It is not easy to be a member of a military family. They face many challenges that civilians do not, and—all too often—they do not receive the support in two critical areas that could make a difference.
Risks for military families include accidents during training, battlefield injury, and the stress of frequent moves. Service members have a far greater than average chance of becoming disabled or dying prematurely. This makes it especially important for military families to have access to financial and estate planning advice.
The Wall Street Journal article, "How to Serve Military Families," says that in many instances military spouses are young and financially immature. Military families don't settle in one place for very long, so a nonmilitary spouse may have trouble finding a steady job that would provide a second income and a retirement plan. In that situation, if something happens to the service member, and benefits are paid out, they need to be able to access them immediately. It's more likely that young military families will need help getting these estate documents in order and updating their beneficiary designations.
Financial and estate plans can't be static. They need to reflect a family's current life situation. For example, beneficiary designations on retirement plans need to be reviewed and updated, and many soldiers and sailors name a boot camp buddy as the beneficiary of their Servicemembers Group Life Insurance (SGLI) policy after they enlist. This needs to be changed when they've married and have had children.
Retirement and insurance plans pay named beneficiaries, separate from the will. A service member's will may provide that his or her child can't access the assets left in trust until he or she reaches age 25. However, if the child is a named beneficiary of an SGLI policy, the proceeds will be paid directly to the child if he or she is 18 or has attained the state's age of majority; or they will be paid—regardless of age—to a legal guardian who may not be the person the service member would have chosen to manage these funds for his or her child. Another way to go is to have a trust for the child be the insurance beneficiary.
Another area of concern for military families is real estate assets. If they move frequently, it is likely that they may own property in multiple states. If the service member dies, it may be difficult for the surviving spouse to manage properties, or the property may end up in probate.
One possible solution for a military family is starting a limited liability company and liability-protection trusts for the properties. Speaking with an estate planning attorney to set up these critical planning documents during his or her lifetime is essential, and will also allow the servicemember to name accurate beneficiaries in case of death.
Serving military clients is a way to serve the brave men and women who serve our country.
Reference: Wall Street Journal (April 19, 2016) "How to Serve Military Families"