Military beneficiary forms can decide who gets a service member’s money

A family facing a cancer diagnosis is being urged to check military beneficiary forms before grief and paperwork collide.

In MarketWatch’s Dollar Signs column, personal-finance reporter Aditi Shrikant responded to a reader whose stepfather, a member of the military, has been told he has about a year and a half to live. The reader said her mother believes her husband’s assets, including a home in Maryland and retirement benefits, would pass to her automatically.

The daughter was worried that children from a prior marriage or siblings might later claim they should receive some of his money. Shrikant wrote that the concern is reasonable because the answer may depend less on family assumptions and more on what is written on specific forms.

Joshua Brooks, a certified financial planner who works with senior military members, told MarketWatch that military paperwork can take priority over a will. Shrikant noted that this is also a familiar issue outside the military, since beneficiary designations on accounts such as 401(k)s can control who receives the money.

What military beneficiary forms should spouses check?

MarketWatch identified three documents the family should review while the service member is still able to help locate and confirm them.

• Servicemembers Group Life Insurance, or SGLI: MarketWatch described this as a life-insurance policy. The person named as beneficiary receives the life-insurance payment after the service member dies. If no one is named, Shrikant wrote, the money goes to the widow.

• Thrift Savings Plan: MarketWatch described this as a retirement savings account for government workers. As with SGLI, the named beneficiary receives the account after death. If no beneficiary is listed, Shrikant wrote, it would go to the spouse.

• DD Form 93: MarketWatch said this Record of Emergency Data can direct $100,000 in tax-free cash and any unpaid amounts owed to the service member. If no beneficiary is listed, Shrikant wrote, those payments go to the spouse.

The key warning from Brooks was that beneficiary forms may have been filled out at different times and for different reasons. A prior spouse, child or another relative could still be listed if the paperwork was not updated, according to the MarketWatch column.

Shrikant wrote that if the mother is explicitly named as beneficiary, children or siblings who later object would not have a right to override that designation based on what they believe they deserve.

What happens to the house?

The Maryland home is a separate question from military benefit forms, according to MarketWatch. Shrikant wrote that property would be handled through the will, so the family should review the will to see who is named to receive the house.

A will is a legal document that says how certain assets should be distributed after death. Beneficiary forms are different because they tell a specific account, policy or benefit program who should receive that money directly.

Shrikant also advised the daughter to reduce the burden on her mother by asking specific questions about the forms rather than speaking only in broad terms about estate planning. She wrote that the stepfather should be included in the conversation because he may be the person who knows where the records are.

The practical point is blunt: MarketWatch’s advice was to confirm names on the forms now, before the surviving spouse is left to discover a bad surprise while mourning.

This story draws on original reporting from MarketWatch.