Estate Planning for Military Personnel

Every adult can benefit from having an estate plan in place, but estate planning is even more important for both active and retired military personnel. Along with the heightened risk of death or incapacity you face as a member of the military, you are also entitled to several unique financial benefits that should be included in your estate plan. With that in mind, the Indianapolis attorneys at Frank & Kraft discuss estate planning for military personnel.

Basic Estate Plan Essentials

While every estate plan should be uniquely tailored to address the goals and needs of the person creating the plan, there are some basic estate planning components that you may decide to incorporate into your estate plan if you are currently in the military or are a veteran, including:

• Last Will and Testament. Executing a Will ensures that you do not leave behind an intestate estate, meaning that the state decides who inherits from your estate. For military personnel, a Will offers another important benefit by providing you with the only official opportunity you will have to indicate who you would choose as your children’s Guardian if one were ever needed.
• Advance Directives. Most states recognize at least two types of advance directives: a healthcare Power of Attorney and a Living Will. A healthcare POA lets you designate someone as your Agent with the authority to consent to medical treatment on your behalf if you are unable to consent yourself. A Living Will allows you to make critical end-of-life medical treatment decisions yourself ahead of time, such as accepting or rejecting life-sustaining treatment, in case you are unable to make them at a later time.
• Living trust. A living trust offers several benefits, including probate avoidance, the ability to stagger distribution of the inheritance you leave to a beneficiary, and a method by which control of your assets and financial accounts can easily be transferred to a spouse, adult child, or other individual if you become incapacitated.

Estate Planning Considerations for Active Military and Veterans

Along with common estate planning concerns, members of the military must also incorporate a variety of unique government benefits into their estate plans to protect those benefits. While not all service members will qualify for the same benefits, some examples of benefits that should be incorporated into your estate plan if you are active or retired military include:

• Serviceman’s Group Life Insurance (SGLI). SGLI is an employee benefit term life insurance offered to active duty servicemembers that provides monetary benefits to a servicemember’s designated beneficiary if the servicemember dies while on active duty. Be sure that your beneficiary designation is up to date and name a contingent beneficiary in case your primary beneficiary predeceases you. If you want a minor child or a beneficiary with special needs to receive the benefits, you should establish the appropriate type of trust and choose your Trustee carefully. Also be sure to list your SGLI benefits in your Will or trust.
• Active Duty Survivor Benefit Plan (ADSBP). Both military pay and retired pay end with the death of a servicemember but ADSBP provides an annuity for beneficiaries of servicemembers. Your spouse and/or dependent children may receive benefits from the annuity after your death. ADSBP benefits are paid at 55 percent of what your retirement pay would have been had you retired on the date of death with a 100 percent disability, equal to 75 percent of the highest 36 months of base pay. Like your SGLI benefits, be sure your beneficiary designations are current.
• Survivor Benefit Plan (SBP) for retirees. If you are a retired servicemember, you have the option to take a reduction in retirement pay and designate a beneficiary to receive a portion of that pay after your death. Your family structure and status will impact your beneficiary options, for example:
  • If you are survived by a spouse and children, benefits will be paid to your spouse. If your spouse dies or remarries before age 55 the benefits pass to eligible children.
  • If you are survived by children only, your SBP benefits are divided equally among all eligible children. The benefits end when a child ages out of the program.
  • If you have a special needs child, the child can receive SBP for life as long as he or she remains unmarried. Because these benefits could impact eligibility for government assistance programs such as Medicaid or SSI, it is critical that you establish a special needs trust within your overall estate plan.
• Dependency and Indemnity Compensation (DIC). DIC benefits may be available to your survivors (spouse, children, or parents) if you die while on active duty, if your death resulted from a service-connected injury or disease, or you are a fully disabled veteran.
• Death Gratuity. This is a one-time tax-free payment of $100,000 (as of 2023) payable to your next of kin if you die while on active duty.

Do You Need Assistance with Estate Planning for Military Personnel?

For more information, please join us for an upcoming FREE seminar. If you need help creating an estate plan for you and/or your spouse that incorporates issues unique to military personnel, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.

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