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Update: Dept. of Veterans Affairs Proposes Transfer Penalty for Pension Applications

Update March 24, 2017

We continue to receive anecdotal information regarding when this proposed regulation will be implemented by the VA. Unfortunately, we have no firm information about when and how the regulation will be implemented. Recent information indicates the VA may begin to impose this rule in June 2017. If you are contemplating filing for VA pension benefits, we recommend that you contact legal counsel as soon as possible to review the ramifications the new rule would have on your plan. It may also be beneficial to file sooner, rather than later, to avoid these more restrictive rules being applied to your claim. 


April 6, 2015

In our last newsletter, we wrote about a regulation proposed by the Department of Veterans Affairs (VA) that seeks to implement an asset transfer penalty for claimants applying for VA needs-based benefits as well as revises provisions regarding net worth and income exclusions under such programs. The comment period for the proposed regulation ended on March 24, 2015.

The VA has not taken any further action with the regulation as of the date of this article. According to federal law regarding the making of administrative regulations, the VA could take any of the following actions with the regulation:

  • Re-open the comment
  • Propose a new regulation or propose a supplement to the current proposed
  • Establish a second period to reply to
  • Terminate the proposed
  • Adopt the regulation as it is

While the language of the proposed regulation contained no provision as to the effective date of the regulation, the federal law on the making of administrative regulations does provide some insight as to when the regulation may become effective. First, the agency must publish the final regulation and identify its legal authority for issuing the regulation. A final regulation, then, is effective not less than thirty days after the date of publication unless otherwise indicated in the regulation. In some circumstances the “default” effective date can be delayed further.

The VA received more than 880 comments to the proposed regulation. It is our hope that in reviewing these comments, the VA can come to a final regulation that will eliminate the abusive practices it sought to curb in its original proposal, but avoids the unforgiving portions of the current proposed regulation that will negatively impact individuals whose transfers were not made with the intent of becoming VA eligible.

The Stinson Law Firm will continue to monitor the progress of this proposed regulation and provide updates as they occur.

Even with new eligibility rules, VA pension planning will continue to be available and necessary for many veterans and surviving spouses of veterans. We remain prepared to work with our veteran clients and their families to determine the plan and benefit most suited to their individual needs. We will also continue to guide clients through a well-reasoned analysis to determine what public benefit fits an individual client’s situation best and help balance the different requirements of each public benefit program.

 

Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.

Jeffery D. Stinson, Certified Elder Law Attorney
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.