Article 39-Estate Planning Series: The Income a Veteran Can Receive and Still Qualify for the Improved Pension Benefit

Written by Wright Law on . Posted in Estate Planning

In recent weeks I have been addressing the improved pension benefit, a tax free cash payment that may be available to senior age veterans.  This benefit is “need based,” meaning applicants (which can include the spouses of deceased veterans) must show their income and their net worth (meaning their assets minus their debts) do not exceed certain thresholds.  This column will address how the VA considers the income of an applicant. 

To determine if a veteran establishes the requisite need to qualify for improved pension benefits, the VA will consider the gross income of the veteran (and spouse), meaning income before taxes etc. are taken out.  Currently, the annual income of the applicant must be less than the following:

  • $ 12,868 for the basic pension benefit or $ 16,851 if the veteran has a dependent (i.e. spouse).
  • $ 15,725 if the veteran is housebound or $ 19,710 if that veteran has a dependent (i.e. spouse).
  • $ 21,466 if the veteran needs aid and attendance or $ 25,488 if that veteran has a dependent (i.e. spouse).

The income of the veteran from any source, including social security, is counted.  The income of the veteran’s spouse is also counted.

Before you dismiss this benefit as an option because your income is over these amounts, consider what is not counted - or deducted - from your income.

For example, the proceeds from the sale of your residence is not considered income (although those proceeds will likely increase your “net worth” as I discussed last week).  In fact, the proceeds from a reverse mortgage are not considered countable income.  If someone is repaying a loan from the veteran, repayment of the principal is not considered income.  Finally, the contributions from family to help with the costs of care are considered to be “maintenance,” rather than income.

Perhaps most importantly, there are also expenses that are deducted from your income.  I will discuss those in my next column.

© 2015 Steven J Wright  

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