Posted by Bishop L. Toups | In Veterans' Benefits
VA Veterans Pension, Survivors Pension, and Aid and Attendance: How to Get Approved for a Tax-Free, Lifetime Pension From the VA
The VA Pension, also known as Aid and Attendance, is one of the VA benefits that most Veterans have no clue they qualify for. A Veteran who qualifies for the VA Pension and has a spouse or dependent child will earn up to $2,431.25 (2022) tax-free, each month for the rest of their life. This Article will go over the basics of the VA Veterans Pension and will discuss which Veterans are qualified and not qualified for the pension.
Table of Contents
The VA offers two main tax-free pensions for qualified Veterans:
This means that both qualified Veterans and survivors of qualified Veterans can receive the VA Pension.
Veterans who meet the following criteria will be eligible for the VA Veterans Pension:
The two biggest areas that trip up most Veterans when trying to qualify for the pension is the VA countable income requirement and the VA asset requirement. If your countable income is too high, then your VA Veteran Pension will be reduced to zero. And if you’re a penny over asset wise, you will be ineligible for the pension.
Countable income is an area that trips up most Veterans when trying to qualify for the pension. Countable income is how much you receive each month from Social Security, investments, retirement payments, rental properties, and any other income received. Countable income can be reduced by non-reimbursable medical expenses that are not covered by your insurance company.
The VA will take your countable income and then subtract that from the Maximum Annual Pension Rate (MAPR) to determine how much you are entitled to. The MAPR is adjusted each year for cost-of-living increases and is set by the VA.
Example: George’s monthly income after non-reimbursed medical expenses is $24,000 for the year. George’s yearly MAPR amount is $29,175. The VA takes $29,175 and reduces it by the $24,000 of monthly income. This means that George will be entitled to $5,175 of VA pension, which equates to $431.25 per month.
Tip: If George reaches out to a Veterans Benefits Attorney, George can do some additional planning to reduce his monthly income significantly to increase his VA monthly pension.
The current asset limit is $138,489 (2022). Assets include both the Veteran’s assets and the spouse’s assets. Assets include investments, bank accounts, CDs, money market accounts, boats, cars, homes, etc. The VA excludes your primary residence, vehicles as long as they are used for the Veteran on a regular basis, pre-paid burial plans and burial plots, and basic home items like appliances from counting against you. The VA also adds annual income to the total amount of assets.
Example: Georgette is applying for the VA Veterans Pension. She has a primary residence worth $500,000, a bank account with $100,000 in it, one vehicle worth $30,000, and an annual income of $35,000 a year. Georgette is not married.
Result: Georgette’s primary residence and vehicle of $530,000 would be completely excluded for the VA asset limit. The bank account and her income of $135,000 total would count against her. Since Georgette’s total assets of $135,000 is less than the current asset limit of $138,489, Georgette would qualify asset wise for the VA Veterans pension.
Caution: Your primary residence is limited to 2 acres. If it’s more than 2 acres, then the house will not be exempt from the Asset Test.
Tip: The VA allows transfers of assets to a Special Needs Trust for a dependent child who was disabled before the age of 18.
The VA recently instituted a three year look back period for any transfer that is not for fair market value. The three year look back period starts on the date the VA pension application is submitted. The VA can assess a penalty not to exceed five years for any less than fair market value transfers.
Only transfers not for fair market value are penalized. Transfers made before the three year look back period or for fair market value are not penalized.
Example: June is apply for the VA pension and she gifts her second home to her daughter a year before applying for the VA pension so that her assets would be below the asset limit.
Result: The VA will assess a penalty not to exceed five years for June’s transfer of her second home to her daughter since the transfer was a gift and not for fair market value.
Tip: The VA look back period is less than the Medicaid five year look back period. If you’re trying to get on Medicaid and the VA pension, or you are worried you might need Medicaid for the nursing home down the road, make sure you are doing planning that fits in with both VA and Medicaid.
A common planning technique to get a Veteran below the $138,489 (2022) asset amount is to set up a Veterans Asset Protection Trust (VAPT). The Veterans Asset Protection Trust is an irrevocable trust designed to protect a Veteran’s assets. Irrevocable means the trust cannot be changed after it has been established.
Most irrevocable trusts will not work to protect a Veteran’s assets—that is why it’s vital to use a Veterans Asset Protection Trust. It is not recommended for the Veteran to serve as Trustee of the Trust. We typically recommend naming a trustworthy child or close family member.
Veterans Asset Protection Trusts are set up at least three years before the Veteran needs to qualify for the VA pension. Transferring three years before application shelters the assets because the VA look back period is only three years (Medicaid is five years).
Example: Jimbo only has $300,000 in the bank. He rents and does not own a primary residence. Jimbo is starting to slow down health wise and will need some assistance inside the home in the next few years. Since Jimbo is over the $138,489 (2022) amount that is allowed, he can establish a Veterans Asset Protection Trust and place roughly the majority of his $300,000 into the VAPT. After three years, Jimbo will be below the $138,489 mark and be able to fully qualify for the VA pension while saving all of his assets.
In order for a Veteran to qualify for the VA pension, the Veteran must have served at least 90 days of active duty service and only 1 of the 90 days must have been during a period of war. Here are the periods of service that qualify for the VA pension:
|World War II||December 7, 1941 through December 31, 1946|
|Korean Conflict||June 27, 1950 through January 31, 1955|
|Vietnam Era||August 5, 1964 through May 7, 1975 (for Veterans who served in country before August 5, 1964: February 28, 1961 through May 7, 1975)|
|Gulf War||August 2, 1990 through a date to be set by law or Presidential Proclamation|
IRS Bills? The Internal Revenue Service can wreak havoc on your life. This book has the information and strategies you need to confront America’s most intimidating agency.View on amazon
Create a business tax strategy that will save you time, energy and money. Getting your tax on track will free time to do what really counts - running a profitable business.View on amazon
Worried about escaping an audit intact? Then you need Surviving an IRS Tax Audit. This book explains what to say, what to do, even what to wear, so that a visit from the auditor doesn't turn into a disaster.View on amazon