Create Customized Estate Plans with Greater Efficiency

by Asset Protection

The process of creating a customized estate plan begins with the client interview. State-of-the-art software uses a single-entry system; as you work through the interview, you only have to enter information once. That information is later reused in the interview and replicated in the assembled documents.

Another benefit of a single-entry system is that it allows you to easily update necessary information. For example, if you need to change Bob Sample’s name to Robert P. Sample (or make a change considerably more complex), you only have to correct it once. The change will automatically be adopted throughout the interview, and ultimately, across every document included in this particular estate plan.

Additionally, the data collection tools within the software and workflows are designed to make it easier for you to gather the information you need to draft your clients’ documents. For example, when your legal assistant or client services coordinator enters a client’s information into a matter within the workflow, the information will populate and pre-fill some of the choices within the software interview.

Next time: Discover the power of Dynamic Interviews

Efficiency

Improve Your Firm’s Efficiency One Keystroke at a Time

by Asset Protection

EfficiencyGreater efficiency is one of the keys to greater profitability. As an estate planning and elder law attorney, if you want to become more profitable, your firm must be able to draft an asset protection plan more efficiently. The right software can help you accomplish this.

The improved workflow efficiency inherent in computer software is sometimes compared to the greater efficiency automation brings to manufacturing. Consider the automobile. Building a Rolls Royce, where many of the required tasks are completed by hand, requires six months. Compare this to a typical sedan. That process, which can be roughly divided into stamping, welding, assembly, painting, and inspection, takes less than 18 hours.

At this point you might say, “My firm is not a document mill, we design customized plans. Cookie cutter plans don’t work.” You’re right. Fortunately, using the proper software does not limit you to creating a Toyota Corolla-like plan, you can use it to produce the asset protection equivalent of a Rolls Royce. You’ll see how next time.

Seize the Day, Every Day: The Benefits of Cutting-Edge Asset Protection Software

by Asset Protection

Given the amount of time and energy you put into running your law firm, do you feel like you should be making more money?

Do you wish you could spend more time with your family or on the hobbies and activities that interest you most?

Do you feel like there is simply not enough time in the day to accomplish everything you need to get done?

In short, does it sometimes feel like the sacrifices you make to own an elder law and estate planning firm outweigh the benefits?

We would never suggest that asset protection software is some kind of panacea, capable of eliminating all of the aforementioned challenges. However, it’s a great place to start. And the better the software, the greater your chances of seizing control of your time, your firm, and possibly, your lifestyle.

In the coming weeks we’ll discuss what the proper asset protection software can help you accomplish, starting with greater efficiency. Until next time.

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I’m Disabled, Not Incompetent … Why Can’t I Establish My Own Trust?

by with 2 Comments Asset ProtectionLegal TechnicalSNT

Special needs trusts are an important tool in an elder care attorney’s toolbox. Established correctly, SNTs allow a person to qualify for public benefits such as Medicaid or SSI while maintaining assets in a trust to supplement the funds provided by such programs. First-party SNTs are established with funds that belong to the beneficiary. By placing the assets into a first-party SNT, the beneficiary can reduce his or her resource level to below the $2,000 required by Medicaid and SSI to qualify for benefits. Unlike SNTs established with third-party funds, a first-party SNT will include a government payback provision. Often, competent adults who have a physical injury or disease will want to establish first-party SNTs, with the appropriate government lien, for themselves.

Bigstock-Disabled-Athlete-With-The-Whee-85935989Since the Omnibus Budget Reconciliation Act of 1993, it has been a legal requirement that first-party special needs trusts be established by a parent, grandparent, guardian or court. This requirement has caused some issue for competent disabled adults who wish to establish their own trusts, and it is in direct conflict with the pooled trust. Pooled trusts, which are special needs trusts run by a non-profit third party for a pool of beneficiaries who place their own funds in the trust, were permitted by Congress in 1993 as well. Because of these issues, the Special Needs Trust Fairness Act was resubmitted to Congress in 2015 asking for a law allowing competent disabled adults to establish first-party SNTs for themselves.

