TL;DR: Key Takeaways for Veterans
- VA disability compensation stops at your death. It does not pass to heirs through your will.
- SGLI and VGLI beneficiary designations are governed by federal law and override anything your will says.
- A special needs trust can protect a disabled beneficiary’s VA pension eligibility from being disrupted by an inheritance.
- Virginia requires an advance medical directive under Code Section 54.1-2983 to be signed before two witnesses and notarized.
- Your DD-214 should be stored with your estate documents. Your executor needs it, and your family may not know where it is.
What Your Will Controls vs. Federal VA Rules
Understanding which assets and benefits pass through your estate vs. through the VA
Why Standard Estate Plans Often Fall Short for Veterans
A standard Virginia will covers what you own. It rarely covers what you are owed. Veterans receive federal entitlements, disability ratings, survivor benefit designations, and life insurance policies that exist entirely outside the probate process. None of them transfer through a will. If your estate plan does not account for them, your family is left to figure out a complicated federal benefits system while they’re grieving.
This matters for a straightforward reason: veterans tend to have more moving parts in their financial picture than civilians of the same age. A 45-year-old veteran might have a VA disability rating, a VGLI policy with a 20-year-old beneficiary designation, a Survivor Benefit Plan election from a prior military retirement, and a pending VA claim. A generic estate planning template is not built for that situation.
Military Benefits That Require Special Handling
Six categories of military-related benefits sit outside your will and need deliberate planning:
- VA disability compensation — monthly payments based on your service-connected rating; stops at your death
- Dependency and Indemnity Compensation (DIC) — a separate benefit available to surviving spouses and dependent children; administered by the VA, not by your estate
- Survivor Benefit Plan (SBP) — available to military retirees; must be elected at retirement and cannot be changed through a will
- SGLI / VGLI life insurance — governed by federal law; beneficiary designation controls distribution, not your will
- VA burial benefits — eligibility is determined by the VA; requires documentation, not a will provision
- VA pension — a needs-based benefit for wartime veterans with limited income and assets; can be disrupted by an inheritance if not structured correctly
Protecting Your VA Benefits Through Your Estate Plan
According to the Department of Veterans Affairs Annual Benefits Report for FY 2024, more than 6.1 million veterans received VA disability compensation, and approximately 430,000 surviving spouses received Dependency and Indemnity Compensation. Yet many of these benefits are never factored into veterans’ estate plans, leaving families without guidance when it matters most. (VA Annual Benefits Report, FY 2024)
Coordination is the core challenge. Your estate plan and your VA entitlements need to work together, not against each other. That means your executor, your surviving spouse, and any trustee you name need to understand both what the VA will provide and what they will need to apply for separately.
How Survivor Benefits (DIC) Interact With Your Will
Dependency and Indemnity Compensation is a monthly benefit paid to eligible surviving spouses, children, and dependent parents when a veteran dies from a service-connected condition or was rated 100% disabled for at least 10 years prior to death. The key point: DIC is not controlled by your will. The VA determines eligibility based on its own criteria.
What this means practically is that your estate plan should document DIC eligibility so survivors know to apply. A will that is silent on DIC does not forfeit the benefit, but survivors often miss the application window or do not realize they qualify. Including a letter of instruction alongside your estate documents that lists your VA rating history, service dates, and the contact information for your regional VA office can make a meaningful difference for your family.
VA Burial Benefits: What to Document Now
Veterans who meet service requirements are eligible for burial in a national cemetery, a burial flag, and a Presidential Memorial Certificate at no cost to the family. Virginia veterans also have access to the state’s veterans cemetery system. Under 38 U.S.C. Chapter 23, the VA covers burial and funeral expenses for eligible veterans who die from a service-connected condition.
None of this is automatic. Your DD-214 (Certificate of Release or Discharge from Active Duty) is the document that proves eligibility. Store the original or a certified copy with your estate documents and tell your executor where it is. If yours has been lost, you can request a replacement through the National Personnel Records Center using Standard Form 180.
Special Needs Trusts for Veterans With Service-Connected Disabilities
If you have a service-connected disability, or if a member of your family does, leaving assets directly to that person can disrupt needs-based government benefits. The answer in most cases is a special needs trust (also called a supplemental needs trust), which holds assets in a way that preserves program eligibility.
