Estate Planning and Veterans: Securing Your Legacy

Whether you are a veteran, active military, or a civilian, estate planning is critical for securing your legacy. It allows you to direct how your property should be distributed at death and to prepare for unexpected events like becoming incapacitated. 

It does not matter what level of income you have, your investor criteria, what assets you have, or how you provide proof of assets, all adults over the age of 18 should have an estate plan. An “estate” for estate planning purposes is made up of an individual’s tangible and intangible property. Any adult who owns any type of property — a car, a home, a bank account, cryptocurrency, a website, etc. — has an “estate” for estate planning purposes.  

But estate planning is much more than just passing on one’s property. 

It focuses on an individual’s specific financial and personal situation to provide for your family’s future and minimize taxes as much as possible. In addition, estate planning helps you to anticipate and prepare for what might happen if you become incapacitated and unable to make decisions for yourself. 

Estate planning attorneys use a variety of legal tools and documents to help people plan for the future so that individuals do not have to rely on statutory law or the court system to make their most important decisions for them. 

Overall, estate planning is one of the best ways to plan and prepare for the future.

Why Estate Planning is Essential for Veterans

While everyone can benefit from having an estate plan, it can be even more essential for active military and veterans. 

Why?

Because those who serve in the military are in a unique situation. 

Members of the military move frequently. They also put their lives on the line during wars. Even during peacetime, many military jobs subject personnel to highly dangerous conditions. These factors make it more likely that veterans and active military may become injured or suffer serious permanent disabilities due to their work or work environment. It is this inherent precariousness in military service that makes it imperative for members of the military to have an estate plan in place.

In addition, veterans have access to a number of government benefits. These benefits can make estate planning for veterans more complicated as government benefits are frequently subject to unusual tax rules.

Veterans need to understand how their benefits impact their estate and estate taxes, so they can plan and provide for their families and their future.

For example, veterans may be eligible for benefits such as:

• life insurance coverage for the veterans and their families

• survivor benefits if the veteran dies due to service-related illness or injury.

• pension plans, or

• disability compensation.

Various government benefits can significantly affect your future and the financial futures of your loved ones. Planning how to pass on these benefits is critical but complicated due to eligibility requirements, so be certain to consult with an experienced trusts and estate or probate attorney where you live to assist you. 

Another important consideration is what happens if you die or become incapacitated and you don’t have an estate plan in place. 

If you die without having made an estate plan (in other words, you die “intestate”), then your estate must go through probate. Probate is the court-supervised process of distributing a person’s property. It’s an expensive and time-consuming process. 

When a person dies intestate, the court will use the intestacy laws to decide who gets what and how much of your property. 

Even worse, if you don’t have the right documents in place and you become incapacitated, the court and the statutory law of your state will decide who should take over your finances and make decisions for you. This could be someone you know, or it could be a complete stranger. 

Becoming a “ward of the state” and having the court appoint a guardian for your person and/or property is something you want to avoid at all costs. It is a well-known secret that this area of probate, known as “guardianship,” is fraught with serious fraud and abuse. 

All in all, estate planning is essential for everyone, but especially for veterans and active military personnel.

What Goes into Securing Your Legacy? 

To address the myriad life-impacting issues that could arise in a person’s future, estate planning relies on a variety of legal documents and estate planning strategies. 

The most commonly known — and often the most misunderstood — legal documents are the Last Will and Testament (“Will”) and Revocable Living Trust (“Trust”).

Wills and Trusts are both legal documents that assist in directing and carrying out an individual’s estate plan. 

Although separate and stand-alone documents, Wills and Trusts work together; much like peanut butter and jelly. 

Hold on, we can explain.

Think of it this way: You can have a sandwich with just peanut butter. Or you can have one with just jelly. Either one will be fine. But together, peanut butter and jelly make the perfect — and complete — sandwich. 

Wills and Trusts are a bit like that.

You can have just a Will for your entire estate plan, or you can have just a Trust. But when your estate plan has both, all bases are covered, and you have a more complete estate plan. 

Why is it best to have both a Will and a Trust?

Because a Will can do some things that a Trust cannot, and visa versa.

So, what are the differences between a Will and a Trust?

Basically, a Will is a formal legal document that directs the disposition of your property (both tangible and intangible) after your death. To be valid, a Will must comply with all the legal formalities of your state. The most basic of these are that:

• the person making the Will (the “testator”) must have legal capacity,

• the Will must be in writing,

• it must be signed by the testator, and 

• the testator’s signature must be witnessed.

