Protecting Your Assets: VA Aid and Attendance” Benefits

Michael H. Marks, Esq.

Michael H. Marks

Linda Law Carroll

412-421-8944

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U.S. Veterans Administration “Aid and Attendance” cash benefits can be available for a qualifying veteran or for the widow of a qualifying veteran, in any setting or placement, i.e. at home, in a personal care home or assisted living facility, or even in a nursing home. If you are disabled and your cash costs of care exceed your monthly income, you may be eligible to receive an amount of up to just over $2,000 monthly for a veteran and up to just over $1,000 per month for the widow of a veteran.

Eligibility Requirements

The requirements for VA Aid and Attendance benefits are generally as follows:

  1. That the veteran served for at least 30 days during a “wartime era,” as defined by specific dates, and received an honorable or general discharge (not a dishonorable discharge);
  2. That the veteran or widow is disabled in the sense of needing daily aid and attendance;
  3. That your net worth is insufficient to provide for your projected needs; and
  4. That your cash costs of care are greater than your income.

More Valuable in Some Settings than Others

VA Aid and Attendance benefits can be very helpful if you are in a home-based care setting or in an assisted-living facility, to help close the gap between your income and your expense. (However, if you are heading straight to a nursing care facility with costs of $8,000-$10,000 per month, frequently payable by Medicaid, then the effort necessary to obtain VA benefits would often not be worthwhile).

There is also often a long delay after your application is submitted and until your determination or approval is granted – at least several months, and often up to a year. Also, in some ways the VA application process and eligibility determinations can be somewhat subjective and not based on clearly established formulas, rules or guidelines.

No Gifting Penalty

While the application and documentation process is a very taxing bureaucratic exercise, for now at least, VA benefits have no “look back period” or penalty for making gifts or transferring away assets, as under Medicaid’s rules. Therefore strategic planning and your preparation for VA eligibility can be simpler than for Medicaid planning purposes. (Legislation has been introduced several times in the U.S. Congress to establish anti-gifting and look-back rules for VA benefits, too. To date, no new law has been enacted, but such rules are coming)

Documenting Cash Costs of Care Greater than Income

You have to have actual cash costs of care in excess of your income, to claim and receive the benefit, such as if you are paying significant cash cost of care to outside service providers. If not, you may still be able to create a written caregiver payment agreement with your child or other person to demonstrate the necessary cash expenses for this purpose.

Reducing Excessive Net Worth

If your net worth is excessive under VA guidelines, you will need to reduce the amount of your available resources in order to qualify for benefits. Sometimes this can be done simply, as by making your accounts jointly held with a child or children. If so, only the fractional share belonging to you, the veteran or widow, will be counted. At other times, more sophisticated measures such as the Asset Protection Trust are necessary to reduce your net worth for VA purposes. Annuities can also be used to turn excess assets into income.

Achieving VA Eligibility through an “Asset Protection Trust”

An irrevocable “Asset Protection Trust” (“APT”) can help protect the principal value of a big chunk of your assets, both in the immediate future while receiving VA benefits in a home setting or in a personal care home, and if you need Medicaid benefits to pay for expensive nursing care thereafter (but only after five years have gone by).

Using a trust can be better than making a direct simple gift. You could reduce your own available resources by simply giving your money to your child or children to hold for you. I always recommend using a formal Trust instead of a casual, informal transaction, to make sure that your interests and funds will still be protected even if your child or other person holding your funds were to become incapacitated or die before you. It’s safer. The formal Trust guarantees that someone else whom you choose would become the Successor Trustee with the same formal legal powers and obligation to handle the Trust funds at your direction. A gift to an individual does not provide the same degree of assurance. The Trust can also help save money by avoiding probate upon your death.

In an Asset Protection Trust, you voluntarily give up the right to access the principal and income of that part of your assets placed into the trust. (You only put part of your assets, not all, into the trust.) However, your child or other trusted person can still access principal or income from the Trust for you if needed, despite the nominal prohibition, by making a distribution through himself as a beneficiary. The Trust can also be terminated if necessary, despite its nominal status as “irrevocable.”

Transferring your home into a trust can also help to protect your VA eligibility so that, if you sell the home, you don’t become ineligible because of having additional net worth in the form of the sale proceeds. By having the home in the trust you protect the cash proceeds of the sale.

Change of Strategy Sometimes Needed

Note that VA benefits and Medicaid benefits have different rules. If you should later need nursing level care and apply for Medicaid benefits, depending on the timing it may be necessary to shift directions, undo the trust or adopt a new strategy for Medicaid eligibility.

Call today to meet with an elder law attorney in Pittsburgh, with offices in Monroeville. Contact Marks Elder Law today to start the planning process.

We will gladly review your planning for long term care to ensure it is up-to-date.