Wills and Trusts: Best Practices for Military Families

To safeguard your family’s financial future and prevent your estate from getting tied up in the court system, you need to have a plan for what you want to happen to your assets after you pass away.

Service members face a heightened level of risk in their everyday lives compared to the general public. Because of this, it is especially important that you have your affairs in order now, so that if something unexpected happens, your family can avoid the additional heartache of waiting for a probate court to decide what happens with your belongings, your accounts, and in some cases, your children.

There are two main tools you can use to prepare your estate: a last will and testament, commonly called a will, and a trust. This guide covers how each works, why both matter, and how military families can get started.

What Is a Last Will and Testament?

A last will and testament is a legally binding document that details your wishes for how your estate should be handled after your passing. Within it, you can designate an executor, beneficiaries, and a guardian for any minor children. You can also include instructions for your funeral arrangements and the distribution of any remaining assets.

The Executor

Your will should name an executor, a person responsible for ensuring its terms are carried out. Your executor can be a trusted family member, friend, or attorney. The executor is responsible for filing the appropriate paperwork with the probate court, making any outstanding payments on your behalf, and distributing your assets to beneficiaries.

Beneficiaries

The individuals, businesses, charitable organizations, or other entities you leave your assets to are called beneficiaries. It is important to note that a beneficiary designation in a last will and testament does not override a beneficiary designation on a life insurance policy. Any individual listed as the beneficiary of a life insurance policy, including SGLI and VGLI, a bank account, Thrift Savings Plan, or other retirement account, will receive the associated proceeds regardless of contradicting wishes expressed in a will.

Guardians

A guardian is a person named in a will who is entrusted to care for children under age 18, or those who are physically or mentally unable to care for themselves, after your death. Because you cannot predict the timing of your passing, it is wise to choose alternate guardians in the event that the named guardian cannot fulfill their duty of care.

Probate

When you pass away, probate court may need to verify your will’s legitimacy before your executor can begin distributing your assets. Depending on the value of your estate and your location, this may not always be required. Estates that qualify as small estates are able to submit a small estate affidavit to the court, which allows for a more simplified probate process, though what qualifies as a small estate varies by state. Regardless of the size of your estate, your executor typically needs to file your will with the court so that it can become public record.

Probating an estate may cost between 4% and 7% of the estate’s value. Having a written will, even if your estate still needs to be probated, simplifies the process and reduces costs for your family.

What Happens If You Die Without a Will?

If you die without a will, state law will determine who will care for your children, what happens to your pets, and who will inherit your money and property.

Through a process called intestate succession, the court will name an executor, typically your surviving spouse, or a public trustee appointed by the court, to distribute your assets according to state law. Until the court designates an executor, probate law mandates that all estate assets be frozen and cannot be accessed for any purpose.

As an active duty or retired military member, you have access to legal personnel on base who can help you create your will at no cost through your installation’s Judge Advocate General (JAG) office. The American Bar Association also maintains a directory of legal programs available to military families in each state.

What Is a Trust and How Does It Work?

A trust is a legal relationship where one or more persons manage property on behalf of others. In other words, a trust can hold assets outside your personal estate and distribute them without going through probate.

More specifically, a trust is an agreement in which you, the grantor or creator of the trust, make property available to a trustee for certain purposes. The trustee agrees to manage the property in accordance with your wishes.

All types of trusts involve three main parties:

• The grantor creates the trust and puts assets into it for distribution later

• The trustee administers the trust, following the instructions laid out in the trust documents and ensuring beneficiaries receive their designated assets

• The beneficiaries receive assets from the trust

The grantor, trustee, and a notary typically sign the trust document. This document is essential when it comes time for the trustee to administer the grantor’s estate.

There are two basic types of trusts worth understanding:

Revocable and Irrevocable Trusts

Revocable and irrevocable trusts are created during the grantor’s lifetime.

A grantor can make changes to a revocable trust at any point during their lifetime. An irrevocable trust, by contrast, shifts ownership of assets outside of the grantor’s estate immediately upon funding, meaning the grantor cannot make changes without the beneficiaries’ consent.

A trustee manages both types of trusts and distributes assets to beneficiaries after the grantor’s death at a designated time. These trusts allow a trustee to immediately handle the grantor’s end-of-life affairs and distribute assets without going through probate.

Testamentary Trust

A testamentary trust is created upon the death of the grantor through their last will and testament. It allows the grantor to manage their assets outside of a trust during their lifetime while still controlling how those assets are distributed after death.

This type of trust is often used when the grantor’s beneficiaries are minors. Typically, it holds assets until beneficiaries reach a certain age, for example, releasing funds when a beneficiary turns 18 and needs access to money for higher education. Unlike revocable and irrevocable trusts, a testamentary trust does not avoid probate since it is created through a will.

Using a Trust with Life Insurance

A trust can be named as the designated beneficiary of a life insurance policy. If you have minor children and want to ensure they gain access to funds upon reaching adulthood, setting up a trust to be funded with the proceeds of your life insurance policy guarantees your wishes will be followed. You have full control over how much the trust pays out to beneficiaries and when it makes those payments.

If you participate in the Survivor Benefit Plan and have elected spouse and child or child-only coverage for a dependent child or child with a disability, you may use a special needs trust to designate payments to your beneficiary. Keep in mind that this is an irrevocable decision.

Setting up a trust typically requires the services of an estate planning attorney.

Keeping Your Documents Updated

The most important consideration when it comes to wills and trusts is keeping your documents up to date. When your family circumstances change due to a birth, death, marriage, or divorce, it is important to update your last wishes accordingly. Major life events, such as deployments, PCS moves, large purchases, and changes in your financial situation, should prompt a review of your estate planning documents.

As a general rule, review your estate plan every three to five years, even if no major life events have occurred. Your circumstances change, your assets evolve, and your wishes may shift over time.

Getting Started with Estate Planning

Estate planning is an important step for military families, but knowing where to start can feel overwhelming. Here are the most practical first steps:

Use your JAG office. Military members have access to free will preparation through their installation’s Judge Advocate General office. This is one of the most underused benefits available to service members and their families, take advantage of it.

Work with an estate planning attorney for complex needs. If your estate involves significant assets, a trust, blended family considerations, or a dependent with special needs, working with a private estate planning attorney who specializes in military families is worth the investment.

Review your beneficiary designations. Make sure your SGLI, TSP, life insurance policies, and bank accounts all reflect your current wishes. Beneficiary designations on these accounts override your will, so keeping them up to date is essential.

Talk to your family. Let your executor, trustee, and named guardians know about their roles before you need them. Having these conversations in advance ensures the people you are counting on are prepared and willing to serve.

Why Estate Planning Matters

A will and a trust are the two foundational tools of any estate plan. Together, they ensure that your assets are distributed according to your wishes, your children are cared for by someone you trust, and your family is spared the time, cost, and heartache of a lengthy probate process.

The best estate plan is the one you actually create. If you have been putting it off, now is the time to take action, starting with a visit to your installation’s JAG office or a consultation with an estate planning attorney.