Veteran Estate Planning Tips

Veteran Estate Planning Techniques to Protect Your Assets and Family

Estate planning is just not for the rich and famous. It’s for everybody — especially Veterans who are receiving benefits from the VA. So we wanted to take this opportunity to talk about the unique challenges of Veteran estate planning. We love our Veterans and we want them to be prepared in their later years if something unexpected happens.

Veteran estate planning is important for many reasons. If something happens to you, you don’t want the government to determine who is going to get your property and how they are going to get it. You also don’t want the government determining who is going to be in charge of your estate and who will be administering your assets to your heirs. I don’t know of anyone who would want that. As such, an estate plan is necessary.

Veteran estate planning presents many challenges because access to benefits and resources must be considered when creating an estate plan. This includes not only the Veteran’s access to benefits, but their spouse’s access to benefits as well. The programs available to Veterans and their beneficiaries are wide-ranging and include employment, training, disability benefits, healthcare, education, life insurance, home loans, and survivor benefits.

Each Veteran’s benefit has its own eligibility requirements, criteria, and application process. It can be a difficult maze to navigate, but we are here to help you. As experienced VA attorneys, we know how to incorporate these benefits into your estate plan so that you don’t lose them if you need nursing home care or if you have a life insurance policy that is paid upon your death.

VA Aid & Attendance Benefits

Let’s first discuss Aid & Attendance benefits, also known as VA pension. An estate plan should always consider the potential for future long-term care needs. Veterans who need assistance performing activities of daily living may be eligible for funding via VA Aid & Attendance. These activities of daily living include cooking, cleaning, personal hygiene, driving to the grocery store, medication management, financial management — all of those things. We take many of these daily activities for granted, but there may come a day when we’re not able to do some of these common daily activities.

Recall from previous blogs that the requirements for Aid & Attendance benefits are that you must have had an honorable discharge from your service and you must have served in a qualifying wartime period. Qualifying wartime periods include World War 1, World War 2, the Korean War, and the Vietnam War. There are currently no dates set for the Gulf War.

In addition to those two qualifications, VA Aid & Attendance also considers your assets and income. Your net worth cannot exceed a certain amount, which is currently about $140,000. The calculation for net worth can be quite complicated, but there are deductions we can use to reduce your net worth for qualification purposes. The two primary deductions we use are your personal residence and unreimbursed medical expenses.

Let’s start with the example of your personal residence. As is the case with Medicaid planning, your residence is considered an exempt asset for VA Aid & Attendance qualification purposes. However, the VA also makes you consider how much land you have. If your residence sits on more than 2 acres, you must add the value of that additional acreage to your total net worth for VA Aid & Attendance qualification purposes.

Let’s say that you have a house that’s worth $300,000, but that house sits on 5 acres which is valued at $5,000 per acre for a total of $25,000. The VA rules state that you get to include the value of the residence plus $10,000 in your exempt assets. So you would have to take that additional $15,000 and count towards your total income or non-exempt assets. You can see how this can get quite complicated, but that’s why we’re here to help.

The other deduction for VA Aid & Attendance qualification is unreimbursed medical expenses. Any income used to pay for unreimbursed medical expenses can be deduced from your total countable income. As a Veteran, you can combine you and your spouse’s medical expenses to calculate a total unreimbursed medical expense amount. This is because your income is combined for VA benefits qualification purposes.

We’ll use this example to explain. Let’s say that your total household income (you and your wife) is $2,000 per month. But each of you pay $175.00 monthly to Medicare Part A and you each have a supplemental insurance policy that costs $200 a month. Totaling those costs, we get $750 of deductions from your $2,000 income total per month. So your income for VA purposes is then $1,250 per month and you would qualify for $2,250 in monthly benefits. But they then deduct your income for VA purposes ($1,250) from that total benefits amount to arrive at a monthly VA benefit of $1,000 per month. That’s how the unreimbursed medical expense deduction works.

There are tried and true techniques that we use every single day to help clients increase their unreimbursed medical expenses. This helps them increase the monthly benefits that they receive from the VA and helps them have a higher standard of living. If you have any questions or comments about doing this, please don’t hesitate to contact us here.

Veteran Estate Planning Tools for Aid & Attendance

How do you use Veteran estate planning tools to reduce your income and receive more Aid & Attendance benefits? There are many ways to do this. A simple one is to use the three year look back period that the VA enacted back in August 2018. This rule says that you’ll be disqualified for VA benefits if you transferred any non-exempt assets within three years of your Aid & Attendance application. There are also other ways that we can use valuations and certain transfers of property among spouses to get you qualified.

Additionally, we can use trusts to help you qualify for Aid & Attendance. We can use an irrevocable trust, which is a type of trust that cannot be changed once it is drafted and funded. Now you can make some minor adjustments to the irrevocable trust through a limited power of appointment, but for the most part it can’t be changed. The trust is a great Veteran estate planning tool that we frequently use to help Veterans and their spouses qualify for Aid & Attendance.

Another helpful Veteran estate planning tool is life insurance. Life insurance is a key part of estate planning for most individuals, regardless of their Veteran status. If you are on the verge of having too much income to receive Aid & Attendance benefits and you have a life insurance policy coming to a surviving spouse, that’s going to create a problem. So we may want to look at making some transfers to that life insurance policy so that it doesn’t cause your income to increase so much.

Other Veteran Estate Planning Tools

VA life insurance includes service members, group life, family service members group life, traumatic injury protection, Veteran group life insurance, service disability Veterans insurance, and Veterans mortgage life insurance. These life insurance policies are not mandatory, but Veterans use these to help supplement or protect their spouse in the event of their death or disability. Life insurance is a great tool, but just know that you can be life insurance rich and cash poor.

The last Veteran estate planning tool is burial benefits. This includes funeral plans that are part of your Veteran estate planning. This can help save money and reduce stress for family members in the future. I am a big proponent of pre-planning your funeral arrangements such as whether you want to be buried or cremated. If you suddenly pass, your family members are going to be experiencing much grief. Make it easy for them by having all these decisions determined ahead of time.

With respect to burial benefits, you can go ahead and select the funeral company of your choice. Once you show them a copy of your DD214 to prove that you are a Veteran, they will make whatever arrangements need to be made for you as a Veteran or the spouse of a Veteran. If you want to be buried in a National Cemetery, you may qualify for that. Your spouse may qualify for that also.

How to Create an Estate Plan?

So how do you get started with Veteran estate planning? The basis of a solid estate plan is a will. Everyone needs to have a will. If you don’t, the State will determine who is going to be in charge of your estate and who is going to receive your property when you pass. If you have a second marriage, you may want to ensure the children from your first marriage still receive an inheritance. You can do this with a simple will.

Secondly, you need a durable power of attorney. You need to put in writing who is going to pay your bills and handle your money if you become disabled or incapacitated. And lastly, you need an advance healthcare directive. This states who will make medical decisions for you if you are unable to do so. If you don’t want to be kept alive by a ventilator, you would need to specifically state this in your advanced healthcare directive.

Contact Us So We Can Help!

We hope this Veteran estate planning information has been helpful and we hope it has encouraged you to make sure you have an estate plan in place — especially if you are a Veteran! If you need assistance with Veteran estate planning or assistance obtaining any of the Veterans benefits listed above, you can complete this form or give us a call at (229) 226-8183. You can also send us an email to [email protected].

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