Key Distinction In Asset Protection

February 10, 2015

by David Zumpano with No Comment Asset Protection Legal Technical

Many attorneys confuse asset protection with Medicaid planning, and estate tax avoidance. It is essential attorneys and allied professionals are very clear on the key distinctions of asset protection and the types of asset protection that can be obtained.

The first distinction is identifying if protection is desired during life (now), after death, or both? Determining when asset protection is sought, will lead to whether a revocable living trust or irrevocable living trust is utilized. Revocable living trusts typically provide for the management of an individual’s assets during their lifetime if they become incapacitated, and can provide asset protection for those same assets to the beneficiaries, after the grantor’s death. In contrast, a properly drafted irrevocable trust created during lifetime, can provide asset protection when funded, but may not meet the requirements to qualify for benefits eligibility planning, Medicaid, VA and other needs based benefits. A traditional irrevocable trust will provide asset protection as long as the grantor who funds the trust gives up the right to the assets and/or income which protection is desired. Simply restated, if the grantor retains the right to income but not principal, the principal will be protected, but the income will not. General asset protection begins when the asset protection trust is funded. If any liability arose or became known prior to the funding of an irrevocable asset protection trust, the protection will be not be achieved as to those known potential liabilities. Any liability occurring after the funding of the trust, will be protected from any claims related to it.

Unlike asset protection, benefits eligibility planning requires additional restrictions beyond what is required for asset protection. The two most significant distinctions are (1) any rights provided to the spouse of the grantor will be determined available to the grantor or spouse in determining the grantor or spouse’s eligibility for a needs-based benefit; or (2) unlike an asset protection trust where the assets are protected immediately upon funding, funding of an irrevocable asset protection and needs benefits trust exposes the asset to “view” and still be considered in determining the future eligibility of the grantor or spouse for up to five years after the trust is funded. These two additional restrictions are problematic for general asset protection attorneys whose client’s later attempt to qualify for needs-based benefits. A final distinction in needs based benefits planning relates to veteran’s benefits which provide that any asset owned in an asset protection trust that is a grantor trust, is counted (in “view”) in determining eligibility for the Veteran’s Aid and Attendance and Housebound benefits. One caveat however is property held trust which does not generate income and therefore not targeted (or in “view”) by the Veteran’s Administration. Any conversion of the property to income producing will make the proceeds countable in determining the Veteran’s eligibility for benefits, even though it’s in an irrevocable asset protection trust.

Another key distinction with asset protection is whether a “domestic asset protection trust (DAPT)” is utilized or an iPug™. DAPT’s are complicated and available in only 14 states. Typically DAPT’s require a nexus with the state it is created and a close assessment of each of the individual rules associated with the states DAPT statute. In addition, domestic asset protection trusts are typically not successful in being able to plan for needs-based benefits. A more useful approach is the iPug™. The irrevocable pure grantor trust allows the grantor remain as trustee, change the beneficial interest to anyone except themselves, maintain the benefits during their lifetime of income or use of the residence, and to receive a full step up in basis on all trust assets at the grantor’s death.

A final consideration with asset protection is whether any tax reduction strategies are a goal. Some asset protection planning trusts can be utilized to reduce federal estate taxes while others choose to ensure the assets of the asset protection trust are included in the estate of the grantor, to ensure a “step up in basis” on the assets owned by the trust. Other asset protection trusts enable the spreading of income generated by the trust to beneficiaries who are in a lower income tax bracket than the Grantor, thereby minimizing income tax. The choice of trusts available for Estate and income tax planning are various and complex.

So you think you know asset protection, think again. Get clear on your client’s needs and goals and then pursue the trust that best accomplishes them.

If you want to learn more about understanding how iPug Trusts are used for clients with businesses for asset protection join our FREE webinar this Thursday, February 12th at 8:00 EST. Click here to register now and reserve your spot today.

