THIS ARTICLE IS INTENDED TO SUPPORT THE READER’S AWARENESS AND UNDERSTANDING. IT IS NOT LEGAL ADVICE. IF THE READER SEEKS LEGAL ADVICE CONCERNING HIS OR HER PARTICULAR SITUATION, HE OR SHE SHOULD SEEK OUT AN ATTORNEY IN A LAWYER CLIENT RELATIONSHIP.
The Veteran’s Aid and Attendance improved pension benefit is a needs-based benefit and is not intended to preserve the estates of individuals who have the means to support themselves. Accordingly, a claimant may not create pension entitlement by transferring covered assets. A voluntary asset transfer to, or purchase of any financial instrument or investment , including a “Medicaid ( i.e. Medical Assistance ) Compliant Annuity “ that reduces net worth by transferring the asset to, or purchasing, the instrument or investment will be considered a transfer of assets for less than FMV and trigger a period of ineligibility for the Veteran’s “Aid and Attendance” Improved Pension benefit.
Also , financial products should not be sold or marketed to individuals who have the means to support themselves for the purpose of establishing entitlement to a needs-based benefit . Such activity would constitute fraud, misrepresentation or unfair business practice related to the sale or marketing of financial products and justify a complaint contemporaneously filed with State, Local, or Federal authorities reporting the incident.
VA will review the terms and conditions of asset transfers made during the 36-month look-back period to determine whether the transfer constituted the transfer of a covered asset.
The Veteran’s “Aid and Attendance ” Improved Pension Benefit is a needs- based benefit and thus it is not intended to preserve the estates of individuals who have the means to support themselves. Accordingly, individuals who have the means to support themselves should not create entitlement to this pension benefit by transferring covered assets in order to decrease net worth . See 38 CFR § 3.276 (a)(8) (b and (c) – Asset transfers and penalty periods; See also See Department of Veteran’s Affairs Adjudication Procedures Manual M21-1, Part IX , Subpart iii , 1.J.5.c Transfers for Less Than Fair Market Value ; See 38 CFR § 3.276 (a)(8) (b and (c) – Asset transfers and penalty periods.
Also , financial products should not be sold or marketed to individuals who have the means to support themselves for the purpose of establishing entitlement to this needs-based pension benefit . See Department of Veteran’s Affairs Adjudication Procedures Manual M21-1, Part IX , Subpart iii , 1.J.5.c Transfers for Less Than Fair Market Value ; See 38 CFR § 3.276 (a)(8) (b and (c) – Asset transfers and penalty periods. Such activity would constitute fraud, misrepresentation or unfair business practice related to the sale or marketing of financial products and justify a complaint contemporaneously filed with State, Local, or Federal authorities reporting the incident. See Department of Veteran’s Affairs Adjudication Procedures Manual M21-1, Part IX , Subpart iii , 1.J.5.c Transfers for Less Than Fair Market Value ; See 38 CFR § 3.276 (a)(8) (b and (c) – asset transfers and penalty periods.
The VA presumes that an asset transfer made during the look-back period was for the purpose of decreasing net worth to establish pension “Aid and Attendance” entitlement. However, VA will not consider such an asset to be a covered asset if the claimant establishes through clear and convincing evidence that the asset was transferred as the result of fraud, misrepresentation or unfair business practice related to the sale or marketing of financial products or services for purposes of establishing entitlement to VA pension. Evidence substantiating the application of this exception may include a complaint contemporaneously filed with State, local, or Federal authorities reporting the incident. See Department of Veteran’s Affairs Adjudication Procedures Manual M21-1, Part IX , Subpart iii , 1.J.5.c Transfers for Less Than Fair Market Value ; See 38 CFR § 3.276 (a)(8) (b and (c) – Asset transfers and penalty periods.
