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"Is your estate plan, will, or trust sufficient or deficient?"

Proposed VA Pension with Aid and Attendance Changes

Why does the Department of Veterans Affairs want to amend the existing regulations pertaining to pension and its other needs-based benefits? VA is statutorily precluded from paying pension if “it is reasonable” that a claimant should consume some portion of his or her resources before receiving needs-based pension benefits. Currently, VA does not have an established net worth limit for pension recipients and current regulations do not provide specific guidance regarding how to determine whether or not a claimant’s financial resources are sufficient to meet the claimant’s needs without the pension benefit. Be careful with information you read on the internet, especially if the information claims that applicants are allowed to keep a specific value of money, assets, or resources. We repeat VA does NOT have an established net worth limit! This means that VA decides whether each applicant has excessive assets on a case by case basis.

The VA began its attempt to make its rules more restrictive and to limit the number of veterans and dependents of veterans who receive benefits with help from Congress and the Senate. The house introduced H.R. 2189 and the Senate introduced S. 944. Remember what was happening when these bills were introduced? President Obama and the federal Congress could not agree on a federal budget. The federal government was deadlocked, shut down, and the bills were tabled.

Next the Department of Veterans Affairs (VA) proposed to amend its regulations governing entitlement to VA pension. The proposed regulations would establish new requirements pertaining to the evaluation of net worth and asset transfers for pension purposes and would identify those medical expenses that may be deducted from countable income for VA’s needs-based benefit programs.

First, the proposed regulations would impose a penalty against the claimant who disposes of property for less than fair market value if that transfer reduces the amount of the claimant’s estate.

Second, the regulations impose a 36-month look-back period for transfers made prior to the submission of an application. Under this portion of the regulations, the VA will review the applicant’s gifts and other transactions over the past 36 months to ensure no penalties described in the prior paragraph should apply.

Finally, the regulations describes transfers to a trust, annuity or other financial instrument or investment as a transfer of an asset. There are exceptions, but the goal appears to be to discourage some Veterans pension planning strategies that currently exist and, according to regulations proponents, are being misused.

There are other aspects of the proposed law that would further affect Veterans, and their spouses, applying for these benefits. However, the bottom line for our senior clientele is that new planning strategies may be required to assist them in obtaining these benefits. We will keep you posted on the progress of these bills. For more information about Veterans pension benefits, please contact our office.

Update August 2017

The amendments to the proposed rule based on review of public comments have been completed. We expect the final rule to clear the VBA concurrence process by the end of August 2017, at which time it will undergo full VA concurrence. VA does NOT expect the final rule to be published before the end of summer/early fall.

Attorneys, advisors, and Veterans submitted over 800 comments until March 24, 2015. The VA spent the time from then until now reviewing and responding to those comments before passing the regulations. The draft final rule contains several changes as a result of some of the comments. However, because it is still a draft and VA has not finally approved the changes, I can't share with you what those changes are. We recommend that you subscribe to our newsletter so that you can receive updated information as we receive it.