2018 Changes to VA Aid and Attendance Pension Rule

The Veterans Administration (VA) has changed their non-service connected pension benefit (sometimes called “Aid and Attendance”) eligibility rules.

These changes will take effect October 18, 2018.

NET WORTH LIMIT

The new net worth limit will be the maximum Community Spouse Resource Allowance (CSRA) that is used by the Medicaid program. Currently, this is $123,600.

The old rule considered life expectancy, negative monthly cash flow, and other similar factors. Often an $80,000 limit was referred to even though this was never supported by the rules.

Now that there is a set net worth limit, there will be less confusion concerning who is eligible. Hopefully this will help make the application process quicker. All claimants will need to have $123,600 or less in order to qualify. If they have more than this limit, they will need to decrease their net worth to be eligible for pension.

LOOK-BACK AND PENALTY PERIODS

There will now be a period of ineligibility imposed if a claimant makes an uncompensated transfer during the 3-year lookback period. An uncompensated transfer might be moving money into an irrevocable trust or an immediate annuity.

If a claimant made an uncompensated transfer during the 36-month lookback period, the penalty period will begin the month after the last transfer occurred. The maximum penalty period will be 5 years (60 months).

The penalty period will be determined by taking the total of the uncompensated transfers during the lookback period and dividing it by the Maximum Allowable Pension Rate (MAPR) in effect on the date of the pension claim at the aid and attendance level for a veteran with one dependent. This MAPR is currently $2,169.

For example, if a claimant had gifted his son $32,550* two years before filing the “Aid and Attendance” claim, he would be ineligible for pension for the next 15 months ($32,550/$2,169=15 months).

*Only transfers above the net worth limit will be penalized.

PURCHASING AN ANNUITY
A quick way to gain eligibility for VA pension used to be purchasing an immediate annuity. However, now assets moved into an annuity to spend down net worth will be penalized if the annuity cannot be liquidated. Also, the monthly income from the annuity will be considered income.

Therefore, purchasing an immediate annuity is no longer an attractive option.

IRREVOCABLE TRUSTS

Irrevocable trusts have been used to reduce net worth as well, but now those transfers will be penalized if made within 36 months of filing a claim.

While the new rules make irrevocable trusts less immediately effective, they will still be an effective planning tool. A claimant can create a trust, transfer assets to it, and then wait 36 months to file a claim. As long as their assets are below the limit at the time of the claim, they should be approved.

SPENDING DOWN NET WORTH

If a claimant has more than $123,600, but does not have enough excess assets to justify creating an irrevocable trust, they should focus on spending their assets down.

Unfortunately, “in the absence of clear and convincing evidence showing otherwise, an asset transfer made during the look-back period was for the purpose of decreasing net worth to establish pension entitlement.” This means that any transfer not made for fair market value will be penalized, if the amount is over the CSRA limit.

The good news is that purchases for fair market value for the veteran or surviving spouse are allowed. This means that purchases of home repairs, vehicles, medical equipment, clothing, electronics, vacations, etc. are all permissible as long as they are used for the claimant (you can’t buy a cruise ticket for your son).

SUMMARY

• Net worth limit is $123,600 (2018).Claimants that transferred assets within the last three years (36 months) will now be subject to a period of ineligibility (“penalty period”)
• Immediate annuities will be penalized if purchased within the three-year lookback period
• Transfers to irrevocable trusts will be penalized if within the three-year lookback period
• Allowable ways to spend down assets are to spend them on items or services that are purchased at fair market value for the veteran or surviving spouse

This is a very significant change in the VA rules that will affect many veterans and surviving spouses that are in need of in-home, assisted living, or nursing home care.

Now more than ever, it is important to consider long-term care insurance and work with an elder law attorney to design an appropriate plan before the need for long-term care arises.

If you need assistance, please contact Golowin Legal to schedule a one-hour meeting to discuss your goals.

These rules were published in the Federal Register as "Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits" on on September 18, 2018.