A voluntary asset transfer to, or purchase of any financial instrument or investment , including a “Medicaid ( i.e. Medical Assistance ) Compliant Annuity “ that reduces net worth by transferring the asset to, or purchasing, the instrument or investment will be considered a transfer of assets for less than FMV and trigger a period of ineligibility for the Veteran’s Improved Pension “Aid and Attendance” benefit. See 38 CFR § 3.276 – Asset transfers and penalty periods.
See below 38 CFR § 3.276 – Asset transfers and penalty periods.
(5) Transfer for less than fair market value means—( emphasis added)
(i) Selling, conveying, gifting, or exchanging an asset for an amount less than the fair market value of the asset; or
(ii) A voluntary asset transfer to, or purchase of, any financial instrument or investment that reduces net worth by transferring the asset to, or purchasing, the instrument or investment unless the claimant establishes that he or she has the ability to liquidate the entire balance of the asset for the claimant’s own benefit. If the claimant establishes that the asset can be liquidated, the asset is included as net worth. Examples of such instruments or investments include— ( emphasis added )
(A) Annuities. Annuity means a financial instrument that provides income over a defined period of time for an initial payment of principal. (emphasis added)
(B) Trusts. Trust means a legal instrument by which an individual (the grantor) transfers property to an individual or an entity (the trustee), who manages the property according to the terms of the trust, whether for the grantor’s own benefit or for the benefit of another individual.
(6) Uncompensated value means the difference between the fair market value of an asset and the amount of compensation an individual receives for it. In the case of a trust, annuity, or other financial instrument or investment described in paragraph (a)(5)(ii) of this section, uncompensated value means the amount of money or the monetary value of any other type of asset transferred to such a trust, annuity, or other financial instrument or investment.
(8) Penalty period means a period of non-entitlement, calculated under paragraph (e) of this section, due to transfer of a covered asset.
(e) Penalty periods and calculations. When a claimant transfers a covered asset during the look-back period, VA will assess a penalty period not to exceed 5 years. VA will calculate the length of the penalty period by dividing the total covered asset amount by the monthly penalty rate described in paragraph (e)(1) of this section and rounding the quotient down to the nearest whole number. The result is the number of months for which VA will not pay pension.
(1) Monthly penalty rate. The monthly penalty rate is the maximum annual pension rate (MAPR) under 38 U.S.C. 1521(d)(2) for a veteran in need of aid and attendance with one dependent that is in effect as of the date of the pension claim, divided by 12, and rounded down to the nearest whole dollar. The monthly penalty rate is located on VA’s website at www.benefits.va.gov/pension.
(2) Beginning date of penalty period. When a claimant transfers a covered asset or assets during the look-back period, the penalty period begins on the first day of the month that follows the date of the transfer. If there was more than one transfer, the penalty period will begin on the first day of the month that follows the date of the last transfer.
(3) Entitlement upon ending of penalty period. VA will consider that the claimant, if otherwise qualified, is entitled to benefits effective the last day of the last month of the penalty period, with a payment date as of the first day of the following month in accordance with § 3.31.
4) Example of penalty period calculation. VA receives a pension claim in November 2018. The claimant’s net worth is equal to the net worth limit. However, the claimant transferred covered assets totaling $10,000 on August 20, 2018, and September 23, 2018. Therefore, the total covered asset amount is $10,000, and the penalty period begins on October 1, 2018. Assume the MAPR for a veteran in need of aid and attendance with one dependent in effect in November 2018 is $24,000. The monthly penalty rate is $2,000. The penalty period is $10,000/$2,000 per month = 5 months. The fifth month of the penalty period is February 2019. The claimant may be entitled to pension effective February 28, 2019, with a payment date of March 1, 2019, if other entitlement requirements are met.
See below 38 CFR § 3.276 (a)(7) – Asset transfers and penalty periods.
For the VA Aid and Attendance Benefit the look-back period means the 36-month period immediately preceding the date on which VA receives either an original Aid and Attendance pension claim or a new Aid and Attendance pension claim after a period of non-entitlement.