Here's just some of what you'll discover during the webinar…

Learn the difference between General Asset Protection, DAPT Protection, Medicaid Protection and iPug® Protection
Comprehensive outline of the 2 primary iPug® Business Protection Strategies
Learn why clients choose single purpose Irrevocable Pure Grantor Trusts™ over LLCs
Learn how it all comes down to Funding
And much much more… register now to reserve your spot!

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

Congratulations To Frank McClure, LWP Member Of The Month

February 4, 2015

by Lawyers With Purpose with One Comment Uncategorized

What is the greatest success you’ve had since joining LWP?

The greatest success we have had is implementing the entire LWP system. We all know what has happened in the past, we go to a program or seminar and come back to the office on Monday morning and dump the binders on the desk where they sit. With LWP the key is follow through and accountability which our Team is now able to provide to each other through our coaching calls and implementation calls. Are we 100% where we want/need to be? No, but we also realize that it is progress and not perfection. We finished 2014 with consistently hitting our monthly goals and we look forward to 2015!

What is your favorite LWP tool?

All of the tools together is what makes LWP so beneficial to our practice. The system and processes guide our team in the day to day operations of our law firm. If we have a question or if there is something that just doesn’t seem to be running smoothly there is a system or process within the process that can provide the answer.

How has being a part of LWP impacted your team and your practice?

The Tri-Annual Retreats, Implementation Calls and Coaching Calls have impacted our team on a level that we never thought possible. Through LWP all team members are on the same page and speak the same LWP language. We can truly say that our law firm is a TEAM and all members of our team are needed for the firm to run smoothly and for us to reach our goals. LWP provides the systems and processes to make this happen.

SPECIAL GUEST BLOG: “We Fight Back!”

January 29, 2015

by Lawyers With Purpose with No Comment Asset Protection

Lawyers With Purpose welcomes guest blog and Tri Annual Practice Enhancement Retreat sponsor, David A. Weintraub, P.A. "Many Stockbrokers and Investment Advisors Take Advantage of Senior Citizens. We fight back!"

The sad truth is that not all stockbrokers and investment advisors are ethical. While many are very ethical and do the best they can for their clients, others give ill-advised or inappropriate advice, and sell high commission, high risk products, that are not suitable for your clients. Much of this predatory behavior is at the expense of senior citizens – your clients – who are unaware of the consequences of these unethical and illegal practices.

We fight back against these predators. We protect the interests of those who have been taken advantage of by unscrupulous investment advisors. We hold them accountable for their actions and strive to compensate their victims for their losses.

We look forward to meeting you next week and working with you to help your clients recover losses they should never have incurred.

For more information about David Weintraub’s practice, please click here. David was also recently mentioned in the elder abuse related article you can find here: http://www.sun-sentinel.com/local/broward/pembroke-pines/fl-pines-century-village-financial-20150122-story.html

Lawyers With Purpose cannot wait to be in the room with all of our member and vendors next week in Charlotte for our Tri Annual Practice Enhancement Retreat! Safe travels and we'll see you soon.

Roslyn Drotar – Coaching, Consulting & Implementation, Lawyers With Purpose

The Veterans Administration Proposes 3 Year Look Back On Gifts

January 28, 2015

by Lawyers With Purpose with 3 Comments Asset Protection Estate Planning Drafting Software Legal Technical VA

On Friday, January 23, 2015, the VA issued proposed new Veterans Administration regulations that would penalize wartime veterans up to ten years for making gifts of assets for less than fair market value. The VA is trying to stop what they perceive as lawyers and financial advisors “taking advantage of veterans” when helping them strategically plan to preserve assets and qualify for the Improved Pension benefit.

The proposed changes in regulations would:

Establish a 3 year look back for gifts
Impose penalties for up to 10 years
Create a bright-line net worth standard of $119,220, which includes annual income
Deny any expenses related to independent living facilities as care costs
Require Veterans to sell their home place property if the lot coverage exceeds 2 acres.

How will this work? When a veteran or widow of a veteran applies for the Improved Pension with Aid and Attendance, the VA will ask if any transfers of assets for less than fair market value have been made in the three years prior to the application. If so, the VA will presume it was for the purpose of meeting the VA eligibility standards.