Currently, the act has passed the Senate and is now under consideration by the House Committee on Energy and Commerce. As an issue of policy, it is highly likely the bill will pass a vote in the full House as well. Passing this bill will free up court time and resources and cut down on unnecessary costs for disabled adults. It will also offer us, as elder care attorneys, another option to provide clients who are receiving benefits and who inherit or are awarded a lump sum of money over $2,000. Imagine the convenience to our disabled clients of establishing their own trusts, picking their own trustees and having funds readily available for the remainder of their lifetimes to supplement their SSI benefits without the necessity of court intervention.

You can follow the progress of the bill on Congress.gov or contact your own representative to establish your support as an elder care professional by referencing H.R.670 – Special Needs Trust Fairness Act of 2015.  We will keep you updated at LWP as the bill continues to move forward becoming law and providing an exciting new opportunity for our clients!

If you would like to learn more about our Client Centered Software click here and we'll schedule you a live demo!  

Kimberly M. Brannon, Esq., Legal-Technical and Software Trainer

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You Bet Your VA Life Insurance!

by with No Comment Asset ProtectionLegal TechnicalSystems & ProcessesVA

Among the benefits that veterans may access through the U.S. Department of Veterans Affairs (VA) is life insurance. Considering the often-hazardous duty that veterans have encountered and survived, the VA’s life insurance programs are meant to offer a measure of financial security to the family for little or no cost. And proceeds from a life insurance policy on a veteran, no matter whether a VA policy or not, are not considered income by the VA, which can be a valuable benefit for a surviving spouse.

The various VA life insurance programs are listed below with the ubiquitous corresponding VA acronym.

  • Service members’ Group Life Insurance (SGLI)
    • Service members’ Group Life Insurance Traumatic Injury Protection (TSGLI)
    • Family Service members' Group Life Insurance (FSGLI)
    • Service members’ Group Life Insurance Disability Extension (SGLI-DE)
  • Service-Disabled Veterans’ Insurance (S-DVI)
  • Veterans’ Group Life Insurance (VGLI)
  • Veterans’ Mortgage Life Insurance (VMLI)

Bigstock-Soldier-And-Doctor-Shaking-Han-83552111As the names suggest, not all of these life insurance programs are meant for veterans. The only ones that are available to veterans are the last three. The first four programs are applicable to active service members or their dependents. Specifically, Service members' Group Life Insurance is term life insurance coverage for eligible service members that extends until 120 days after separation from service. Coverage under SGLI is $3.50/month for increments of $50,000 up to a maximum death benefit of $400,000 at a maximum monthly premium of $28.

Apart from basic SGLI, there are three versions of SGLI for specific circumstances. For an additional $1 premium per month, Service members'’ Group Life Insurance Traumatic Injury Protection (TSGLI) provides for a benefit paid in life if the service member suffers a loss due to traumatic injury like amputation, blindness, and paraplegia. There is also SGLI for dependents called Family Service members' Group Life Insurance (FSGLI). And the Service members' Group Life Insurance Disability Extension (SGLI-DE) is an extension of coverage for up to two years if the service member is totally disabled at separation.

After eligible active service, only veterans, and not their dependents, have VA life insurance options: the Service-Disabled Veterans’ Insurance (S-DVI), Veterans’ Group Life Insurance (VGLI), and the Veterans’ Mortgage Life Insurance (VMLI). Veterans who receive a new service-connected disability rating have two years to apply for Service-Disabled Veterans’ Insurance (S-DVI). A “new” service-connected disability rating does not include an increase of a previously held rating, nor a rating of Individual Unemployability, which is a special rating under which the VA can pay 100% of full disability compensation to someone whose service-connected disabilities are not rated at that level. Basic coverage under S-DVI, which offers both term and permanent type plans, starts at $10,000, and supplemental coverage can be purchased up to $30,000. If the new service-connected disability began before the age of 65 and lasted six consecutive months, the premiums for the first $10,000 in S-DVI coverage are waived.