The specific Will formalities vary by state, so be sure to consult your state’s laws. However, these are the most frequently seen formal requirements for Wills. 

While a Will can dispose of many different types of property, it cannot dispose of all property. For example, a Will can only pass on property that is titled in your name. A Will cannot pass on:

• joint property

• life insurance policies or other property with beneficiary designations

• payable upon death accounts

• retirement plan accounts, or

• employee death benefits. 

Additionally, passing on certain digital assets through your Will — like email accounts or cryptocurrency — can be problematic due to security and transferability issues. 

Also, a Will does not come into effect until you die.

On the other hand, in your Will, you can appoint the person whom you want to administer your estate at your death. You can also decide who will take care of your children in the event of your death or incapacitation. Your Will can be used to decide when your children (or other beneficiaries) are allowed to receive their inheritance. This can be especially helpful if you have small children and you don’t want them to receive their entire inheritance until they reach the age of maturity or another age where you deem they will be mature enough to handle it. 

Unlike relying on the intestacy laws, when you have a validly executed Will, you are the one who makes all the important decisions — not a judge or impersonal law. 

In contrast, a Trust is also a legal document, but the trust document creates a legal entity (the “trust”). This legal entity is created by agreement between the trust maker (“trustor,” “grantor,” or “settlor”), and the trustee (the person who will manage the trust) for the benefit of certain individuals (the “beneficiaries” of the trust). 

In a trust, the trustee holds title to the trust property and manages it for the benefit of the beneficiaries.

A trust, because it is a legal entity, can hold and own property. A Will cannot do this. All a Will can do is pass on property.

Most assets can be titled in a trust, but because the laws vary by state, there may be important exceptions to this, so always be certain to consult with experienced estate planning counsel where you live.

Trusts can be revocable or irrevocable. As their names suggest, a revocable trust can be changed during the lifetime of the settlor whereas, (with few exceptions), an irrevocable trust cannot be.

Most estate plans use “revocable living trusts.” Unlike a Will, the Trust comes into being and operates during the lifetime of the settlor or grantor. 

If the living trust is revocable, it can be changed or revoked at any time during the settlor’s lifetime. 

In most cases, the trustee of the Trust is also the grantor or settlor. He (or she) then manages the Trust during his/her lifetime, and at the time of death, a successor trustee takes over. The successor trustee is then responsible for managing and ultimately distributing the property to the beneficiaries following the Trust’s terms.

Because they are flexible estate planning tools, Trusts are greatly favored by many estate planning attorneys as part of a comprehensive estate plan. But they are not the only estate planning tool. As mentioned, most estate plans make use of both a Will and a Trust.

What is best for you will depend entirely on your specific situation.

Some Important Documents Beyond a Will and Trust

As noted previously, an estate plan anticipates more than just property distribution at the time of your death. One of the significant issues it takes into account is what might happen if you become incapacitated and unable to make decisions for yourself.

Preparing for possible incapacitation is critical to do. Without the necessary documents in place, if you should become incapacitated, for example, due to a stroke or accident, no one can act on your behalf. This means that even your spouse cannot sign documents on your behalf.

Plus, as we have seen time and time again, family disputes over medical interventions for those who do not have health care directives or powers of attorney in place can quickly turn into emotionally charged, expensive, and prolonged legal battles. The sad cases of Terri Schiavo and Karen Ann Quinlan are just two examples of this. 

To address the situation of a possible incapacitation, there are two common estate planning documents beyond a Will and a Trust, that every veteran should have in place. These are a power of attorney and a health care directive (also called a “health care surrogate designation” “medical power of attorney,” or “advance health care directive”).

A power of attorney is a legal document in which you appoint a person of your choice to act as your agent. You decide the extent of the authority your agent can have, but generally, a power of attorney gives someone the authority to pay your bills, purchase property, and make other legal and financial decisions for you.

A health care directive appoints a person you trust to make medical decisions for you if you should become incapacitated. This legal document gives your chosen individual the power to decide what life-prolonging medical interventions you will or will not receive. 

If you are a veteran and don’t have an estate plan in place, don’t wait any longer. Get one. Estate planning is essential for everyone, and, most importantly, for veterans. Securing your legacy isn’t hard to do. It may not be exciting, but it is something that every veteran should do. 

For more information on this and other important topics, go to VerifyInvestor.com.