Penalized gifts include gifts of money or assets to children or others, establishing estate plans with the use of trusts, and establishing retirement plans through the use of annuities which can provide a life time income stream.

When a gift has been determined to have happened during the look back period, the VA will calculate the penalty by dividing the value of the gift by the claimant’s pension rate with aid and attendance. Each classification of claimant varies, thus, the penalty periods will be different depending on who makes the claim. The pension rates with aid and attendance are as follows:

(1) Married veteran = $2,120

(2) Single veteran = $1,788

(3) Widow = $1,149

Thus, if a married veteran gives away $15,000 and a widow gives away $15,000, the widow is penalized almost double that of the veteran. (Married veteran $15,000 divided by $2,120 = 7 month penalty; widow $15,000 divided by $1,149 = 13 month penalty.)

Also, because the “net worth” standard will include income, high income earners will be allowed to have low to no savings for emergency items; whereas, very low income earners will be permitted to keep much more in savings. Because of the strict ruling on how the VA plans to define “medical care,” veterans who have dementia, Alzheimer’s Disease or other degenerative diseases and live in independent living facilities because they no longer drive and need a safe environment in which to live, will not be eligible for the benefits because they may not yet the hands on care for bathing, dressing, eating, toileting or transferring (ADLs). Although they are unsafe to live at home due to their health care condition of cognitive decline, the VA refuses to consider any expenses of care for a facility as deductible from the claimant’s income unless the claimant needs assistance with no less than 2 ADLs.

Between 2012 and 2014, Congress introduced two different bills, each imposing a three year look back penalty. Both bills were died. Nevertheless, the VA is moving forward on their own to create the look back and penalties. These changes will not only hurt wartime veterans, specifically WWII and Korean war vets, but it will further exacerbate the enormous claims back logs that already exist.

To fight this from happening, everyone who cares about a veteran must respond. Public comments must be received no later than March 24, 2015 and can be sent through http://www.regulations.gov or by mail or hand-delivery to: Director, Regulation Policy and Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. Comments must include that they are in response to “RIN 2900-AO73, Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits.”

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 for Wartime Veterans, Co-Founder of Veterans Advocate Group of America.

If are in the Charlotte NC, area, or will be attending our Practice With Purpose Program or our Tri Annual Practice Enhancement Retreat, consider joining Victoria for her Specialty Program on Wednesday, February 4th, and get your initial VA Accreditation through the VA. If you provide legal advice to Veterans about specific VA claims, to include drafting asset protection trusts for VA Benefit qualifications, you MUST be accredited by the VA. Contact Molly Hall at mhall@lawyerswithpurpose.com for registration information.

** Before attending this course, you must have submitted an Application for Accreditation, VA Form 21a, to the Office of General Counsel and received approval.

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How To Distinguish The Snapshot Date From The Look Back Date

January 27, 2015

by David Zumpano with One Comment Asset Protection Estate Planning Drafting Software Legal Technical

Many lawyers doing Medicaid qualification for their clients often get confused between the snapshot date and lookback date. These dates are not only confused by lawyers, but also often by the Medicaid departments processing the application. So let's set it straight. 42 US 1396r-5 (c) states the snapshot date occurs on the first day of the month in which a Medicaid applicant reached thirty days of "continuous institutionalization". Continuous institutionalization is identified as thirty consecutive days in an institution of care. These include hospitals, nursing homes, VA facilities, or the like.

If an individual enters a hospital on January 15, is discharged on January 30, enters a nursing home on February 5, and applies for Medicaid on March 1, no snapshot date has occurred. Why? It's simple. Thirty continuous days of institutionalization has not occurred by March 1. By virtue of the discharge from the hospital on January 30 and readmission to the nursing home on February 5, a lag occurred, restarting the 30 day period. Since they entered the nursing home February 5, and applied March 1, no snapshot date is set because thirty continuous days has not occurred.