For any service member who was covered by a SGLI policy during active duty and does not want to lose that coverage beyond the given 120 days after separation, there is the option of converting SGLI to a Veterans’ Group Life Insurance (VGLI) policy or even to a commercial policy. VGLI is a term life insurance product that provides lifetime coverage as long as the premiums are paid. Coverage can be the same amount as the original SGLI policy or can be reduced by increments of $10,000. Once enrolled, you can increase coverage by $25,000 every five years up to a maximum coverage of $400,000

The final insurance program available to veterans is Veterans’ Mortgage Life Insurance (VMLI), which is specifically for severely disabled veterans who have received a VA Specially Adapted Housing (SAH) grant to help build, remodel, or purchase a home, have the title to the home, and have a mortgage on the home. There is also an application deadline of age 70. A VMLI policy provides coverage equal to the amount of the mortgage still owed, up to $200,000, and is payable only to the mortgage holder. It is a decreasing term life insurance that reduces as the mortgage balance declines.

There is a convenient tool called Overview of VA Insurance Benefits created by the VA that allows you to pick the insurance program and then get further guidance on specific program eligibility. If a service member is qualified for SGLI, he or she, along with their non-service-member spouse, is automatically enrolled. To qualify, the applicant has to be an active-duty member of the Army, Navy, Air Force, Marines, or Coast Guard; a commissioned member of the National Oceanic and Atmospheric Administration or the U.S. Public Health Service; a cadet or midshipman of the U.S. military academies or the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises; or certain reserve members.

Veterans, on the other hand, must complete applications for VA life insurance products. Complete and file form VA Form 29-4364 for Service-Disabled Veterans’ Insurance (S-DVI) or apply online at https://www.insurance.va.gov/portal/. Veterans’ Group Life Insurance (VGLI) requires completion of VA form SGLV 8714 or an online application at the Prudential website: https://giosgli.prudential.com/osgli/web/OSGLIMenu.html. Finally, one can only apply for Veterans’ Mortgage Life Insurance (VMLI) by completing VA form 29-8636.

If you would like to learn more about becoming a Lawyers With Purpose member consider joining us in the room the week of October 24th – October 28th in Houston for The Law Profit Summit and the Tri-Annual Practice Enhancement Retreat.  We promise it WILL change your practice!

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC, and Director of VA Services for Lawyers with Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation, Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers with Purpose; and Co-Founder of Veterans Advocate Group of America.

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Does Your Trust Really Have Remarriage Protection?

by with One Comment Asset ProtectionDavid J. ZumpanoEstate Planning Drafting SoftwareLegal Technical

As a lawyer practicing in the elder law and estate planning industry for 25 years, I'm always intrigued by what lawyers refer to as remarriage protections. Remarriage protection relates to the provisions that one puts in a trust to ensure after a spouse dies and a surviving spouse remarries (or cohabitates) that the underlying estate plan of the deceased spouse is honored and maintained. The truth is that trust systems in the estate planning industry have little, if any, remarriage language or protections. The general protection that trust systems provide for remarriage is that if a spouse remarries, they allow you to discontinue payments of interest or principal to that spouse, and that's usually limited to the context in a family or marital trust. Wow, that's remarriage protection?


Bigstock-Broken-Wedding-Rings-19863971 (1)Hardly. In the Lawyers with Purpose Client Centered Software (LWP-CCS) system, there are layers of remarriage protections available to the client. First and foremost, the trust system tracks all of the benefits granted to a surviving spouse as you design the plan and import data into the trust system. Second, the trust system tracks all of the authority that you give a surviving spouse as trustee, trust protector, etc. Third, the LWP-CCS system allows you to identify what your client considers to be “remarriage.” In our default definition, the language identifies that a spouse will be deemed to be remarried after cohabiting for one night. The software also allows you to customize your own definition of remarriage, and once that definition is triggered you are then allowed to customize which of the powers or benefits that you have granted a surviving spouse will be modified or eliminated, along with any conditions for reinstatement.

