trust, including how you would like your assets handled during any period in which you may be incapacitated or otherwise unable to speak for yourself.
Establishing and funding a Trust keeps your precious assets and owned property safe until it's time to pass them down to someone else. While there are many benefits to establishing a Living Trust, which we will discuss below, it does require that you transfer ownership of the included assets from yourself to your Trust. For this reason, you may not want to put items or accounts that you may need access to, like your checking account or primary place of residence, into a Trust.
Protection in Case of Injury or Incapacitation
This can be beneficial to those serving active duty. Being in combat means there is always a chance that you will be hurt when you go out to do your job. That is the risk an active duty service member takes every time they face a mission. Knowing who has your back can save your life in the field, and so can knowing everything is protected back at home. A Trust can provide instructions on how to handle a military family's assets during any period in which they cannot speak for themselves, including severe injury and incapacitation.
Avoid Probate Court
Establishing a Trust allows you to pass assets and property to your Beneficiaries without going through Probate Court. This is because, as we discussed above, you have already transferred ownership of these assets to the Trust. Since the Trust owns the assets, the terms of the Trust dictate what happens to them.
Probate Court can be a time-consuming and expensive process. Because military families dedicate themselves so completely to military life and all it asks of them, it may not be possible for a surviving spouse to support their family, even temporarily, without their partner's income coming in. A military family may simply not have the time to wait for the Probate Court process. With a Trust-Based Estate Plan, ownership is immediately passed from the owner of an Estate to their intended Beneficiary.
Estate Tax Savings
While putting assets into a Trust is typically subject to gift tax requirements during your lifetime, establishing a Trust may help minimize Estate Taxes after death. Due to the Tax Cuts and Jobs Act of 2017, Federal Estate Taxes are only triggered when an individual's assets total $11.4 million or more, or a combined total of $22.8 million, for couples.
Life Insurance for Military Service Members
When you have a family depending on you, just the thought of going to work may fill you with uneasiness, wondering if you've done everything you can to protect your family. This can be especially true if you or your spouse are facing deployment.
The Department of Veterans Affairs offers veterans and active duty service members low-cost life insurance for themselves and their loved ones. Military service requires deep sacrifice from the service members themselves and their entire family. Because each veteran and active duty service member is unique, there are a variety of plans to choose from, depending on your circumstances and level of coverage needed.
Survivor Pension Benefits
Some veterans and their families receive Veterans Pension Benefits that provide them with supplemental income. But those benefits stop if a veteran passes away. No longer having that payment to rely on every month could leave their family struggling to make ends meet.
A Survivors Pension, or Death Pension, is a tax-free benefit paid to a veteran's surviving spouse or unmarried children after their death.
For a spouse or children of a deceased veteran to be eligible for a Survivors Pension, the veteran must have died while on active duty, died due to a service-related injury or disease, or have been receiving VA compensation for a service-related disability or be totally disabled. A veteran's length of active duty is also a factor in eligibility.
Filling the Gaps of Military Service Member Estate Plans
While the military may have benefits that aid veterans and active military in taking care of their families now and after they're gone, there may still be gaps in your Estate Plan. To fill them, look no further than Trust & Will, the most trusted resource in online Estate Planning.
With Trust & Will, you can create a new Will or Trust or update existing Estate Planning documents. All documents are specific to your state, created by an expert team of lawyers and professionals to ensure that you create a perfect, customized Estate Plan to meet your needs—no matter how unique they may be. Get started now!