Continuing, if the client stays in the nursing home through March 5, then the snapshot date would be February 1, the first day of the month in which the applicant entered a facility for thirty days of continuous institutionalization. The significance of the snapshot date is it represents the date Medicaid will look at all financial assets owned by the Medicaid applicant and spouse in determining whether or not they are eligible for benefits. In this case, Medicaid would take a "snapshot" of all assets owned by the applicant and spouse on February 1 and use this information to determine the client's individual resource allowance, the community spouse resource allowance, and the client's net available monthly income that can be used for the cost of care.

What makes all this confusing is, although the federal statute is clear as outlined above, most states treat the “lookback date”, as the "snapshot date." The lookback date is entirely different; it is the date when applicant resides in a nursing home AND applies for Medicaid benefits. In this case the lookback date does not occur until the Medicaid applicant applies for Medicaid. Since they are already in the nursing home, they would have to apply for benefits to establish the lookback date.

In this case, if an application was filed, the lookback date would also be March 1, the first day of the month of application after admission. In many cases clients come to you long after the snapshot date and in many cases may have been residing in a nursing home for many, many months, before they apply for Medicaid so no lookback has been established. The lookback date has a use and different significance than the snapshot date. While the snapshot is used to calculate all the allowable exemptions, the lookback date is used to establish the date at which Medicaid will look back sixty months at all financial data of an applicant to determine if there were any uncompensated transfers.

Understanding these key definitions is critical in having an effective Medicaid practice, but more importantly, to get your clients confident they will be eligible in the timeframe you identify. To learn more about Asset Protection and Medicaid Planning for your estate or elder law practice, consider joining us next week in Charlotte, NC, for our Practice With Purpose Program. We'll be covering this and so much more just on Day 1! We'll also be allowing a test drive in the room to review our drafting software!

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

This Monday…. (tomorrow)

January 25, 2015

by Lawyers With Purpose with One Comment Coaching & Implementation

Has your mood felt a bit low lately? The New Year isn’t kicking off quite as well as you had hoped? Well, I’ve got news for you – you’re not the only one!

I was reading one of my favorite blogs this a.m. by Kimberly Snyder and she mentioned that it turns out this coming Monday, January 26^th is “Blue Monday”. Blue Monday is purported to be the most depressing day of the year. The concept was first publicized as part of a 2005 Cliff Arnall, the Centre for Lifelong Learning, a Further Education center attached to Cardiff University, press release which claimed to have calculated the date using an equation of this milestone represents “the least happy day of the year.”

The formula; W=weather, D=debt, d=monthly salary, T=time since the holidays, Q=time since failing our new year’s resolutions, M=low motivational levels, and N_a=the feeling of a need to take action.

W= Weather. It’s still dark out. Although we’re moving further and further away from the shortest days of the year, our daylight hours haven’t yet extended to the point where most people can enjoy them after leaving the office at the end of the work day. Feels like Ground Hog Day.

D= Debt. Our holiday bills are due. Holiday gifts, trips and time off seemed like a good idea when you were filled up with holiday spirit, but the end of January means credit card statements are rolling in, and the financial reckoning is upon us.
d= Monthly Salary. Not Meeting Monthly Goal and its Tax time. The New Year is already looming with 11 months behind and its looming time to pay the tax man.
T= Time since Holidays. The parties are over. The family and friend gatherings have stopped. January is a month where Americans go into hibernation mode and we are spending more time alone that ever. And if our business calendars are empty and no strategic plan to change that around on the horizon, it feels a bit like solitary confinement.
Q= Time since failing our New Year’s resolutionsOur New Year’s Resolutions are failing. January 17th is the most common date to give up on your resolutions; it’s marked by Ditch New Year’s Resolutions Day. Unfortunately, only a fraction of those who make resolutions will achieve their goals, and those that don’t begin losing hope and resorting back to “It is what it is” mindset around this time.
M= Low Motivation Levels. And nothing to look forward to until Spring Break or sadly possibly a summer vacation. There is no accountability in place and no one holding your feet to your dreams. No signs of “help is on the way.”
N_a=The feeling of need to take action. “I know I must do something differently but I don’t have the time, money or energy to power down and make the investment in finding my way” is what I have been hearing from attorneys this month calling with a sense of terror. Some have been calling me for over two years with this exact statement. Doing the same thing over and over again and expecting different results.

