Article 42-Estate Planning Series: How the VA is Changing the Rules for Veterans to Receive the Improved Pension Benefit – Part 2

Written by Wright Law on . Posted in Estate Planning

In my last article I began explaining the changes I expect will be coming for veterans who wish to qualify for the improved pension benefit.  I expect these changes will occur in 2016, possibly as early as February.

I also mentioned that I expect at least three major changes, the first of which is the manner in which the VA determines if a veteran establishes financial need.  Currently, the VA evaluates the net worth of veterans (and spouses) separately from the veteran’s (and spouse’s) income.  Essentially there is a test for net worth and a separate test for income, both of which must be met. 

However, the new expected threshold of $119,200 will likely be the maximum for net worth and annual income together.  Although it appears as though the VA is significantly increasing the dollar amount one can have and still establish financial need; this increase is not what it appears to be.

I stated in my last article that the residence of a veteran is not included in the net worth calculation.  This will continue to be true.  However, the veteran will likely only be able to include two acres of real property once the changes are made.

The second of the significant anticipated changes borrows a concept from Medicaid.  For the first time, I expect the VA to start prohibiting the transfer of assets prior to application.  Medicaid has a similar policy and uses a 5 year “look back”.  Any transfers 5 years prior to application will impact when the Medicaid applicant qualifies for Medicaid.

It appears the VA will now be implementing a 3 year “look back.”  This means that, upon implementing the new regulations, a veteran will not be allowed to transfer assets out of his/her estate less than three years before applying.  Any such transfers will result in a delay in receiving benefits up to a maximum of 10 years.

My next article will address the third expected significant change.

© 2015 Steven J Wright  

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