For example, if a surviving spouse has been named trustee, the software knows that and asks you if you want to remove the right of the surviving spouse to be trustee upon marriage. Secondly, the trust software tracks all beneficial interests of the surviving spouse, and if you elect to have remarriage restrictions, the software will show you all the different places where the surviving spouse has retained a right to benefit from the trust. It will also ask if you want to minimize or eliminate any of those benefits individually, not collectively. That is, you can pick and choose which ones stay and which ones go.

Does this seem too good to be true? Well, it is if you have regular software, but the LWP-CCS software has been designed around the needs of the client, not the lawyers. The good news is, once you identify the needs of the client, the software will put in the necessary legal language to accomplish the objectives that you have identified for the clients. This is what being a Lawyer with Purpose means, and this is what client-centered software is all about. Don't go it alone. Let Lawyers with Purpose show you how to do real remarriage protection planning for clients.

If you aren't a Lawyers With Purpose member and are even thinking about adding estate or elder law to your existing practice, or want to make your estate/elder law practice more efficient, join us in the room in Houston this October 24th and 25th. Click here for the full agenda and to discover more of what you'll get from this program!

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center

Gene-wilder

Honoring the Chocolate Factory by Protecting our Grantors During Life and After Death

by with One Comment Asset ProtectionSystems & Processes

Unknown to most of us, Gene Wilder suffered from Alzheimer’s disease during his final years. Mr. Wilder decided early in his diagnosis not to disclose his medical condition to the world. His family quietly dealt with the pain of caregiving and memory loss in a quiet and secluded way. After Mr. Wilder’s peaceful passing in his home, which came after a family chicken dinner while he listened to “Somewhere Over the Rainbow,” his nephew made an official statement about his death, and then the family went back to mourning the loss of a beloved member.

As an attorney, I immediately imagined what planning must have gone into this decision. I imagine the HIPAA forms that must have been signed to make sure the medical records of someone so famous stayed under wraps. Mr. Wilder must have had a strong personal care plan with wonderfully explicit direction to direct that, when he remembered nothing, his family should have his favorite meal and listen to his favorite song as he passed amid them all.


Gene-wilderBut mostly, I imagine the moment when it could have all gone wrong from a legal perspective. I imagine that moment when a doctor or lawyer told the family that Mr. Wilder could no longer make his own decisions. I wonder how that moment went, but I will never know. There were no court hearings about Mr. Wilder’s competence or who would control his fortune. There were no tabloid articles written. So, while we will never know what Mr. Wilder chose for us not to see, I do believe one thing to be certain. Gene Wilder must have had a strong trust plan in place, with dependable trustees, a solid disability panel and a watchful trust protector.

Often when creating trust plans, attorneys focus only on who will get property, at what time and in what manner. Certainly those are important prongs of a complete plan to focus on, but they are not the only issues. A solid client-centered plan will also focus on who will fulfill each crucial role of making sure the client’s plan is carried out when it is funded, after he becomes disabled and upon his death. A trustee or successor trustee should be selected with care and thought. And, by using age restrictions, powers of appointment and remarriage restrictions, a trustee can be guided in the exact direction the grantor intended for his estate plan.

A trust protector can be appointed to offer protection to the trust estate and the beneficiaries against any law changes, trustee vacancies and/or disputes that arise in the estate.  A trust protector’s ability to restate or amend a trust, appoint a trustee or settle a family dispute can eliminate the need for an expensive and public court hearing on a private family issue.  Trust protectors, usually attorneys, are the perfect parties to offer their clients the security of knowing that the plan they drafted has an outside eye ready to look over and protect the intent of the original plan.

