Estate Planning

This document gives one person the authority to act on your behalf on legal, money and health matters if you become unable to handle your own affairs.

This document allows you to describe what medical treatments you do or don’t want should you suffer a serious injury or become terminally ill. You can also designate, via a durable health care power of attorney, who you prefer to make medical decisions for you if you’re unable to do so.

It is important to plan ahead for the care you may need if you have a disabling or chronic illness and can no longer care for yourself.

With this legal document, you dictate your wishes for after your death. Without a will (or similar testamentary instrument, such as a trust), state law governs how your property will be distributed and who should be responsible for the care of your children.

This legal document is used to manage or protect assets, offer privacy, provide for multiple beneficiaries and children or tax planning, and avoid the delays and costs of probate court.

Service members have life insurance through Servicemembers’ Group Life Insurance. Depending on the benefit amount you want to provide to your family, you may want to supplement your SGLI with another life insurance policy.

If you die because of an injury or illness incurred or aggravated during your service, your survivors may be entitled to benefits from the Defense Department and the Department of Veterans Affairs. Some benefits are automatic, but there are others, such as Social Security Survivor benefits, that your family must apply for.

Your estate plan helps ensure that your final wishes are carried out, including funeral and burial arrangements. Your family is also eligible to receive funeral and burial benefits through veterans affairs.

If you own property, you’ll want to determine who receives ownership in the event of your death. Your estate may increase in value after mortgage replacement or general appreciation, for instance, but if you don’t have a will, you won’t have a say in how it gets divided.

A will is needed to establish legal guardianship. As a parent, a will allows you to determine the appropriate guardians for your children. Without one, a judge will choose guardians for your children and determine who raises them.

Any person age 18 or older who is of sound mind can write a will. But keep in mind that if you write a will under life-threatening circumstances, it could be challenged. And if you do not write your will personally, but rather a friend or family member writes it for you, your will could be challenged or revoked.

An attorney at your legal assistance office can help you draw up a will and any associated estate-planning documents.

You can change your will at any time, as long as you meet certain conditions, such as rewriting the entire will or using an amendment called a codicil. You may want to update your will with your attorney if:

• You get married or divorced
• A birth or death in your family affects your plan
• You have a large increase or decrease in the value of your property
• The person you name as executor, guardian or trustee dies or becomes unavailable to serve
• The laws associated with estate taxes change
• You change your state of legal residence
• You wish to change how you want your property distributed

Don’t make hasty decisions or impulsive purchases. An inheritance may represent the largest sum of money you’ll ever receive at one time.

While you’re considering your options, place your inherited cash into a low-risk money market fund or certificate of deposit, also known as a CD.

Consult a probate lawyer within two weeks of the death. A lawyer can give you a good idea of the timetable and any issues you might face. This doesn’t need to be expensive. Sometimes one hour can lead to an action plan that saves you time and money. You also may want to talk with an accountant and a financial advisor.

If you already have a will, you may want to look at it again.

Determine how to allocate inherited cash among your existing investments and savings, as well as what to do with any inherited property and stocks.

Be sure to factor in any applicable inheritance taxes.

Even after the process is over, you may want to keep copies of important documents, such as the will and trust documents, asset inventory and value, and multiple copies of the death certificate. Good record-keeping today can save you from a headache in the future.

If you’re inheriting assets, you’ll likely hear these terms:

• Inheritors, heirs and beneficiaries — These terms apply to anyone who inherits assets according to a will or under the law.
• Debts — After a person dies, debts are paid before any inheritance is passed on to heirs. You’re usually not legally responsible for the debts of a parent or relative. Their estate is responsible for paying the remaining debts.
• Estate — This refers to the assets left behind after a person’s death.
• Estate taxes or taxes on your inheritance — Federal and state taxes may be due after a death. In some states, the taxes are paid by the estate’s assets, while in others, the inheritors pay it.
• Executor — The person named in the will or appointed by the court who gathers, secures and manages the estate’s assets.
• Probate — The legal process by which a court oversees the distribution of property after the owner’s death.
• Will — A legal document that states how a person’s property is to be distributed after death. If there is no will, every state has intestacy laws that provide a formula for determining distribution.
• Trust — This is another way for a person to transfer their estate to their named beneficiaries. In setting up a trust, the person names a “trustee” to distribute the property to named beneficiaries according to certain instructions.