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Make Sure You Receive All of the Benefits for Serving Our Country

Members of the military have special estate planning needs, particularly when they’re deployed. These families also have access to special benefits and resources, says Kiplinger’s May 27, 2016 article, “Estate Planning for Military Families.” Here’s a rundown:

Sign up for low-cost life insurance. This is critical if you have financial dependents—even more so if you’re heading into combat. Active-duty members of the military can purchase low-cost term life insurance, called Servicemembers’ Group Life Insurance (SGLI). It costs just 7 cents per $1,000 of coverage per month—or $336 a year for the maximum $400,000—regardless of your age, health, or likelihood of being deployed. In addition, service members can also purchase $100,000 in coverage for their spouse for $60 a year if the spouse is under age 35. The coverage will cost more for older spouses.

Have your legal documents organized. You should create the legal documents such as a will (in which you’ll designate a guardian for your minor children), a power of attorney, and a health-care proxy. The power of attorney can be used while you’re deployed. It gives your spouse or another person you choose the authority to handle your affairs while you’re on duty or out of the country.

Update beneficiary information. The beneficiary designations for your pension, life insurance, IRAs, and thrift savings plan take precedence over your will. Remember, if you designated a beneficiary when you first joined the service and haven’t changed it since you got married, that original beneficiary could inherit your account. Update those designations with your spouse and review them when you have life changes like marriage, divorce, or the birth or adoption of a child.

Make survivor decisions for your military pension. If you qualify for a military pension, you’ll need to think about whether to have your military retirement pay continue for your beneficiary after you pass away. You typically will pay 6.5% of the portion of the monthly pension payout you want your beneficiary to receive, which is deducted pretax from your retirement pay. If you’re looking at this cost compared to the price of buying life insurance for your spouse, the policy would need to be permanent rather than term to be certain it would still be in effect when you die.

Utilize survivor benefits. One often overlooked benefit is the ability to roll over a military death gratuity or SGLI death benefit into an IRA even if it is greater than the $5,500 annual limit. While there are some restrictions, this and other rules can prove helpful to military families.

Reference: Kiplinger’s (May 27, 2016) “Estate Planning for Military Families”

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