Finally, I have no doubt that Mr. Wilder’s final years would not have been as private had he not had an excellent disability panel in place. A disability panel – a group of individuals hand-picked by the grantor who will decide when he is incapacitated for purposes of being trustee of his own estate – can make a determination of incompetence. By determining the incapacity of a grantor as a group, the disability panel can eliminate the need for a court hearing to declare the incapacity of a grantor. I cannot imagine the security a hand-selected disability panel must offer to people like Mr. Wilder who know that the day they need someone to take over is fast upon them and that it can be done with no court interference or adverse action by the family.

We are fortunate at Lawyers with Purpose to have client-centered drafting software that allows us to produce documents that take into account the need for disability panels, trust protectors and all of the other practice tools listed above that might be necessary to meet a client’s goals.      

I am positive that Mr. Wilder would be thankful for our ability to help clients through client-centered planning. I am certain of this because Mr. Wilder’s family spoke of why he made the decision to keep his prognosis and struggle private. He did so because he did not want the children of the world to see Willy Wonka as a sick, elderly man. I believe Willy Wonka himself best defined Mr. Wilder’s actions leading up to his death: “So shines a good deed in a weary world.”

If you want to learn more about becoming a Lawyer With Purpose, join us in Houston October 26-28 for the Tri-Annual Practice Enhancement Retreat. Click here to see the full agenda and reserve your seat now!

Kimberly M. Brannon, Esq., Legal-Technical and Software Trainer

Obama Signature

Impact of Executive Order 13658 Establishing a Minimum Wage for Contractors on VA-Contracted Nursing Homes

by with 2 Comments Asset ProtectionVA

Executive Order (EO) 13658 “Establishing a Minimum Wage for Contractors” was signed by President Obama on February 12, 2014 to raise the minimum wage to $10.10 for all federally contracted workers. The intent of this EO was “to promote economy and efficiency in procurement by contracting with sources who adequately compensate their workers.” However, there may be unintended consequences to this federally mandated minimum wage increase in the form of a decrease in VA-contracted nursing homes.

Obama SignatureThe implementing regulations were drafted by the Department of Labor, followed by a public comment period that attracted more than 6,500 comments. The final rule became effective on December 8. It raises the hourly minimum wage paid by federal contractors and subcontractors to workers performing work on covered federal contracts to $10.10 per hour. It applies to contracts beginning January 1, 2015 and also includes potential future increases by an amount to be determined annually by the Secretary of Labor. In 2016, it was increased to $10.15.

Contracts entered into on or before the effective date of January 1, 2015 will not have to comply with the 2015 federal minimum-wage increase until they expire. Prior to 2015, the McNamara-O'Hara Service Contract Act (SCA) determined what federal contractors would pay service employees based on the size of the contract. For contracts equal to or less than $2,500, contractors were required to pay no less than the federal minimum wage of $7.25 in effect as of July 24, 2009. Contracts in excess of $2,500 required contractors to pay their employees rates competitive with the local market unless previously negotiated in a prior contractor's collective bargaining agreement.

Although EO 13658 is projected to benefit around 200,000 minimum-wage workers (Department of Labor Fact Sheet: Final Rule to Implement Executive Order 13658, Establishing A Minimum Wage For Contractors), it may incidentally impact veterans’ long-term care, and not for the better. Contracting agencies – like the Veterans Administration – are not only responsible for ensuring that the clause implementing the Executive Order minimum wage requirement is included in any new contracts or solicitations for contracts, but they must also withhold funds when a contractor or subcontractor fails to comply with that clause. For this reason, there are nursing homes that are choosing not to renew or pursue VA contracts due to the financial impact of the requirement to increase the salary of any minimum wage employees.

Unlike VA Community Living Centers that are owned and run by the VA and state veteran’s nursing homes that are owned and run by the state, contract nursing homes are privately owned but have contracts with the VA to provide long-term care paid or subsidized by the VA. What does EO 13658 mean to such nursing homes? This year it means that, if they want to contract with the VA, they will have to pay their employees at least $10.15/hour – an increase of 40% over the older federal minimum wage of $7.25. Some nursing homes are small and will simply not be able to afford this mandate, and those nursing homes that can afford it may decide the VA contract is not worth the cut into their profit margins.

