Dowell sits just across the Thomas Johnson Bridge from Patuxent River Naval Air Station, home to a significant community of active duty, retired, and Coast Guard military families. Estate planning for military retirees involves benefits and programs that civilian plans do not address. Here is what Dowell military families should know.
Military retirement brings a specific set of benefits that continue into civilian life: retirement pay, VA disability compensation, Survivor Benefit Plan elections, TRICARE, and life insurance through programs like SGLI and VGLI. For Dowell retirees and their families, an estate plan that does not coordinate these benefits with the rest of the estate leaves significant gaps.
At The Law Offices of Haskell and Dyer, we work with military families across Calvert County and Southern Maryland. Here is an overview of how military benefits interact with estate planning.
Military Retirement Pay
Military retirement pay generally ends at the retiree’s death unless a Survivor Benefit Plan (SBP) election was made. Key points for estate planning:
- Retirement pay is based on years of service and final pay or high 36 calculation
- The benefit terminates at death for a retiree without SBP coverage
- The full retirement pay does not transfer to a surviving spouse absent SBP
- Retirement pay is subject to federal income tax but not to estate tax in most cases
Planning needs to address what happens to the household income when the retiree dies. Without SBP, the surviving spouse may lose a substantial portion of monthly income overnight.
The Survivor Benefit Plan
The Survivor Benefit Plan (SBP) allows a retiring service member to elect to continue a portion of their retirement pay to a surviving spouse, child, or both. Key details:
- The maximum SBP benefit is 55 percent of the retired pay base amount elected
- Premiums are deducted from retirement pay during the retiree’s lifetime
- The election is typically made at retirement and is generally irrevocable
- Changing the election after divorce or death of the original beneficiary requires specific procedures
- SBP benefits are taxed as income to the surviving spouse
Common SBP planning questions include whether the default election amount provides enough income, whether additional life insurance should supplement SBP, and how to coordinate SBP with Social Security survivor benefits.
Important to verify: If you divorced and remarried, or if your original SBP beneficiary has died, make sure your current SBP paperwork correctly reflects your intended beneficiary. DFAS records sometimes lag behind personal changes, and errors can be difficult to correct later.
VA Disability Benefits
VA disability compensation ends at the veteran’s death. However, Dependency and Indemnity Compensation (DIC) may be available to surviving spouses of veterans who died from a service connected condition or who were totally disabled for a specified period. DIC provides monthly income to qualifying survivors.
For estate planning, DIC eligibility should be evaluated alongside other survivor benefits to understand the full income picture for a surviving spouse.
VA Pension and Aid and Attendance
Wartime veterans with limited income may qualify for VA pension, which provides monthly income based on financial need. The Aid and Attendance enhancement can increase the benefit for veterans who need help with daily living activities. These programs can be an important part of long term care planning for aging veterans.
VA pension and Medicaid have overlapping eligibility considerations. Planning should consider both programs together, particularly as the veteran’s needs change.
SGLI, VGLI, and Other Military Life Insurance
Military life insurance operates outside probate through beneficiary designations. Key programs:
- SGLI (Servicemembers’ Group Life Insurance): Coverage for active duty service members, with beneficiary designations controlling distribution.
- VGLI (Veterans’ Group Life Insurance): Conversion of SGLI to continued coverage after service, with separate beneficiary designations.
- Family SGLI: Coverage for spouses and children of active duty service members.
Reviewing and updating beneficiary designations after marriage, divorce, birth of children, or death of previous beneficiaries is essential.
TRICARE and Healthcare Coverage
TRICARE coverage for retirees and their dependents continues after retirement with specific rules. At the retiree’s death, surviving spouses typically retain TRICARE eligibility, and children remain eligible under certain conditions. Healthcare planning for surviving spouses needs to consider TRICARE’s coordination with Medicare and any supplemental coverage.
Patuxent River Active Duty Considerations
For active duty families stationed at Patuxent River Naval Air Station, additional estate planning considerations apply:
- Deployment and training schedules that may limit availability for planning
- Frequent moves that affect state of legal residence and domicile
- Servicemembers Civil Relief Act protections
- Power of attorney needs during deployments
- Family care plans for single parents or dual military couples
The base legal assistance office can provide basic wills, powers of attorney, and advance directives at no cost. For more complex planning needs, such as trust structures, business succession, or Medicaid planning, a civilian attorney experienced with military families can provide specialized guidance.
Thrift Savings Plan for Uniformed Services
Military members have access to the Thrift Savings Plan (TSP), the same retirement savings program used by federal civilian employees. TSP beneficiary designations control at death, independent of the will. For retirees who have rolled TSP balances into IRAs, the IRA beneficiary designations become the controlling document.
Coordinating TSP and IRA beneficiary designations with the overall estate plan is essential. The beneficiary form on file, not the will, determines who receives these significant assets.
The Spouse of a Military Retiree
Military spouses often face unique estate planning questions:
- How to continue receiving survivor benefits after the retiree’s death
- How to maintain TRICARE eligibility
- How to access DFAS and VA accounts to manage benefits
- How to coordinate federal benefits with any civilian employment history
- How to plan for remarriage, which may affect some military benefits
A comprehensive estate plan addresses all of these questions rather than leaving them to discovery after the retiree’s death.
Planning for the Second Career
Many Dowell area retirees begin a second career after military retirement, often in federal service, defense contracting, or private business. Planning should integrate military retirement benefits with any new pension, 401(k), or business interest arising from the second career. Double dipping into multiple benefit programs requires careful attention to beneficiary designations and coordination.
For the broader framework on federal worker estate planning, also see our related guide on federal workers in Lusby.
Coordinating with the Overall Estate Plan
Military benefits are one part of a complete estate plan. Coordinating them with wills, trusts, advance directives, and financial powers of attorney ensures the entire plan works together. For the broader framework, see our cornerstone: Calvert County Estates and Probate: A Complete Guide.
Immediate step for military retirees: Pull your DFAS account statements, VA award letters, and SGLI/VGLI policy documents. Review the beneficiary designations on each. If anything is outdated or unclear, that is the starting point for your planning conversation.
Military Retiree or Active Duty in Dowell?
We help Pax River and Calvert County military families coordinate benefits with estate plans. Free consultation.
This article is for general information only and does not constitute legal advice. Contacting our firm does not create an attorney client relationship until a formal agreement is signed.
