Critical decisions overwhelm those who lose spouses to war

Reporting from Ft. Bragg, N.C. — — Just after Wesley Bauguess’ husband, Larry, an Army major, was killed in action in Pakistan in May 2007, she had to make immediate decisions, including what to do about her husband’s survivor benefits.

In shock and consumed by grief, Bauguess waded through confusing technical details before deciding to receive benefits in the names of her two daughters, then 6 and 4.

Later, she discovered that her daughters have to file tax returns on the benefits — at a potential tax rate of 36%. They were snared by the “kiddie tax,” a provision passed by Congress in 1986 to prevent wealthy parents from sheltering assets in their children’s names.

The kiddie tax is just one of dozens of complicated knots surviving spouses must untangle at a time when they are under extreme stress.

They must decide how and where to bury their spouses, and how to retrieve personal effects. They must deal with life insurance, taxes, Social Security benefits, children’s college education plans, probate issues, dental benefits, base housing and more.

The five-page checklist of items provided by the military is 50 items long, some of them with sub-categories. It can be overwhelming.

“I call it the widow fog,” said Charlotte Watson, program manager of Survivor Outreach Services at Ft. Bragg.

“Certain things have to be decided almost right away,” she said.

The military, which has expanded survivor services during the Iraq and Afghanistan wars, shepherds survivors through the process for months and sometimes years.

“We constantly reiterate things,” said Elissa Davis, benefits coordinator for Casualty and Mortuary Affairs at Ft. Bragg. “Sometimes they don’t fully get it till six months down the road.”

The consequences of putting benefits in her daughters’ names didn’t hit Bauguess, 38, until she began preparing her tax returns last year. A certified public accountant and a tax specialist told her the children were required to pay the kiddie tax. A military tax law specialist at Ft. Bragg told her didn’t think the tax applied to them, but she is still trying to get clarification.

On May 10, U.S. Sen. Richard M. Burr (R-N.C.) introduced a bill that would eliminate the kiddie tax for survivors’ families and make them subject only to ordinary wage taxes.

“Our nation’s service members and their families have sacrificed enough on our behalf” without paying exorbitant taxes aimed at extremely wealthy individuals, Burr said.

Often, benefits decisions are made just after survivors bury their loved ones — hardly the best time to focus on financial matters.

“My entire world was turned upside down, and I’d never had to think this way before,” said Vanessa Cole, who was confronted with difficult benefits choices after her husband, Chief Warrant Officer 4 Brent S. Cole, 38, was killed in Afghanistan in May 2009.

Even a year later, Cole said, “I’m still digesting it all and learning how everything works. The amount of paperwork alone is overwhelming, whether you’re ready for it or not.”

Survivors negotiate thorny legal territory. For instance, military retirement benefits are subject to federal income taxes, but death compensation benefits paid by Veterans Affairs (currently $1,154 a month) are not.

Most survivors cannot receive full benefits from both the military and the VA. Total benefit amounts are “offset,” or reduced — except in cases where survivors choose to receive military benefits in their children’s names. But that can expose them to the kiddie tax, as Bauguess learned.

Even soldiers who carefully plan for their families in case they are killed in action cannot anticipate every decision. Staci Chiomento, whose husband, Robert, 34, an Army staff sergeant, died in Afghanistan in July 2006, said he placed the family’s important documents in a lockbox before deploying.

Yet she felt overwhelmed after he died. “I just had to step back and gather myself,” she said.

What got her through the ordeal, she said, was the guidance of Army counselors and the support of her husband’s unit. More than three years after Robert’s death, she still talks to the outreach staff.

“I feel very blessed that I had my Army ‘family,’” Chiomento said.

Cole said her casualty assistance officer, assigned by the Army to help her through the process, was “first class.” Her husband’s commander, Lt. Col. David Jernigan, called her regularly and visited her on his home leave from Afghanistan. He even called her son, Carson, this month to wish him a happy 11th birthday.

“Everyone has made me feel I’m still important,” she said.

Bauguess said her benefit options were thoroughly explained to her by counselors after her husband died.

“But I’m not sure I absorbed it all, given the state of mind I was in,” she said. “It was a decision that had to be made at that time.”

Even so, she said, she believes she made the right choice regardless of the kiddie tax implications.

“I know one thing for sure,” she said. “Larry would have wanted me to provide for our two little girls.”

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