Planning for When You're Gone

Life Insurance Contract

Estate planning is not a pleasant subject nor an enjoyable task. Estate planning means more than simply preparing a last Will and Testament. In its broad sense, estate planning must address the administration and protection of assets during your lifetime and for decision making in the event that you are unable to make decisions for yourself.

Estate-planning issues can become very complicated and they vary widely from state to state, so you may need the advice of an estate-planning attorney or legal assistance available on base, or through your financial institution. Many estate planning firms offer a free consultation to assess your needs and then will discuss what they will provide and their fees.

A comprehensive estate plan includes all the documents above plus some continuing service can cost about $2,000 to $3,000. The more complicated your estate, the greater the cost. Most retirees have relatively simple estates so costs can be less. Just because your estate is simple now does not mean that you will not need estate planning in the future. Also, estate planning is not a task reserved solely for the elderly.

Incapacitation. What if you are involved in a serious accident or contract a serious illness? Who will make the decisions regarding your medical care, what medical measures do you want taken to save your life, what if those measures reduced you to a prolonged vegetative state, who has the power to make significant financial decisions if you are incapacitated, who will take care of your children if you are unable to do so?

Durable Powers of Attorney, Living Wills, and Advance Health Care Directives can answer most of those questions. A will is used to designate the guardians of your children. All of these are legal documents and in today's litigious society are challenged frequently. This is why they need to be prepared by competent attorneys. These documents represent the cornerstones of your estate plan.


Many people consider trusts something that only the wealthy need and use. However, a trust can be a valuable tool for almost anyone. A trust is a set of instructions that tell the world how you want things done if you are not around or able to do them yourself. The most popular and widely used trust is a revocable trust that you own and manage while you are alive. It also carries out your wishes when you die. There are some key reasons why you might want to consider a trust: 

  • Trusts avoid probate. Trusts avoid delays in settling your estate and will save your survivors both time and money. Another good reason to avoid probate is privacy. Any of your assets that pass through a normal probate process become part of the public record and are available to creditors and others who might want to take advantage of your family. Trusts are private.
  • Trusts can help avoid tax liabilities. While most retirees may not have estates large enough to be concerned about estate and inheritance taxes, this can change. Hopefully you will see a substantial increase in your estate as you pursue your second career. Also, many retirees underestimate their estates by failing to include the real value of their home or by failing to include the large death benefits of their life insurance policies. In some cases, there is even a value attached to survivor pensions such as SBP. So while tax planning should not be a major focus of a trust, it can be a valuable tool.
  • Trusts can help plan for known or unexpected family situations. A trust can help a disabled child, sibling or parent be cared for, can ensure that funds will be available and be used to care for your children after you are gone. There is an almost endless list of problems and issues that can be helped by a properly prepared trust.
  • Trusts can be used with Life Insurance Planning. A trust can own or be the beneficiary of a life insurance plan. Trusts can also be set up to dispense the proceeds of a large policy to your children in a controlled manner if you and your spouse should die prematurely. An estate planning attorney/tax expert should be consulted to discuss the advantages of using trusts with life insurance.

The estate planning tools and documents will be based on your own family circumstances. 

Long Term Care (LTC)

Long term care is one area where you are not covered. Neither TRICARE nor Medicare provide for custodial care which is what most LTC consists of. Medicaid is usually a non-starter for a military retiree due to your pension. LTC is a growing topic of interest in this country. Statistics show that with people living longer than ever. The probability of their needing some type of assisted living is also rising. In your family, the person with the most need is usually the female spouse. The average nursing home stay is two and a half years and the average cost is currently $85,000 per year. However, that can vary greatly depending on region. This time of transition from active service, may be a good time to consider your future LTC needs and start planning now. There are several options that financial professionals discuss:

Long Term Care (LTC) Insurance Plans. These are plans that you purchase much like Term life insurance. You pay an annual (or more frequent) premium and if you meet one of the requirements for LTC your plan pays you a monthly amount. LTC Plans have a variety of benefit elections which impact the price, such as the amount of the daily benefit, the length of the benefit period (usually three to five years), the length of the elimination period, inflation protection options, etc. Your age is a major factor in your premium costs. The best place to start is with the Federal LTC Program. Use it as a benchmark. You can learn more about the federal program, including getting premium quotes for various options from their excellent website at

Self Insure. Some financial professionals believe that if you have sufficient assets, you can provide for you and your spouse's long term care. However, there is a risk that you could run out of funds and, of course, any assets used for long term care would not be available for other uses or for passing them on to your family. You should consider seeking the counsel of a financial professional if you think you can self insure. Additionally, some of the other options below could be used as part of you overall LTC Self Insurance Plan.

Continuing Care Retirement Community (CCRC). One popular self-insurance plan is a CCRC. These are facilities that offer the full range of living arrangements -- from separate homes or apartments where couples live independently, to nursing facilities where a person requires continuous LTC. There is typically a large entrance fee ($100,000 to $300,000 or more) and then a monthly fee ($1,000 to $3,000 and up). For those with sufficient assets CCRCs offer an attractive option for insuring LTC needs.

Annuities. An annuity can provide monthly income for life or for a specified number of years. This income could be used to fund LTC needs or could be used to pay LTC Insurance premiums. The best way to use an annuity for this purpose would be to purchase a flexible premium deferred annuity at a young age and then make monthly contributions to it. Let it grow tax deferred and then annuitize it later in life to pay for LTC expenses. This is probably not a viable option for most retirees. However, it might be an option for a younger retiree. There are also some  annuities available that can have a LTC option where the annuity payment would be increased if the annuitant met certain LTC criteria.  

  • Life Insurance. Some permanent (whole life) life insurance plans have a LTC Option which allows an accelerated payout of the death benefit if the insured meets certain LTC criteria. Again, this would work best if the policy were purchased at a younger age with lower premiums. Most retirees will find whole life insurance to be an expensive alternative. However there are advantages: You have the LTC protection if you need it and life insurance and cash value if you don't require long term care, so it may be well worth the cost.  
  • Reverse Mortgages. A reverse mortgage is a  loan against a home's market value that advances cash to the borrower who remains the homeowner. It requires no installment payments, and proceeds from the sale of the home are used to repay the loan when the borrower no longer maintains the home as a principle residence (e.g. dies or moves into a nursing home, etc.) A reverse mortgage is an option for obtaining funds to pay for LTC. Reverse mortgages are provided through the federal government and private lending institutions.
  • Family Care. About 70% of long term care is still being provided by family members. However, this can be a significant physical, mental and financial burden on a family. It can require modifying a home to accommodate the LTC needs of a person. In many cases, families eventually have to turn the care over to professional care givers or turn to a nursing home anyway.  Some children have also turned to paying the premiums for LTC Insurance for their parents.
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