I am trying to get veteran benefits for my dad. He has too much money to qualify. Lawyer says put in trust that invests it. Any other option for trust w/out investing it?
1 Answer from Attorneys
As a follow-up to our conversation, I thought I would introduce myself and provide you a brief education into VA benefits that your mother could be entitled to. First here is a little bit about myself: When we meet we can discuss your personal planning and review yours and your mother’s documents. Please feel free to share this information with your sister.
I have been practicing for thirty-six years and my practice is limited to specializing in issues concerning disability, estate, probate, long term care, nursing home, Veterans, Medicaid and special needs planning. Some my honors, awards and memberships are:
- Recognized by the National Association of Distinguished Counsel as being in the Nation’s Top One Percent of Attorneys in my field,
- Recognized in 2016 by Hour Detroit and Dbusiness Magazines as a 5 Star Wealth Manager in the area of estate planning and received the same award since 2010,
- Recognized as a "Superlawyer" for 2015 and every year since 2009, which designates that I am one of the top lawyers in my field,
-Immediate past President/Chairman of the Board of Directors of the Alzheimer’s Association - Greater Michigan Chapter (after having served for the last 6 years) and member of the Association's executive committee and an Assembly Delegate to Alzheimer’s Association – National Chapter, Chicago, Illinois,
- Member of National Academy of Elder Law Attorneys and have been listed since 1991 in the Academy's Experience Registry,
- Member of the Masters Section of the State Bar of Michigan,
- Past Chair of the Governing Council of the Elder Law and Disability Rights Section of the State Bar of Michigan,
- Accredited attorney with the US Department of Veterans,
- Charter Member of the Academy of Special Needs Planners,
- Member of the Financial and Estate Planning Council of Metropolitan Detroit and.
- Rated by AVVO (www.avvo.com) as Superb (10 out of 10). Avvo is a company that independently rates attorneys throughout the country.
This is probably more information than you bargained for, however, I am sure this information will educate you into the area of non-service connected Veteran’s benefits for Veterans and Widow of Veterans called Improved Pension/Aid and Attendant Care.
The following is an answer that I authored that was recently published as an article on a website that I belong to called ElderCareMatters. I am the State of Michigan Coordinator. While it may not apply to your mother’s specific circumstances, I am certain you will find this very informative as well as helpful. Also, in regard to his particular circumstances, it is obvious that your mother has the medical need and if she meets the other requirements such as a widow of a Veteran she would qualify for $1,149 a month tax free as long as she needs the care and is not in a nursing home under Medicaid. If a Veteran does not have the medical expenses we can create them with a care contract. If a nursing home is the issue in the future there may be a way we can protect a significant portion of the assets except for the tax consequences of any IRA’s. The attached applies to the VA. If a person does need custodial nursing care then the VA benefit will not make any sense as it will only pay $90.00 a month.
I personally know how difficult and stressful these decisions are. Taking care of an elderly parent is time consuming, and has its emotional and financial costs, yet it can be very rewarding. I understand the goal is to ensure your parent(s) receive the greatest quality of care in the least restrictive setting at the least cost to themselves and their family. It is always wise to plan for the worst and hope for the best.
The laws pertaining to elder law, Medicaid planning, care contracts and Veterans benefits are complex, confusing and ever changing. You need an elder law attorney to help navigate through these waters. In regard to Veterans benefits planning you must seek counsel from an attorney who has been accredited by the United States Department of Veterans to prepare, assist, counsel and process claims.
You have asked a specific question in regard to Aid and Attendant Care/Improved Pension Benefit. This benefit is a non-service connected benefit to war time veterans and the surviving spouse of war time veterans. For purposes of your question we will assume that your mother is a widow of a war time veteran. In order for one to be a war time veteran one has to have served 90 days in the service with one of those days during a declared war time period.
In addition to discussing Veteran benefits herein, you need to ensure your mother’s affairs in order. Therefore, I have also discussed the critical need for your mother, provided she is competent to establish proper health and financial durable power of attorneys. As an elder law attorney, I specialize in estate planning but kick it up a notch. I have a different philosophy than most true estate planners. This does not mean they are wrong but we approach things very differently. Specifically I address the issues of:
Who will make my medical decisions when I am no longer able to make them?
If I unable to care for myself, how can I achieve the greatest quality of care without bankrupting me or my family?
Who will make my end of life decisions?
What happens if I get sick and can’t stay in my home anymore?
How am I going to pay for it?
I also prefer having medical day to day decisions, specifically the durable power of attorney for health care becoming effective the moment you sign them rather than becoming effective when a person is no longer able to participate in their decisions. It is just more workable. Last, the financial power of attorney needs to authorize gifting and authority to apply for Governmental benefits. However, Veterans does not recognize power of attorneys but use a different procedure.