This comes up frequently in veteran estate plans. A child with a disability may depend on Medicaid or SSI. A veteran receiving VA pension may face a benefit suspension if they inherit a lump sum. Getting the structure right requires understanding both Virginia trust law and VA benefit rules.
How a Special Needs Trust Protects VA Disability Payments
There is an important distinction here that most general estate planning guides miss. VA disability compensation is not means-tested. An inheritance will not affect it. VA pension, however, is needs-based, and the VA counts assets and income when determining eligibility. A veteran receiving pension who inherits a substantial sum could lose that benefit until the inherited funds are spent down.
A properly drafted special needs trust can hold those inherited assets in a way that keeps the beneficiary’s countable assets below the VA’s threshold. The trust must be structured carefully, and the trustee must understand the VA’s spending rules. This is one of the situations where coordinating your VA benefits planning and your estate planning under one attorney makes the biggest difference.
Virginia Code Requirements for Special Needs Trusts
Virginia follows the Uniform Trust Code under Code of Virginia Section 64.2-700 et seq. Special needs trusts must satisfy both Virginia law and federal Medicaid rules to be effective. That means naming a trustee who understands the restrictions, drafting spending provisions that do not supplant needs-based benefits, and in some cases seeking court approval. These are not off-the-shelf documents.
Updating Your Life Insurance: SGLI, VGLI, and Civilian Policies
Servicemembers’ Group Life Insurance (SGLI) provides up to $500,000 in coverage during active service. Veterans can convert to Veterans’ Group Life Insurance (VGLI) within 1 year and 120 days of separation — but those who apply within the first 240 days are guaranteed acceptance without medical underwriting. Under 38 U.S.C. Chapter 19, beneficiary designations on these policies govern distribution and override your will entirely. (VA Insurance Service, 2024)
Here is the risk this creates: if you named an ex-spouse as your VGLI beneficiary before your divorce and never updated it, that former spouse will receive the policy proceeds. Your current spouse or children will not. This is not a hypothetical. It happens regularly, and it happens precisely because veterans do not think of their VGLI designation as an estate planning document.
Review your SGLI or VGLI designation any time you experience a major life change: divorce, remarriage, birth of a child, or death of a named beneficiary. The update process is handled through SGLI Online, or for separating service members, through the VA’s insurance office. Keep in mind that you have up to 1 year and 120 days after separation to convert to VGLI, but applying within 240 days means you skip the medical underwriting entirely.
The Beneficiary Designation Problem Most Veterans Miss
The same principle applies across your entire financial picture. Civilian life insurance policies, IRAs, 401(k)s, and bank accounts with payable-on-death designations all transfer by beneficiary designation, not by will. These are called non-probate assets, and they can represent the majority of a veteran’s estate. A comprehensive estate plan must coordinate all beneficiary designations with your will and any trusts so the plan holds together.
Healthcare Directives Virginia Veterans Should Have in Place
Veterans with service-connected injuries or conditions face a higher-than-average likelihood of serious illness or incapacity. Two documents protect your treatment preferences and your finances if that happens. Without them, your family may face a court proceeding to establish authority to make decisions on your behalf.
Advance Medical Directive Under Virginia Code Section 54.1-2983
Virginia’s advance medical directive is the legal instrument that combines a living will and a healthcare power of attorney. Under Code Section 54.1-2983, the directive must be signed before two witnesses and notarized to be valid. It lets you specify your preferences for end-of-life care and appoint a healthcare agent who can make medical decisions on your behalf.
For veterans with traumatic brain injury, PTSD, or complex service-related conditions, the advance directive is particularly important. Including relevant medical history, the names of treating VA providers, and clear instructions about specific treatment preferences gives your healthcare agent the context to act on your wishes. This is separate from, and more detailed than, a standard living will.
Durable Power of Attorney for Finances
Under Virginia Code Section 64.2-1600, a durable power of attorney lets you name an agent to manage your financial affairs if you become incapacitated. For veterans, the agent’s authority extends to non-VA accounts and assets. Keep in mind that the VA runs a separate fiduciary program for veterans who cannot manage their own VA benefits. Your durable POA covers the rest of your financial life, and the two should be coordinated so there is no gap in coverage.