Basically, we’re stuck inside, we’re further in debt than ever and we’re confronted with the reality that a “Goal” alone isn’t enough to create the practice we have been wishing for. Appears to be much like the fact pattern of this time last year for many firms I speak with looking to hear more about LWP.

Here is what I know to be true for a cure for the common law Practice: 4 days. Invest in 4 days to get in the room; “90% of success starts with taking the leap of faith and getting in the room.” Mark your calendar now for The Practice with Purpose and Practice Enhancement Retreat February 3-6 in Charlotte, NC.

Don’t let “I don’t have the time, money or energy to power down and make the investment to find the solution” be the default motto for 2015. Now is the time.

Molly Hall, Director Of National Enrollment, Lawyers With Purpose

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Essential Things For Your Bottom Line

January 22, 2015

by Lawyers With Purpose with No Comment Coaching & Implementation Systems & Processes

Are you tracking your closing rate? You should be, if only for self-evaluation. Your Pipeline Focuser™ will quickly show how many prospects became clients at each of your Initial and Vision Meetings™ If your closing rate average is lower than 70% you should investigate further.

A low closing rate is not always attributable to the attorney’s lack of skill in the Initial or Vision Meeting™ Sometimes the prospect just isn’t qualified to move forward. While it would be great if your staff could weed out those unqualified prospects before you invest your time in meeting with them, if they attended a workshop and you promised a complimentary Vision Meeting™ then you don’t have much choice.

However, if your closing rate is low and your prospects are largely not qualified, then consider investing time to improve your skills.

On the LWP member website, in the Vision Meeting™ folder (located in the Estate Processes tab), there are four videos designed to help you “close the deal.” Two of them deal specifically with boosting your closing rate by using the Vision Clarifier™.

Are you using the Vision Clarifier™? It’s the tool that visually demonstrates the solution to issues identified in the audit. If you’re skipping this tool, then you’re not visually demonstrating your recommended solution(s).

During the workshop, the attorney tells stories that are memorable, colorful and interesting. Using a PowerPoint presentation, the attorney is able to anchor stories that are easily visualized by attendees. Adding props such as the little red wagon and the dollar bill maintains interest in the illustrations.

At the subsequent Vision Meeting™ the attorney continues educating prospects in a one-on-one setting by connecting the workshop stories to the Estate Planning Audit™ and then demonstrating solutions with the “Vision Clarifier™, leading directly to the firm fee schedule.

This is where the “rubber meets the road.” The bottom line truly is do you believe in the solution you are recommending? Are you able to clearly see the value? If you are, you won’t hesitate when it comes to quoting your fee. That printed fee schedule you worked so hard to develop will boost your confidence and demonstrate to the prospect that you are not pricing based on his/her assets. You really do have set fees.

I invite you to track your own numbers. If prospects walk out of your office, “wanting to think about it,” the odds begin to dramatically decrease that they will become clients anytime soon. Being able to properly demonstrate the benefits of your proposed plan in that first meeting is a priceless skill. Putting in the time to hone and improve this skill will have exponential impact on your bottom line.

If you want to learn more about the Lawyers With Purpose Client Enrollment Process™, join us in Charlotte, NC, February 3rd-5th for our Practice With Purpose Program. There are only a few seats left so register today!

Nedra Catale – Coaching, Consulting & Implementation, Lawyers With Purpose

When To Dismantle ILIT’s For Today’s Clients

January 21, 2015

by David Zumpano with No Comment Estate Planning Drafting Software Legal Technical

I meet with many clients who come in and have an ILIT, (Irrevocable Life Insurance Trust), which was set up in the 1990s or 2000s as part of their estate plan. ILIT’s are typically used when a client is subject to Estate tax and wants to ensure the value of life insurance is not taxed in their estate. They were much more popular in the 90’s and early 2000’s when the estate tax limits were much lower. The question is, are they still needed?

