When a service member dies without updating a beneficiary form, the government pays whoever’s listed on the paperwork, even if it’s someone the recently deceased hadn’t spoken to in decades.
It happens because preparing for our untimely death isn’t usually anyone’s top priority. But for service members, whose jobs can routinely put them in dangerous situations, maybe it should at least be in the top five.
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For the roughly 1.3 million active duty service members and nearly 19 million veterans in the United States, estate planning should be a priority. The problem is that what they potentially leave behind intersects federal law, state probate courts, and a constellation of military-specific (and era-specific) programs that civilian attorneys may not fully understand.
Estate planning experts at the multistate law firm Evans & Davis (who do fully understand this system) created a free guide for military families to learn what they need to know to catch up. This isn’t a paid advertisement, nor is it legal advice. It’s just a good idea. Here’s why:
Military estate planning differs from the civilian world in at least four ways: the scale of federal benefits, legal complexities created by state-to-state moves (and property you might still own in each), unique issues that come up during deployments, and the existence of survivor programs that don’t exist in civilian life.
Simply put: 20 years is a long while and military families go through a lot in that time. Take a look at just a few of the legal challenges that civilians just don’t have to deal with.
It Comes For Us All
Every troop and veteran with surviving dependents has skin in this game, and the core documents are the same as for any American: a will or revocable living trust, durable power of attorney, and a healthcare directive. But on top of those are the following military-specific decisions:
Servicemembers’ Group Life Insurance (SGLI) provides up to $500,000 in term life insurance coverage at group rates for active duty service members. Qualifying service members are automatically enrolled and issued the maximum coverage. Veterans are still covered up to 120 days after leaving the military. The real issue is the beneficiary designation form, which controls where the money goes—independently of any will.
The Survivor Benefit Plan (SBP) allows a retiring service member to elect coverage so a surviving spouse or dependents continue to receive up to 55% of retirement pay after death. Elections are typically made at retirement and are difficult to change later.
Dependency and Indemnity Compensation is a tax-free monthly benefit paid by the VA to eligible surviving spouses and dependents of service members who die from service-connected conditions. Service members must apply for DIC to get it, and their family can’t claim it if they don’t know it exists.
The Death Gratuity is a one-time, tax-free payment of $100,000 provided to eligible survivors of active duty service members who die in service. It’s also controlled by beneficiary designations, not a will. A survivor who isn’t designated will not see that money.
For the Thrift Savings Plan, the beneficiary designation must be on file at the time of death. TSP cannot honor a will or any other document.
Where You Probably Went Wrong
Life’s biggest changes are usually where we need to be thinking about life’s one massive, final change: marriages, divorces, children, changes in disability rating, separation, and retirement are all moments when existing estate plans can become outdated.
Then there are deployments: a major, albeit short-term life change specific to military service. When a U.S. troop ships out without a properly executed durable power of attorney, their spouse may be unable to handle the family business while the service member is unreachable. Your local Judge Advocate General offices offer legal assistance for things like this. They’ll even draft your will.
But JAG-prepared documents may not account for more complex situations, like business ownership, blended families, property held in multiple states, or the service member listed as missing in action—something no civilian has to contend with.
A standard power of attorney ends the moment the person granting authority becomes incapacitated, when it’s needed most. That’s why a durable power of attorney, one that survives incapacitation (including MIA status), is what service members need.
Death and Veterans Benefits
VA disability compensation provides tax-free monthly payments to veterans with qualifying service-connected conditions. We all know that. But that benefit itself isn’t inheritable and ends when the veteran does. While we’re alive, it’s a significant source of income, but when we’re dead, our loved ones may face serious financial trouble without realizing it until it’s too late.
VA pension benefits are a separate, needs-based program for veterans but carry strict asset limits. How a veteran owns and titles property (including what they inherit) determines whether they qualify. Without proper planning, vets might exceed those limits and lose access to benefits they earned through service.
For veterans leaving active duty, Veterans’ Group Life Insurance (VGLI) converts SGLI coverage within a limited time window, without a medical exam. This window is critical for veterans with service-connected conditions that might make civilian life insurance unaffordable or unavailable. If you miss the window, VGLI is gone for good.
The Blended Retirement System became mandatory for all service members who entered after Jan. 1, 2018, and it adds another hiccup. It combines the old school, traditional military pension with TSP contributions, meaning a service member’s BRS income flows from multiple sources. Under BRS, a 20-year retiree receives 40% of their base pay, but that stops when they die, making the TSP beneficiary designation all the more important.
Military retirement pay may also be treated as a marital property interest in divorce cases, and it can be distributed through a Retirement Benefits Court Order, or RBCO, the military equivalent of a civilian QDRO. This is a specialized area of law, and errors in these orders can have permanent financial consequences.
The minimum viable military estate plan includes five elements: an up-to-date will or revocable living trust, current beneficiary designations on SGLI, VGLI, and/or TSP, a durable power of attorney, a healthcare directive, and a review of SBP elections at or before retirement.
For active duty, the JAG office is the first stop. It’s free, staffed by licensed attorneys who understand that military life, and one is usually available on any installation. For veterans with more complex situations, civilian estate planning attorneys with specific military experience are likely a good investment.
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