Article Archives
VA Pensions – What the Illinois Practitioner
needs
to
know
The Department of Veterans Affairs (VA) administers two major VA disability benefit programs for veterans: compensation and pension. There are also two major benefit programs administered by the VA for eligible surviving relatives (usually the surviving spouse) of deceased veterans: dependency and indemnity compensation (DIC) and death pension. This article is intended to prepare attorneys and other advocates to assist veterans in obtaining a pension for the client. Dependency and Indemnity Compensation is for widows or widowers of veterans who have become disabled during active service and now are seeking compensation or a change in the compensation they are currently receiving in relation to a service-connected disability. This article will only discuss VA pensions.
VA pension benefits are designed to supplement the income of disabled veterans who had to give up career opportunities while they served their country during a time of war and, accordingly, were unable to advance their careers or accumulate enough resources to support themselves adequately after they became disabled. The differences between compensation and pension are beyond the scope of this article.
In general, pension benefits are based on several factors: (1) wartime service that ultimately results in a discharge under other than dishonorable conditions, (2) permanent and total disability, and the (3) demonstrated need. The VA determines need by calculating the income for VA purposes and net worth of the claimant.
1. The concept of need may prevent some middle and even upper class veterans from applying for non-service-connected pension benefits. Those who advise veterans should know that unreimbursed medical expenses (UME), including but not limited to expenses for skilled nursing home care and assisted living, as well as payments to home caregivers, can be deducted from the veteran's or widow(er)’s income for VA purposes. If a veteran is entitled to nursing home care the veteran or widow(er) would also be eligible for a higher level of pension (higher monthly payments based on the need for aid and attendance). Attorneys who are advising wartime veterans with their estate planning need to consider this benefit.
2.
Attorneys and other advocates must be accredited with the General Counsel’s Office of the VA to be allowed to do applications for VA pensions with the VA Regional Office in Chicago, the VA pension Center in Milwaukee, or any out of state VA regional office or pension center. However, if the attorney only does estate or financial planning, and does not handle the application itself, it appears at the present that (s)he need not necessarily be accredited. Requests to be accredited are currently being processed by the Office of General Counsel (022D), 810 Vermont Ave., NW, Washington D.C. 20420-0002. So long as any application that is filed later is not charged for by the attorney, or perhaps is handled by a veterans’ service organization or some other individual.
After the attorney becomes accredited, the VA issues to him or her a VA attorney number. This number accompanies every new application or other contacts with the VA. Within a year after that, the attorney must complete a 3 hour accreditation course which must have been approved by the State Bar of any state in the U.S.
Counseling clients about pensions can be tricky. Often the assets (or “net worth”) or the income (“income for VA purposes”, or IVAP) appear to be in excess of the allowable amounts to qualify for a VA pension. Practitioners around the country have devised various planning techniques to deal with these issues, including but not limited to doing irrevocable family trusts, annuities, and personal care agreements, or a combination of more than one of these planning strategies.
The VA application process itself can be arduous and time consuming. Frequently clients are forced to weigh and balance the factors for and against applying for Medicaid versus applying for VA pension. On some occasions, the time delays and the uncertainties of obtaining approval of the veteran or widow’s application for benefits make Medicaid a more attractive, or indeed the only alternative.
There are good sources of information for those who wish to learn more about VA benefits. Perhaps the best source of all is the Veterans Benefits Manual and Related Laws and Regulations, published both in CD ROM and in book format. The CD ROM disc for use in the practitioner’s desktop computer or laptop is published by Lexis Nexis and is very useful in navigating back and forth through the labyrinth of VA rules and regulations, as well as the practical nuances that go with performing this type of work for a client. More information about this manual can be found on the Internet at here.
