Veteran’s Pension and Medicaid Asset Protection Trust Planning
Serving clients in Fredericksburg, Richmond, Virginia Beach, and Williamsburg
While our Elder Law Attorneys always enjoy taking on cases that require their immediate and sustained attention, they find that their clients generally prefer the options available to them when they plan. Long-term care planning typically anticipates eligibility for payment of long-term care services through Medicaid or the U.S. Department of Veterans Affair’s Non-Service Connected Pension in the future.
MEDICAID ASSET PROTECTION PLANNING
The passage of the 2005 Deficit Reduction Act made Medicaid planning more challenging by extending the asset transfer “look-back” period to five years prior to the Medicaid application date for all types of transfers. This means that any transfers of assets to children or to trusts occurring in the five-year period immediately preceding the filing of a Medicaid application will result in a period of ineligibility for long-term care Medicaid benefits. In addition, the more money that someone transfers, the longer the period of ineligibility will last.
This look-back period requires that the most effective types of planning be undertaken at least five years before an application for Medicaid is filed. If the family situation is right and the motivation is strong, such “five-year planning” can prevent an individual from having to spend all of his or her life’s savings on the payment of long-term care services. Our Elder Law attorneys creatively blend different strategies and legal techniques—including long-term care insurance, asset protection trusts, and Medicaid benefits—to ensure clients can keep most of what they have earned when faced with the high costs of long-term care in a nursing home.
VETERAN’S PENSION PROTECTION PLANNING
Wartime veterans and their surviving spouses can potentially benefit from a VA’s Non-Service Connected Pension, sometimes informally referred to as “Aid and Attendance,” when their regularly recurring medical expenses are high and their monthly incomes are low. This income tax-free benefit provides monthly cash payments to help cover the costs of unreimbursed medical expenses for claimants with few financial resources to draw on for their support. Often, potential claimants can become eligible for this benefit upon entering an assisted living community or hiring an in-home caretaker.
In many ways similar to planning for Medicaid eligibility, yet at the same time uniquely different, qualification for the VA’s Non-Service Connected Pension often requires a restructuring of assets, utilization of asset transfers, or conversion of countable resources into exempt assets. With help from the VA-accredited attorneys in our firm, we can help you make the appropriate decisions for your particular circumstances, and avoid irrevocable mistakes.
ASSET PROTECTION TRUSTS
For purposes of Veteran’s Pension Benefits or Medicaid eligibility, a self-settled asset protection trust allows clients to control their estate plan while also protecting their assets from being counted by the VA or by state Medicaid agencies. Traditional estate planning trusts address concerns related to incapacity and the disposition of property at death. An asset protection trust addresses these issues and prevents resources from having to be completely exhausted by the costs of long-term care. Planning that utilizes an asset protection trust requires an extensive review of the client’s assets, goals, and needs. Our Elder Law attorneys are knowledgeable about the benefits and consequences associated with this type of planning, and therefore able to expertly guide clients through its challenges to the creation of a successful and satisfying plan.
Even though the typical asset protection trust is irrevocable, its creator can still retain certain rights in property transferred to it. Depending on the benefit sought, a client can retain the right to:
- Receive all of the trust income;
- Live in and use the personal residence;
- Change the trustees of the trust;
- Change the ultimate beneficiaries of the trust; and
- Add charitable beneficiaries to the trust.
CRISIS MEDICAID PLANNING AND APPLICATIONS
Keep in mind that even if there is insufficient time to implement a “five-year” plan, our Elder Law attorneys can also assist with implementing strategies that protect clients and their families in immediate need of long-term care services. Clients reeling from the shock of the first bills that come due for their long-term care are consistently surprised by the potential opportunities for preserving assets available to them, and grateful for the counsel provided from their initial consultation with our attorneys. Conversely, clients who fail to seek advice early in these situations are often disappointed when they discover that they have paid more for their long-term care than they would have had they obtained counsel when the issue became apparent.