A strong argument can be made that a vast majority of clients (99.8 percent) who have ILITs no longer need them because the estate tax levels have risen to a point where they only affect 2 out of 1,000 clients. So, what do we do with the old ILIT?

One strategy is to continue them and let them play out as intended. A second option is to dissolve the trust under state law, get the insurance policy and any cash value back to the grantor and have the grantor create a new irrevocable pure grantor trust that would ensure asset protection for the grantor but allow the grantor full control, as trustee, the ability to modify it as to any and all changes make other than making it available back to the grantor. The greatest benefit however is that it would allow the grantor to add other assets to the trust to benefit those intended now, during life rather than just after the grantor’s death.

There are two key steps to dissolve an irrevocable trust. First, to identify your state law for termination of an irrevocable trust, typically, by the consent of all the parties. Second, to identify under the state statutes who the beneficial interest would go to, that is back to the grantor, or to the beneficiaries. If there's a way to get it back to the grantor that yields the greatest result so the grantor's life insurance and other assets can be combined and utilized for the benefit of the grantor's beneficiaries during lifetime and after death with full complete asset protection and complete access and control by the beneficiaries. If your state statute requires the ILIT be distributed to the beneficiaries, then the key would be to identify the fewest number of beneficiaries and have them receive the benefits and create a "third party irrevocable pure grant trust" (otherwise known as a KIT™). Under this strategy the benefits could be used for the grantor and others, depending on the trust design. Typically, the ILIT beneficiaries create a trust for the benefit of a larger class of beneficiaries outside of themselves or limit what they are entitled to, to protect the trust corpus.

There are a lot of ILITs out there and obviously maintaining them is the "easier" thing to do. I question however, if they still serve the goal of the client. Terminating these trusts and creating new, more user friendly trusts may ultimately have a better impact on the client and the plan they are trying to accomplish, the key question are you up to speed on helping them to accomplish this effectively and efficiently?

To learn more, join us for our Practice With Purpose Program, February 3-5th, in Charlotte, NC.

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

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Medicaid Planning For Previously Transferred Assets

January 20, 2015

by David Zumpano with No Comment Asset Protection Estate Planning Drafting Software Legal Technical

Many clients who come into my office in search of "qualifying for Medicaid" are concerned about losing their assets. Unfortunately, in many instances they got advice at the beauty shop or coffee shop (and sometimes a lawyer) to give their assets away so that they could be protected if sixty months goes by.

As we know, there is no rule that says a client has to wait 60 months, even if they transferred assets, and we are typically able to get clients qualified in much shorter periods of time, even in crisis. When preplanning, we are also able to protect between fifty and one hundred percent of assets immediately with the proper facts and planning. Understanding this level of planning requires a complete and thorough understanding of the 12 key Medicaid rules and how they apply to each client differently. For a demonstration of how the LWP industry exclusive software documents tally in minutes for any client fact pattern go to https://www.lawyerswithpurpose.com/Estate-Planning-Drafting-Software.php to schedule a software demo.

A key challenge for many clients who have already transferred assets is, how does it figure in in determining their eligibility now, in crisis, or later if they are preplanning. (The answer comes down to two distinctions.)

First, has the transfer been within the sixty months of when they come to see you? If so, the amount of the transfer should be added back to the client's assets as if they still owned them. That is the practical result when applying for Medicaid if within the sixty months of the application. Re-including the assets provides a proper picture of all assets of clients that have to be considered in determining how much can be protected and how much would be lost if the client is in crisis or will require long-term care within sixty months of the transfer.

After re-including the transferred assets, you must then calculate the amount of assets that will be protected and those that will be needed for care (in a crisis case), or, could be needed in a preplanning case, (if care is within sixty months). The key distinction actually comes down to funding. Pre‑transferred assets are a funding issue, not a calculation issue. After adding back the transferred assets and completing the calculations to determine the amount protected, then the first funding task is to allocate the previous transfer to the amount protected and then you only have to fund the balance. If the previous transfers are more than the amount of assets that could be protected, the family must make up for the excess transfer by giving it back (cure). If the amount previously transferred is less than the amount protected then the balance of the assets that can be protected, are thereafter transferred pursuant to the asset protection plan created by the attorney.

