VA Benefits & Planning and How It Effects Future ALTCS Eligibility

Seniors and the Law is authored by the attorneys at JacksonWhite Attorneys at Law and addresses legal issues that arise for the elderly and their families.  Questions can be sent to firm@jacksonwhitelaw.com.
Q:        About two years ago, a financial advisor helped my parents devise a plan by which my dad, a veteran, could qualify for VA Pension.  This plan involved funding an annuity and establishing a trust.  The VA Pension now provides my parents with additional monthly income of about $2,000, but they are still having difficulty paying for dad’s care.  I looked into the ALTCS benefit, but discovered that the type of VA planning in which my parents engaged might create problems.  What should I do?
            Without knowing the particulars of your parents’ situation, I can’t be certain how things transpired here, but I can give you my best guess.  I have met with numerous clients whose financial advisor helped them prepare for VA benefits.  All too often, I find that these VA plans come at the expense of eligibility issues for the ALTCS program. 
It sounds like your parents’ advisor might have funded an annuity product, and transferred that annuity to an irrevocable trust.  This type of strategy can facilitate eligibility for VA benefits because the VA does not have a look-back window, so transfers to a trust can help a VA applicant satisfy the VA resource requirement.  While this strategy works for VA, however, it does not work for ALTCS. 
ALTCS looks back five years for uncompensated transfers – including those to a trust – and imposes a penalty based on the amount of the transfer.  As such, if your parents’ planning involved a transfer to a trust, it could be that ALTCS will not grant approval until the penalty period lapses. 
This situation underscores the importance of working with somebody who understands all of the benefits to which an applicant might be entitled.  While your folks might be able to undo the damage in this case, they would have been much better off contemplating ALTCS rules at the outset.
             Richard White is an elder law attorney at JacksonWhite Attorneys at Law.  For more information on Elder Law at JacksonWhite, please visit www.ArizonaSeniorLaw.com.

This article is provided for informational purposes only and is not intended to replace individual legal advice.