Department of Veterans Affairs Will Finally Implement Transfer Penalty Regulations for Pension Applications

by | Sep 18, 2018 | Veterans Affairs | 0 comments

Please note that we originally reported that the effective date of the new regulations was October 31.  After further review, we have determined that the effective date is October 18.  This article has been updated to reflect that the regulations will go into effect on October 18, 2018.

In January 2015, we first reported to you about regulations proposed by the Department of Veterans Affairs (VA) that sought to implement an asset transfer penalty for claimants applying for VA needs-based benefits as well as revised provisions regarding net worth and income exclusions under such programs.  The comment period for these proposed regulations ended on March 24, 2015 and the VA gave little indication as to if and when new regulations would be implemented resulting in much ambiguity regarding what rules claimants should follow.  On September 18, 2018, however, the VA finally published its final regulations ending this long period of uncertainty.  The new regulations will go into effect on October 18, 2018.

We will plan to have more information about the new regulations as we further assess them.  In the meantime, we want to make individuals aware that the door for planning under the current, more favorable rules will not close until the end of October.  Fortunately, the VA resolved a substantial concern of many commenters of the proposed regulations regarding the effective date of the new regulations, particularly as it applied to transfers of assets.  The final rule indicates that the new transfer of assets provisions will not be applied to transfers that have occurred prior to the effective date of the rule, or October 18, 2018.

If you have been contemplating reviewing your eligibility for VA pension benefits, now is the time to do so.  However, 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.