Consider an example of how the estate planning prior to applying for VA pension might work. Mr. Tanglefoot was discharged from the United States Army in 1945 with 2 years of active service and an honorable discharge. Thus he meets the active duty during wartime and character of discharge requirements, 90 days of active service and other than dishonorable discharge requirements respectively. He lives in a skilled care facility and his wife still resides is in their family home, which is owned by the two of them in joint tenancy or in tenancy by the entireties. He has net worth and income for VA purposes above the present amounts for years 2009 and 2010 for Aid and Attendance (the highest payment and most difficult to obtain of VA pensions which are generally considered by practitioners on behalf of their clients). The income amounts for 2009 and 2010 vary depending on whether the veteran or widow qualifies for low income pension, housebound benefits, or Aid and Attendance. For example $1,644 a month for a veteran with no dependents, $1,949 a month for a veteran with one dependent, and $1,056 a month for the widow(er) of the qualifying veteran.
3.
The maximum permissible net worth used to be $80,000 for all veterans and widows or widowers. Now, however, the actual allowable amount of net worth is based on VA life expectancy tables and the VA claims adjudicator’s opinion of what part of his or her net worth will be essential for the remainder of his or her lifetime, and it is not uncommon for the veteran or widow(er) to only be able to keep something like $30,000 in net worth. The primary residence, fortunately, is exempt in nearly all cases that is until it is sold, at which time it is added to the veteran or widow (er)’s net worth. The test is whether the veteran or widow(er) has sufficient means, based on an “age analysis”, which is tied to VA life expectancy tables. If the net worth and income for VA purposes, adjusted down to zero or less than zero by subtracting unreimbursed medical expenses from the income for VA purposes, appear to be below the “substantial need” standard, the client should be able to satisfy the income requirements for pension eligibility. The attorney or advocate cannot charge the client a fee once the client expresses an intention to apply for VA benefits. However, if the adjudicator at the VA Regional Office denies the client’s application and an appeal is required, and a timely Notice of Disagreement is filed, then a fee (usually done on a contingency fee basis) may be charged for representing the client.
Suppose, though, that Mr. Tanglefoot has a home and $200,000 of liquid assets. Without getting into the details, a trust or an annuity, or both or some other planning device might be necessary before even considering a VA application. In this case, again, it appears that such planning can be charged for, so long as no mention has been made yet by the client about applying for VA benefits.
This work needs to be approached with a broader view than just focusing on VA benefits, trusts, annuities, or other estate planning devices alone. To properly serve the client, it is imperative that the care and dignity of the client be uppermost in the practitioner’s mind. This often means telling the client that VA benefits are not the best avenue to pursue, and some other planning strategy meets the client’s needs under the circumstances. However, in other cases the pursuit of VA benefits is the answer, and the client is well served by pursing eligibility for such benefits.
ENDNOTES
1. Details on calculating income and net worth are found in Part V, subpart iii, Chapter 16 of the VA Adjudication Procedures Manual, M21-1 Manual Rewrite (Manual M21-MR) (last updated Feb. 13, 2007). Generally, these manuals can be found on the Internet. The M21-MR manual can be found at http://www.warms.vba.va.gov/M21_1MR.html, and the M-21 manual can be found at http://www.warms.vba.va.gov/M21_1.html
2. 38 U.S.C.S. 501(a); 38 C.F.R. 3.272 (2008).
3. See Section 3c of the IICLE handbook “5th Annual Elder Law Short Course 2009, authored by Steven C. Perlis for more details on this and the VA pension program in general, and written in the context of a panel discussion of assisted living issues to be considered by the attorney and other advocates...
"Plan today to ensure tomorrow"
Contact us today to seek
up your initial consultation.
Consultation fees are often applied to
retainer fees and document fees.
Proudly serving the Texas counties of McLennan, Bosque, Hill, Limestone, Falls, Bell, Coryell and the cities of Waco, Temple, Killeen, Austin, Bryan, College Station, Fort Worth, Dallas, Arlington, Gatesville, McGregor, Hillsboro, Corsicana, Groesbeck, Mexia, Whitney and many other surrounding areas.
Legal Disclaimers