Department of Veterans Affairs

Over the last few days there has been a sea change in the world of veteran pension planning. The Department of Veterans Affairs published their updated proposed rules which will go into effect October 18th. I am bringing this to your attention because there is a unique opportunity for any clients that might benefit from proactive planning. In particular, under the current rules a veteran could transfer as many assets out of their name as they wanted to in order to get below the financial threshold without creating a penalty period (unlike Medicaid). Effective October 18th there will now be a 3-year penalty period for any transfers made over and above a client’s net worth of $123,600 (FYI $123,600 will be the new net worth cap unlike the current rule of $80,000). Transfers to a trust will be penalized the same as an outright transfer to an individual.

The unique opportunity is that the new VA rules are not retroactive. This means a veteran (or spouse) can do proactive planning before October 18th, vis-à-vis asset transfers, and then file the VA application sometime after October 18th (a day, week, year, etc.) and take advantage of BOTH the current rules AND the new rules! After the 18th VA and Medicaid planning will become a bit more congruent, but right now the bottom line is that there is a unique but brief window in time in the realm of elder law planning.