By: Stephen K. Lehnardt
It is not easy to be a member of a military family. Military families face many challenges that civilians do not, and—all too often—military families do not receive critical support in two areas that make a difference in their financial and personal lives.
It is especially important for military families to access to financial and estate planning advice. In addition to the normal day-to-day considerations of family life, military families deal with the risks of military service—including training accidents, battlefield injuries, and the stress of frequent moves. Service members also have a greater chance of becoming disabled or dying prematurely. In a recent The Wall Street Journal article, "How to Serve Military Families," the issue of young military spouses with have rudimentary finance experience was addressed.
Most military families don't have the luxury of settling in one place for very long. This makes it harder for nonmilitary spouses to find steady jobs that could provide a retirement plan outside of military benefits. In that situation, if something happens to the service member, the family will most likely not have a financial cushion to rely on while they wait for benefits to be paid out—the family will need to access benefits immediately. Young military families also need help to put estate plans in order and to regularly review and update beneficiary designations so they the family's current life situation.
For example, many servicemen and women name a sibling or boot camp buddy as the beneficiary of their Servicemembers Group Life Insurance (SGLI) policy after they enlist. This must be changed when they've married and have had children. Also, beneficiary designations must be reviewed and changed after any estate planning (like creating a trust) is completed.
Retirement and insurance plans pay beneficiaries named in the plan. This means the plan controls over a will, any other expression of intention, and even over what a probate court may determine. For example, a service member's will may provide that his or her child can't access assets 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. If no beneficiary is named, or if the named beneficiary doesn’t exists, the funds are paid in accordance with the SGLI’s “order of precedence.”
Image Credts: © Morgan Slade Photography
Reference: Wall Street Journal (April 19, 2016) "How to Serve Military Families"