A further nail in the coffin lid of VA-contracted nursing homes may be the proposed EO 13706 Establishing Paid Sick Leave for Federal Contractors signed by President Obama on September 7, 2015. The comment period, which was extended through April 12, 2016, is now over, and we are awaiting publication of a final rule that promises to require federal contractors to also provide paid sick leave to their employees.

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC and Director of VA Services for Lawyers with Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers with Purpose; and Co-Founder of Veterans Advocate Group of America.

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Understanding the Child Caregiver Exemption

by with 2 Comments Asset Protection

As many of us are aware, the federal guidelines allow Medicaid applicants to transfer their home to a child caregiver without suffering a Medicaid penalty for the transfer. It is a transfer often attempted by families in the Medicaid application process. It is also a transfer that often fails to meet the requirements necessary for the Medicaid agency to acknowledge the transfer under the child caregiver exemption.


ID-100347162The federal guidelines for the transfer remain somewhat vague, declaring that each state must develop “reasonable standards … for determining eligibility for and the extent of medical assistance,” and that the individual must “fulfill the criteria established by the State in which he lives.” 42 USCA 1396a(a)(17)(A), 453 US 34. This makes it of critical importance that we look to our individual state laws for the specific guidelines necessary. It is also crucial that our clients provide the documentation necessary to prove they acted properly as a caregiver for the parent for at least two consecutive years prior to the transfer.

Generally, individual states require that the child caregiver has resided in the parent’s home for at least two consecutive years immediately preceding the institutionalization of the parent AND provided full-time care for the parent who would otherwise have required institutional care for that entire time period. This is a very specific burden to meet. Just last month, the Superior Court of New Jersey held that a transfer made to a child caregiver who had taken care of her parent for five years prior to institutionalization and met all other requirements of the rule was not valid because the parent had left the nursing home and resided with her son for five months prior to moving back to the nursing home and making the transfer to the daughter. MK v. Dep’t of Human Services, Superior Ct of NJ, Docket No. A-0790-14T3.  

So, what must we ensure that our clients have in order to make the transfer? First, we as attorneys must have a clear understanding of the Medicaid guidelines in our own states. Then we need to be sure our clients obtain, and we review, the required documentation. The Medicaid Child Caregiver Exemption generally requires the following documentation.

1.  Doctor’s letter

I immediately require that my clients bring me the letter from the doctor as soon as they indicate they may qualify for the exemption. I encourage them to have the doctor state all conditions that the parent suffers from, the time period the parent has suffered from those conditions, and that BUT FOR THE CARE OF THE CHILD, the period of time the parent would have required institutional care. Medicaid may, after reviewing the doctor’s letter, request medical records; however, they do not generally need to be provided without Medicaid requesting them.

2.  Proof of child’s address

To qualify for the exemption, the child is required to have lived in the parent’s home for the two years IMMEDIATELY preceding the institutionalization. The fact that the child owns a home and spent part of the time there may pose an issue. Any break in living together in the parent’s home may pose issues as it did in the New Jersey case.

3.  Proof of relationship

If the child has a different last name than the parent, he or she needs to be prepared to present a birth certificate in order to prove relationship. Step-children generally do not qualify for the child caregiver exemption.  

4.  Proof the child provided full-time care

Medicaid may also ask for the past two years of tax returns. Clients may run into an issue here if they worked during the past two years. Generally, the exemption disallows any occupation other than acting as caregiver for the parent. However, in some states, part-time work outside the home is allowed when another child was providing services, or a caregiver was hired, during that time period.

Again, the first step in successfully transferring a home under the child caregiver exemption is knowing the rules of your jurisdiction. Second, we must make sure our clients can actually provide us with the proof required to meet Medicaid’s standards. Often, it is the second prong where we run into trouble. Medicaid rules are often not malleable, and documentation must prove that each prong of the state standard is met.