Your Military Records and Memorabilia: Often the Most Overlooked Asset
Estate planning for veterans rarely focuses enough on military records and memorabilia, and that gap creates problems for surviving families. Three action items address it:
Store and share your DD-214. This is the document your family needs to access burial benefits, apply for survivor benefits, and verify your service history. The original or certified copy should be stored with your estate documents, and your executor should know exactly where it is. If you have lost your DD-214, you can request a replacement through the National Personnel Records Center by submitting Standard Form 180. The process takes weeks, not hours, so do not leave this for your family to resolve under time pressure.
Address military medals and memorabilia specifically. Medals, ribbons, uniforms, and military decorations often carry significant sentimental and sometimes monetary value. Your will can designate specific recipients for specific items. Worth noting: certain military decorations cannot legally be sold under federal law, and your instructions should reflect that.
Document any open VA claims. If a disability claim is pending at the time of your death, a surviving family member can substitute as a claimant to continue the claim under certain circumstances. Your estate documents should include a note of any active claims, the claim number, and the status. This information helps survivors act quickly and preserves potential benefits.
Virginia Veteran Estate Planning Checklist
9 action items to ensure your service is accounted for in your estate plan
Frequently Asked Questions About Estate Planning for Veterans in Virginia
Does my will control what happens to my VA disability payments after I die?
No. VA disability compensation stops at the veteran’s death. It does not pass to heirs through a will or a trust. What can transfer to survivors is a separate VA benefit called Dependency and Indemnity Compensation (DIC), which is determined by the VA based on its own eligibility criteria, independent of your estate documents. Your estate plan should document your VA rating history so your family knows to apply.
Can a special needs trust protect my VA pension benefits from being cut off?
Yes, in most cases. VA pension is a needs-based benefit that counts both income and assets when determining eligibility. A properly drafted special needs trust can hold inherited funds in a way that keeps a beneficiary’s countable assets below the VA’s threshold, preserving pension eligibility. The trust must be drafted carefully, and the trustee must understand the VA’s restrictions on how those funds can be spent.
What happens to my SGLI or VGLI life insurance if I never updated the beneficiary?
Federal law governs SGLI and VGLI beneficiary designations under 38 U.S.C. Chapter 19, and they override your will. If your named beneficiary is a former spouse, a deceased individual, or someone you no longer intend to receive the proceeds, the insurance will be distributed according to SGLI/VGLI default rules rather than your current wishes. Review and update your beneficiary designation after every major life change.
Does Virginia have estate planning rules specific to veterans?
Yes. Virginia veterans are eligible for burial in the state’s veterans cemetery system at no cost. Virginia also follows the Uniform Trust Code under Code of Virginia Section 64.2-700, which governs how special needs trusts must be drafted to protect a beneficiary’s eligibility for needs-based benefits. And Virginia Code Section 54.1-2983 governs advance medical directives, which are particularly important for veterans with complex service-related medical histories.
Do I need separate attorneys for VA benefits and for estate planning?
Not necessarily. Working with an attorney who handles both VA benefits and estate planning means your plan can be coordinated from the start, rather than patched together after the fact. This matters most for veterans with active disability claims, pension benefits, or dependents with disabilities, where the interaction between VA rules and Virginia estate law is most likely to create conflicts.
Ready to Build a Plan That Accounts for Your Service?
If you are a veteran in Stafford, Fredericksburg, Spotsylvania, or Fairfax and want to make sure your estate plan accounts for your VA benefits, contact the Law Office of Miles Franklin at (276) 773-6102 or schedule a consultation online. Having served as a Virginia Army National Guard paralegal, Miles understands the intersection of military benefits law and Virginia estate law from direct experience. You can also review the essential documents every Virginia estate plan should include as a starting point.
Questions about your estate plan?
Every situation is different. If you have questions about how Virginia law applies to yours, contact the Law Office of Miles Franklin to schedule a consultation.
Schedule a Consultation →