facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog external search brokercheck brokercheck Play Pause
Military Finances 101: Wills and Probate Thumbnail

Military Finances 101: Wills and Probate

Estate Planning

If you've gone through a deployment line, you probably have a will. But do you know what a will is, whether you really need one and what it does? While a will is a far more complicated document than a note, leaving a will for your family is not only a considerate move on your part; it may prevent your family from dealing with several hurdles and complications after your eventual passing. It’s a good idea to think carefully about making a plan for you and your estate when you die.

You have an estate.

It doesn’t matter how limited (or unlimited) your means may be, and it doesn’t matter if you own a mansion or a motorhome. Whether you’re considered wealthy or of modest means, when you die, you leave behind an estate. For some, this can mean real property, cash, an investment portfolio, or other investments. For others, it could be as straightforward as the $10 bill in their wallet and the clothes on their backs. Either way, what you leave behind when you die is your estate.

But I don’t need estate planning—do I?

If your estate is small, should you still have an estate plan? If you’re just leaving behind the $10 bill in your wallet, who will inherit it? Do you have a spouse or children? Is it theirs? Should it go to just one of them or be split between them? If you don’t decide, the court will decide for you, and you could potentially leave behind a legacy of legal headaches for your survivors. Estate planning is about deciding how what you have now (money and assets) will be distributed after your death.

Creating an estate plan may give you the comfort of knowing that your wishes will be carried out when the time comes. Your estate plan could include wills and trusts, life insurance, disability insurance, a living will, a pre-or post-nuptial agreement, long-term care insurance, power of attorney, and any other assets that you own.

Is having a will enough?

While your will states who your beneficiaries are, those beneficiaries may still have to seek a court order to have assets transferred from your name to theirs. In such a case, those assets won’t lawfully belong to them until the court procedure (known as probate) concludes. Estate planning can include items such as properly prepared and funded trusts, which may help your heirs avoid probate.

Incidentally, beneficiary designations for qualified retirement plans and life insurance policies usually override bequests made in wills or trusts. Many people never review the beneficiary designations on their retirement plan accounts and insurance policies, and the estate planning consequences of this inattention can be serious. For example, a woman can leave an IRA to her granddaughter in a will, but if her ex-husband is listed as the primary beneficiary of that IRA, those IRA assets will go to him per the IRA beneficiary form.

Where do you begin?

You should speak with a qualified legal professional — one with experience in estate planning (the JAG is o.k., if your affairs are simple). A qualified financial professional may be able to refer you to a good estate planning attorney and a qualified tax professional. Once you have all these members on your team, they can work together to assist you in drafting your legal documents.

Can I create my own estate plan?

Maybe you have seen those will-in-a-box kits. Maybe you have even considered picking one up. Think twice about that. While you can draft a will on your own, there are plenty of reasons why you may not want to go that route. Remember: This is more complicated than just “leaving a note.” Most people do it themselves to save money, but they may overlook or forget to take care of some important details, the cost of which could easily outweigh any savings.

Wills, trusts, and estate plans should be crafted with the help of attorneys. Fortunately, many financial professionals have relationships with attorneys. Instead of searching the Internet or the Yellow Pages for a stranger, ask your financial adviser for a referral.

What happens without a will?

Every day, people die intestate. In legalese, this means without a will. This opens the door for the courts to decide what happens with their estates.

When no valid will exists, state intestacy laws dictate how assets are distributed. These laws may divide an estate evenly (or equitably) among heirs. Any assets held in joint tenancy may go to the joint owner. Assets held in a trust may transfer to the trust beneficiaries (with spouses getting a share of those assets in some states). Community property may go to a spouse or partner in community property states.

Simple, right? Unfortunately, the way assets transfer under these laws may not correspond to the wishes of the deceased person. Did the decedent want some of his or her estate to go to a charity or a person close to them? These laws will not allow this. State law may also decide who is the executor of the estate since the decedent never named one.

If the deceased person designated beneficiaries for his or her retirement accounts and life insurance policy, the retirement accounts and insurance proceeds should be transferred to these beneficiaries without dispute, even when no will exists. When life insurance policies and retirement accounts lack designated beneficiaries, the assets are lumped into the decedent’s estate and subject to intestacy laws.

Articulate your plans for the estate and your family.

Most people have specific ideas about who should inherit what from their estates. Anyone who cares about the destiny of his or her wealth should take this basic estate planning step.

When an individual dies intestate, the future of his or her estate is largely up to the courts. A basic, valid will stating his or her wishes may help facilitate the transition of assets after they’re gone.

If you found this article useful, you might like the following blog posts:

Is SBP Expensive?


Military Finances 401: Ancillary Probate. What Is It?


What Military Officers Need to Know About TSP and Estate Planning



This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Disclaimer
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. C.L. Sheldon & Company, LLC does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to C.L. Sheldon & Company, LLC website or incorporated herein, and C.L. Sheldon & Company, LLC takes no responsibility therefore. All such information is provided solely for convenience, educational, and informational purposes only and all users thereof should be guided accordingly. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.