Estate Planning Essentials for Firefighters

As a firefighter, you have one of the most dangerous occupations in the world. Fighting fires leads to traumatic injuries that can leave you dead or incapacitated. On top of that, you have to deal with higher rates of illness and other factors that can lead to an early death. The sad reality is that each and every call could be your last, and we pray that that never happens. But we should be prepared for the worst, just in case. That way, you won’t expend needless energy worrying about what would happen to your family if you were suddenly gone, allowing you to focus on what counts in the here and now – your job.

A solid estate plan can be one of your most robust defenses against further tragedy if you suddenly pass. In this article, we give a broad overview of what you should consider including in your estate plan; and no, an estate plan isn’t just for the old or the wealthy, as you’ll soon see. It’s for everyone who has a family, property, and loved ones because you don’t want to burden them with further grief in an already trying time.

The Key Components of an Estate Plan

A Will

A will is the cornerstone of your estate plan. Most understand it as a legal document that outlines your wishes to distribute your assets after your death. Your will should clearly state how you want your property and assets distributed among your beneficiaries and name a trusted individual as your executor to carry out these instructions.

One of the lesser-known components of a will is that of naming a guardian for minor children. This designation ensures that if both you and your spouse were to pass away, your children would be cared for by someone you trust – because the last thing you want is for them to end up in the foster system, far removed from their community, friends, and other family members. Along with naming a guardian, consider including a letter of intent to provide guidance on how you want your children raised. While not legally binding, this letter can offer valuable insight into your values, educational preferences, and hopes for your children’s future.

If you’re delaying writing up a will because you fear it will be too expensive, there’s no need to worry. You can get a simple will written up for just a couple hundred dollars.

Advance Medical Directives and Living Wills

After writing up your will, you should next focus on an advance medical directive. This document outlines your wishes for medical care in situations where you’re unable to communicate, for example, if you’re in a coma or vegetative state. It provides clear instructions to healthcare providers and family members about the types of treatments you do or do not want to receive in specific circumstances and whether or not you want to continue receiving medical treatment if death were imminent.

Powers of Attorney

A power of attorney (POA) is a legal document that grants someone the authority to act on your behalf in specific matters. There are two main types to consider in your estate plan: financial and healthcare.

A financial power of attorney allows your designated agent to manage your financial affairs if you become incapacitated. This can include paying bills, managing investments, and handling other financial transactions.

Equally important is the healthcare power of attorney. This document names a trusted individual who can make medical decisions on your behalf if you’re unable to communicate your wishes. While an advance directive outlines your preferences for medical treatment, a healthcare POA comes into play when situations arise that aren’t clearly addressed in your directive.

Trusts

For firefighters with considerable assets or complex situations, a trust can add significant advantages to your estate plan. Trusts can be particularly beneficial if you own a business, have a family member with special needs, or want more control over how and when your assets are distributed. They can offer benefits such as avoiding probate, potentially reducing estate taxes, and providing long-term care for dependents.

However, if your situation isn’t very complex, a trust may not be necessary. As long as you have a well-drafted will, up-to-date beneficiary designations on your retirement accounts and life insurance policies, and the rest of your estate plan is in good order, you may find that’s sufficient for your needs. Remember, the goal is to have an estate plan that fits your specific situation, not necessarily the most complex one possible.

Life Insurance

Life insurance can serve many purposes in estate planning, but it’s primary purpose is to provide a death benefit – a tax-free lump sum payment to your beneficiaries.

This death benefit can serve multiple important purposes. It can help your family maintain their standard of living, pay off outstanding debts like a mortgage, fund your children’s education, and cover immediate expenses such as funeral costs. Some policies even include a cash value component that grows over time, potentially providing an additional financial resource for your beneficiaries.

When considering life insurance, be careful that you’re neither overinsured nor underinsured. A common rule of thumb is to have a death benefit of 10-15 times your annual income, plus specific financial obligations such as your mortgage, your children’s future education costs, and any other debts that could burden your family if you were to pass away.

Line of Duty Death Benefits

Firefighters and their families are entitled to specific benefits if the firefighter dies in the line of duty. These benefits are provided at both the federal and state levels, offering additional financial support beyond personal life insurance policies.

At the federal level, the Public Safety Officers’ Benefits (PSOB) Program provides a one-time death benefit to eligible survivors of public safety officers who die in the line of duty. For 2024, the PSOB death benefit amount is $437,503.00 for eligible deaths and disabilities occurring on or after October 1, 2023​​​. States often offer additional benefits, which can include continued health insurance for family members, education benefits for children, or ongoing pension payments.

It’s important to integrate these benefits into your greater estate plan, but they shouldn’t be viewed as replacements for any of the other components of your plan. Instead, consider them as an additional layer of financial protection for your family.

Updating Your Estate Plan

An estate plan is not a “set it and forget it” document. Life changes and your estate plan should evolve with it. Regular reviews and updates are necessary to ensure your plan continues to reflect your wishes and circumstances.

  • Key life events that necessitate updates include:
  • Marriage or divorce
  • Birth or adoption of children
  • Death of a beneficiary or executor
  • Significant changes in financial situation
  • Purchasing a home or other major assets
  • Changes in tax laws

 

It’s particularly important to keep your beneficiary designations up-to-date, especially for retirement accounts such as your pension and IRA, as well as your life insurance policies. These designations typically override your will, so they need to accurately reflect your current wishes.

In Conclusion

As a firefighter, you dedicate your life to protecting others. Now it’s time to ensure your own family is protected. From wills and advance directives to powers of attorney and life insurance, each component plays its role in securing your family’s well-being and honoring your legacy. While it’s unpleasant to think about it, we shouldn’t wait to create an estate plan because we never know what tomorrow will bring.

Ready to secure your family’s future? We can help make sure your estate plan aligns with your financial goals and personal situation. Just click the button below to schedule a consultation at your convenience!  

The information contained in this article is for educational purposes only, this is not intended as tax, legal, or financial advice. One should always consult with the tax, legal, and financial professionals of their choosing regarding their specific situation.

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