We need to determine who owns what asset and if the financial power of attorney provides the authority to someone to gift (transfer) assets so that we can protect them and qualify your mother for Veteran's benefits. Further, if you mother is not competent and has power of attorneys we need to take immediate steps to implement your mother’s durable powers of attorneys for health care and financial decisions.
As for Veteran’s benefits they are and can be an excellent option to help pay for assisted living, home care and subsidize medical expenses. A husband and could be eligible for a benefit of $2,085 a month or $24,000 a year tax free income. Usually the benefit is paid to the Veteran and if the Veteran is deceased to the surviving spouse. If the Veteran does not need care and is paying for the care of his “ill" spouse then the Veteran may be eligible for base pension which can be up to $1,360 a month tax free. If both veterans need care then the maximum is $2.085 a month. Assuming your father is deceased, then your mother as a widow of a war time veteran would be entitled to $1,149 a month. Remember as long as the Veteran is alive the benefit flows through the actual veteran.
However, there are four prongs that must be satisfied to qualify for the AA Benefit. Each prong is explained in detail below..
First, Service Requirement
First, in order to be eligible for the AA Benefit the Veteran must meet the service requirement. That is, the Veteran must have served in the active military, navy or air service: (1) for 90 consecutive days or more during a period of war, (2) during a period of war was discharged under conditions other than dishonorable or released from such service for a service-connected disability, (3) for a period of 90 consecutive days or more and such a period began or ended during a period of war; or (4) for an aggregate of 90 days or more in two separate periods of service during more than one period of war.
Second, There is a disability requirement. Additionally, the applicant must be “permanently and totally disabled”; however, the VA presumes “disability” for individuals over the age of 65. To qualify for additional funds, the VA requires one to need “care or assistance” on a “regular basis” from another person which protects him or her from “dangers of a daily living environment”. It is generally presumed that an applicant who is residing in an assisted living facility satisfies this requirement. The VA has issued clear guidelines that a veteran or a widow of a veteran must need assistance with at least two activities of daily living, such as eating, bathing, dressing, transferring and toileting or being cognitively impaired. The VA has made it clear that assistance with ones IADL’s is not enough, such as medication reminders, laundry and meal assistance/preparation.
Further, one needs to obtain the proper physician verification to satisfy the disability requirement. If possible, the physician should indicate that one is able to “oversee” his or her financial decisions, but not able to “manage” his or hers financial decisions. In the event the physician states that one is not competent to make his or her financial decisions, then the Veterans Administration will find a level of incompetence which will delay (but not preclude) the application process.
Third, is the asset prong. The VA pension benefit is a needs based benefit and a surviving spouse shouldn't have more than $40,000.00 plus a home and a car. Some persons assisting Veterans will say $80,000. There is no hard and fast rule and therefore we recommend an asset limit of $40,000. Currently there is no penalty (at this time) for transfers. Accordingly, we can transfer everything over $40,000 into a special trust to protect the assets should your parents need them. **NOTE: this is where you have to be very careful because transfers of assets may affect any Medicaid eligibility in the future. Sometimes a proper VA plan for benefits have terrible consequences for Medicaid planning. It is very important to understand if a one’s health deteriorates and need a nursing home then any gift to qualify for Medicaid within 5 years will be very problematic. However there are way when that time comes to undo what has been done for VA and still qualify one for Medicaid and save 50-70% of the assets.
Fourth, is the income prong. The basic rule is one’s unreimbursed medical expenses have to exceed or equal their income to qualify for the full benefit amount. If the expenses do not exceed income then if there is a short fall the Veteran can receive a partial benefit. If one does not have actual medical expenses payable to a third party there can be a way to establish a care contract between family that will qualify as a medical expense.
This may seem simple on the surface, but can be very complicated when you begin to look at transferring assets and eligibility. Additionally, if one were to sell their home while a claim for benefits were pending or after benefits were approved, the proceeds of the home would most likely result in a suspension of benefits for a period of at least one year or longer if the laws change and impose a lookback as we discussed.
Additionally, VA is considering implementing a 3 year lookback on any transfers. Congress has in fact voted down similar laws on two separate occasions. For now there is no lookback and if one is implement it probably will not be for a while, but frankly it is anyone’s guess. What this means currently this a window of an opportunity.
As for the documents we will need: Of course we will need your father’s service records (if you do not have we can help you obtain), copies of your mother’s estate planning documents (will, trusts, financial and health care power of attorneys). Specifics of her gross income, social security etc… Also, her financial information, values and how her assets are titled. This would apply to all assets including but not limited to stocks, bonds, mutual funds, bank accounts, life insurance, IRA’s and annuities.
Trusting you are interested in discussing this further, please call me to schedule an appointment or if I am not available please talk to my assistant Amanda Hillman, who is copied in on this email.
I look forward to meeting with you.
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