If you want to learn more about Lawyers With Purpose and make sure you keep up on the latest and great in the estate and elder law arena, subscribe to our blog and we'll deliver content right to your in-box: http://blog.lawyerswithpurpose.com/

Kimberly Brannon, Technical-Legal & Software Trainer – Lawyers With Purpose

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When the VA Wants Its Money Back: Handling a VA Overpayment Demand

by with One Comment Asset ProtectionLegal TechnicalVA

Receiving mail from the Department of Veterans Affairs (VA) may be a source of excitement for some folks, particularly when they are waiting for news of an initial VA decision. However, once a claimant is getting the correct monthly benefit, correspondence from the VA is generally not good news. Unfortunately, there are times when the VA decides that benefits were awarded and paid in error, resulting in an overpayment demand from the VA’s Debt Management Center. The Debt Management Center (DMC) is a separate department from the Pension Management Center (PMC). The PMC may send you a decision letter explaining why a claimant’s entitlement has changed, but it is left to the DMC to issue the actual request for repayment if the change in entitlement has resulted in a so-called overpayment. This is done via a form letter punctuated by only a few personal details, such as the type of benefit, the amount of debt, and the date on which the VA plans to start withholding benefits until the amount overpaid is recouped. The horror is compounded by the convenient payment remittance stub at the bottom, by which the VA hopes you will pay in full within 30 days.


ID-100249600Overpayment demands occur for various reasons. The claimant’s income may have increased and/or there is a decrease in medical expenses, so he/she no longer qualifies for the same monthly benefit. Or the claimant may have received an inheritance that disqualified him/her completely, based on the VA treating the inheritance as both income and countable assets after a certain date, even though the claimant continued to receive a benefit. If there is indeed more income/less medical expenses than previously reported, consider submitting actual medical expenses for the same time period if sufficient to offset the discrepancy. However, just because the VA claims to have overpaid, that does not necessarily mean that the claim is accurate. Sometimes an overpayment demand is simply the result of a clerical error or the VA considering historical income and/or asset information that should be irrelevant post the effective date.

When you receive an overpayment notice from the DMC, you must generally respond in some way within 30 days of the date of the letter. Responding within this time frame will also ensure that any scheduled withholding action does not occur until after your response is considered by the VA. How you respond depends on whether the overpayment demand has merit and/or whether or not the claimant can repay the debt. If the claimant does owe the debt, the back of the form letter gives you four different ways to pay: by phone, by mail, online, and via Western Union Quick Collect. The DMC has its own toll-free number: (800) 827-0648. If you cannot afford to pay the entire debt at once, the VA is willing to make arrangements for repayment over time or even ultimately to grant a waiver of the debt, if the claimant does not have the means to repay at all.

Claimants may dispute a debt if it is not owed or dispute the amount of the debt if it is inaccurate. The form letter from the DMC should be accompanied by VA form 0748, which is a Notice of Rights and Obligations that explains the claimant’s options for appealing and requesting a waiver of a debt. If you dispute the debt, you must explain in writing why you dispute the validity of the debt or the amount of the debt. If you request a waiver of part or all of the debt, you must explain in writing either why you are not responsible for the debt or how collection of the debt would cause undue hardship. Claims of hardship should be documented by submitting a VA form 5655 Financial Status Report within 180 days, which the VA considers in deciding whether to waive the debt. Pursuant to 38 CFR §1.963, “Recovery of overpayments of any benefits made under laws administered by the VA shall be waived if there is no indication of fraud, misrepresentation, or bad faith on the part of the [claimant] and recovery of the indebtedness . . . would be against equity and good conscience.”

Finally, you must remember – having now dealt with the DMC – to consider whether you should also respond to the appropriate pension department. If an overpayment occurred because the VA made an erroneous decision, you would need to file a request for reconsideration or notice of disagreement with the Pension Management Center serving your particular state in order to start the appeal process. I would not count on the VA to consider your dispute of a debt as an appeal of the PMC’s decision.

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC, and Director of VA Services for Lawyers with Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers with Purpose; and Co-Founder of Veterans Advocate Group of America.