Estate planning is an important task for remaining personally prepared for a deployment or a mobilization. This article applies to both the active and reserve components. The word “mobilization” may be substituted for “deployment.” Do not wait until orders arrive. Make an appointment in the Legal Assistance Office now to prepare a last will and testament, as well as other documents described in this article. Estate planning describes what you can do now, while you are alive and well, for meeting your family’s financial needs at the time of your death or while you are incapacitated.
Estate planning includes purchasing life insurance (or an annuity if you are receiving a retirement check) to make up for the shortfall between what your family inherits from you, the breadwinner, and what the family needs to live on when your paycheck stops. Next, your plan involves the use of legal instruments to transfer your property at your death. In addition to a will, you will need to relook other documents that prove ownership, such as deeds, motor vehicle titles, and stock certificates and beneficiary forms that you have signed. Last, your plan involves the use of powers of attorney to appoint agents to manage your affairs in the event you are deployed or incapacitated, and advance medical directives (the broader term for living wills and medical powers of attorney) to manage your medical care while incapacitated.
The first step involves calculating life insurance needs. Servicemen’s Group Life Insurance (SGLI) currently offers members of the U.S. Armed Forces a maximum death benefit of $400,000 at a monthly premium of $26.00. At just 6.5 cents per $1,000 of coverage, regardless of the member's age, such inexpensive group life insurance means estate planning for many younger Soldiers is no more complicated than correctly completing, signing, and the SGLV Form 86 for SGLI. However, even the $400,000 maximum offered by SGLI may be insufficient for those breadwinners with many dependents. You may go online and use a calculator to figure your correct amount of life insurance. The SGLI main webpage has a good calculator at http://www.insurance.va.gov/sgliSite/calculator/introCalc.htm.
Next, plan for the inheritance of your estate. Your beneficiaries inherit your property according to your will or, if you do not have a will, your heirs take according to your state’s law of intestate succession (by intestacy). Either way, taking by will or intestacy laws involves legal proceedings at the courthouse. Probate refers to taking by will, and estate administration refers to taking by intestacy. The modern trend that states are following (and this includes Maryland) is to refer to both procedures as simply estate administration. With a will, a personal administrator (also called an executor) is needed to present the will to the court, account for the assets, notify beneficiaries and creditors, settle debts, and pay any taxes. So, before making a will, you must determine who this person will be. Without a will, the court chooses an administrator. Taking by intestacy means, basically, the law uses the decedent’s family tree and to determine who receives the property—the heirs by law. Therefore, the heir(s) will be your closest living relative(s). However, in many states, surviving spouses do not receive the whole estate. They receive a spousal share ($15,000 in Maryland) and one-half of the remaining amount. The other half goes to the children or, if no children, to the decedent’s natural parents. It does not matter if one parent has not seen the decedent since birth, by law that parent receives a share. To avoid this result, you should sign a will. Even single Soldiers should have a will. Although the natural parents of a single person with no children are the person’s joint heirs, the process of administration of an estate will be more expensive than the process of probating a will if the estate is not classified as a “small estate,” the definition of which varies from state to state. Even single Soldiers whose estate meets the small estate definition, an executed will avoids expenses and headaches involved in transferring title to vehicle to the parents in a state other than their own. For this and other reasons, no longer are single Soldiers advised that they do not need a will. As always, single Soldiers with minor children are strongly encouraged to sign a will to name a person to raise their children—a guardian—in the event both the Soldier and the other parent die.
Next, plan for the transfer of your property that is not controlled by your will or intestacy laws and, therefore, without court proceedings. There are essentially three legal methods to transfer such “non-probate” assets: by trust, using survivorship rights in a deed or title, and by contract using beneficiary forms. A trust is not necessary unless you own real estate in more than one state, have a large estate with tax issues, or want to control property for years following your death. Deeds, car titles, and possibly bank accounts, allow for two or more persons to own property jointly with a “right of survivorship.” This right of survivorship is important legal language that means that the property transfers to the surviving owner(s) if one owner dies by law. No action involving probate or administration proceedings is required.
Do not assume jointly held property is held with “right of survivorship.” Look at your deed. In some states such as Maryland, the words “husband and wife” alone are sufficient. For bank accounts, however, the words “right of survivorship” must appear on the application for the account. Mistakes are common. Pay a visit to your bank and check for the right language.
The third method is the use of a form with which you direct who takes your investment and securities. Generally labeled “beneficiary forms,” such forms are commonly used with property that cannot be held jointly, such as individual retirement accounts (IRAs) and pension and 401(k) plans, including the Thrift Savings Plan. A beneficiary form is a contract and will be honored regardless of language in a will. Other such contracts include transfer on death (TOD) and pay on death (POD) accounts.
The next step involves signing a power of attorney (POA), which gives your agent the authority to make decisions and act for you. You may give a few powers with a special POA or you may give many powers with a general POA. Because a general POA gives many, almost unlimited powers, an agent who abuses one can cause you financial hardship for years to come. Be cautious and sign a general POA only after carefully considering the trustworthiness of your agent and alternatives.
Most powers of attorney last from a definite start time to a definite end date. If you are deploying, you do not want the POA to expire too soon. On the other hand, be aware that the POA should not last too long. Many businesses will reject a POA that is more than one or two years old, because of the uncertainty that the agent is still authorized to act.
A healthcare POA and an advance medical directive (AMD), still referred to generally as a living will, are important legal instruments that specify how you would like to handle medical situations if you become incapacitated and cannot make a decision for yourself. You may appoint a surrogate to make medical decisions for you with a healthcare POA. You may also sign an AMD or living will, and direct in advance that life-sustaining measures should be not be used to keep you alive (1) if death is imminent due to an incurable and terminal disease, or (2) if doctors declare you are suffering from a “persistent vegetative state.” Once signed, be sure to put a copy into your medical files, and make sure that the person you designate to make decisions has access to the original.
To summarize, estate planning first requires the purchase of sufficient life insurance to meet your family’s needs. Next, make out your will. Once you have signed a will, you should review it from time to time and make revisions if significant developments have occurred, such as the birth of a child, a divorce, or a move resulting in the establishment of a new domicile. Next, check to ensure that you have correctly filled out any beneficiary forms that are available to accompany your IRAs, Thrift Savings Plan, and other investments. Last, sign powers of attorney and an advance medical directive when necessary to carry out your wishes for the management of your financial and medical affairs while deployed, or if you become mentally incapacitated. For further assistance, active duty military, their dependants, and retirees can visit the Fort Detrick Legal Assistance Office located at 521 Fraim Street. The office is opened Mondays, Tuesdays, Wednesdays and Fridays from 7:30 a.m. to 4:30 p.m., and Thursdays from 1:00 p.m. to 4:30 p.m. You can reach the office by calling 301-619-2221.