While complicated in the written word, with a proper understanding of the law and how to apply it to each client and when you have the software that calculates and supports the law and provides calculations in real time utilizing the Medicaid laws, you are able to confidently help your client protect their assets.

If you are interested in learning more about becoming a Lawyers With Purpose member, consider joining us for our Practice With Purpose Program in Charlotte, NC, February 3rd – 5th. We are almost at capacity and there are only a few seats left so register today!

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

Annual Termination Of VA Aid & Attendance

January 18, 2015

by Lawyers With Purpose with No Comment Legal Technical VA

We just started a New Year and many recipients of the VA Pension with Aid and Attendance will lose their benefits this year. Why? Because of a letter VA applicants receive after they have been approved for benefits. The first letter, issued in January 2013, contained the news, originally given in a VA press release on December 20, 2012, that the annual Eligibility Verification Report (EVR) was no longer a requirement. For individuals who had experienced the “old” EVR process, this was quite exciting.

Why the excitement? The EVR was the yearly submission by the Veteran to update the VA with current income and medical expenses. It is a tedious task, both for our clients who had to keep records of all medical expenses and for law firms who cannot charge for these additional services. Foregoing this task saves time and stress.

Why did the VA discontinue the practice? According to the press release, the VA stated that the change allowed them to:

(1) Reallocate the staff who had processed the EVRs to instead tackle the compensation claim backlog, and

(2) The VA could now obtain current income information directly from Social Security and the Internal Revenue Service.

This sounds like a beautiful plan. However, in the absence of updated unreimbursed medical expenses (UME), which is what reduces the “countable income” to meet VA eligibility criteria, the VA will continue to use the last reported medical expenses when reviewing eligibility for ongoing years. This means that for any VA beneficiary whose medical expenses are just high enough to offset their income at the time of application, may have benefits terminated with future increases in income (cost of living adjustment increases, etc.). Therefore, while the VA says that it does not require annual reviews, it is important to meet with your VA benefits clients to assess changes in income and medical expenses that could impact receipt of VA benefits. The best time to meet is after the tax deadline of April 15 when it can be expected that your clients have gathered the prior year’s medical expenses in order to file their tax returns.

Use VA form 21P-8416 when updating medical expenses for the VA. The VA will consider UMEs submitted through December 31^st of the following year for the prior year’s “eligibility period” in which the UME was paid. For example, you have until December 31, 2015 to submit UMEs incurred and paid for during the calendar year 2014. It is not necessary to provide receipts of those medical expenses as long as the VA Form 21P-8416 clearly identifies the nature of the expense, the provider, the date, and for whom the expense was paid. Along with the 21P-8416 for actual unreimbursed medical expenses for the prior year (i.e. 2014), it is also recommended to complete an additional VA Form 21P-8416 with “projected” UMEs for the current year (i.e. 2015). These are both filed with VA Form 21-4138, Statement in Support of Claim, requesting that the VA consider these medical expenses. This should be submitted to the pension management center where you file your pension claims. You will generally only get a response from the VA to this submission when it requires a change in the monthly VA benefit; otherwise, the only indication that the submission has been received, considered and accepted is the continuation of the claimant’s monthly benefit.

Victoria L. Collier, CELA, Elder Care Attorney, Co-Founder of Lawyers for Wartime Veterans and Lawyers with Purpose, Veteran, author of 47 Secret Veterans Benefits for Seniors and most recent book, Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit.

If you're interested in learing more from Victoria L. Collier, join us in Charlotte, NC, February 4th, where she will be LIVE in the room offering VA Accreditation. We only have a FEW SPOTS left so register NOW with Kyle Russ at kruss@lawyerswithpurpose.com.