Estate Planning In Second Marriage Situations

        

            Estate planning is critical in second marriage situations. Meeting or knowing people who are on their second or third marriage isn’t exactly uncommon nowadays. Many of us also know that remarriages entail a lot of adjustments and sometimes complications, especially when there are kids involved. Simply put, blending of two families together can be pretty challenging.

            With all the challenges and concerns on the surface of every remarriage, estate planning is often forgotten or set aside by many couples. But with the merging of two families, concerns and challenges about financial, legal and estate planning multiply.

            The following are some of the issues you should take note of, as explained by Mark Eghrari, and elder law attorney in Long Island, in his article Second Marriage And Estate Planning: 5 Things You May Not Have Considered:

Income and assets that are combined in second marriages may be at risk, if one of you still has financial issues and entanglements with a former spouse. Creditors may come for you to hold you liable of an old debt, as they “are not always bound by divorce settlements,” Mark said. To avoid complications, you may opt to keep you and your spouse’s money separate.

*If you are considering creating a joint trust, you may want to read one of my old blogs: Should I Create a Joint Trust? (Should We Have One Trust or Two?)

You also should understand the status of your properties after remarrying. Mark explains that in a community property state, those you receive before the marriage remain yours, while those you acquire after become co-owned by you and your spouse. On the other hand, “ownership is controlled by titles, registrations, or ownership documents” in a common law state. To help you decide on matters regarding these properties and in connection with your estate plan, you should see professional advice from a lawyer.

A Trust will sufficiently protect assets in case one of the spouses marries again after the other’s death. Protection for the separate assets of spouse’s children may be set up, as preferred.

Complications may happen if a Trust isn’t set up with specific wishes regarding the inheritance of the children. Do the children of the first spouse need to wait for the second spouse to die before they get their inheritance? Does the new spouse get to decide who will inherit the joint assets? All these should be explicitly stated in the Trust, to avoid unintentionally disinheriting your children from your previous marriage.

Whether the surviving spouse be allowed to stay in the home or not is a concern for blended families. What resolves this is again, putting the home in a Trust. According to Mark, many couples do that “for the benefit of the surviving spouse.”

With the different new adjustments in every remarriage, always consider to revise your estate plan (if you already have one) or seek legal advice to set it up. Remember that it isn’t an easy process—you may experience pitfalls in setting up your estate plan in a second marriage—but it is necessary step that no couples of remarriages should overlook.

           

2018 VA Aid and Attendance Pension Rates

What are the 2018 VA Aid and Attendance Pension rates?

For 2018, the Maximum Allowable Pension Rates (MAPR) for the VA Basic Pension, Housebound, and Aid and Attendance ratings have increased from 2017.

As indicated below, the maximum monthly pension payable to a married veteran in need of Aid and Attendance is $2,169 per month. The maximum monthly payment to a surviving spouse is $1,176.

See the table below:

	Maximum Allowable Pension Rate (MAPR)	Approx. Monthly Benefit
Veteran (Basic Pension with no dependent)	$13,166	$1,097
Veteran (Basic Pension with one dependent)	$17,241	$1,436
Veteran (Housebound with no dependent)	$16,089	$1,340
Veteran (Housebound with one dependent)	$20,166	$1,680
Veteran (Aid and Attendance with no dependent)	$21,962	$1,830
Veteran (Aid and Attendance with one dependent)	$26,036	$2,169
Each additional child	$2,250	$187
Surviving Spouse (Basic Pension with no dependent)	$8,830	$735
Surviving Spouse (Housebound with no dependent)	$10,792	$899
Surviving Spouse (Aid and Attendance with no dependent)	$14,113	$1,176
Surviving child	$2,250	$187
Veteran Married to Veteran (Both Aid and Attendance)	$34,837	$2,903

Golowin Legal, LLC provides Medicaid and VA Aid and Attendance Pension planning to families in the central Ohio area.  If you or a loved one is a wartime veteran or surviving spouse and is paying for in-home, assisted living or nursing home care, call us at (614) 453-5208 today to inquire about eligibility for VA Aid and Attendance benefits. Visit our website for more information on VA Aid and Attendance Pension Planning.