Estate PlanninG

Changes Looming... New Restrictions to VA Planning

The House of Representatives passed new legislation on October 29, 2013, that would restrict the ability of our veterans (and the many financial and legal advisors who assist them) to qualify for benefits by positioning their assets with children, trusts or annuities. The measure would require the implementation of a three-year look back similar to that imposed in Medicaid planning.

First, it is important to understand how and why this legislation came into existence. First, How: Legislation is created and titled in order to get the maximum number of votes from our elected officials. Do you think the Affordable Care Act would have passed even through one party if it had been called 'The Unaffordable Care Act That Will Cause Millions to Lose Their Health Insurance Bill'? Of course not . . and this one is no different. It was sold to the legislature as an act To improve the processing of disability claims by the Department of Veterans Affairs, and for other purposes. Sounds good, right? In fact, it sounded so good that it passed the House of Representatives with only one vote against it. Now, however, the bill moves to the Senate Armed Forces Committee where it is being reviewed for content, and where clauses like the look-back period are being scrutinized. As the bill is reviewed in committee, recommendations are made to address the shortcomings of the legislation, and this one has several. NOT included in the consideration of adding the look-back provision are issues related to spousal impoverishment (contrary to good public policy), stipulations on the effect of prior planning, trust creation, a phase in period, etc. These things will need to be hammered out and the revised bill returned to the House for review and passage by both houses of Congress. This process could take a while. In the meanwhile, groups such as the National Academy of Elder Law Attorneys and others are talking to Senators to make certain that if a look-back is approved, rules are clear and understandable.

Now, the 'Why': The Joint Armed Services Committee held hearing in June of 2012 addressing the planning that is being done to assist veterans and their spouses in obtaining these benefits. The VA did not like the planning as it was being done. The committee members, however, reminded the VA that planners (legal and financial) were just applying the rules that existed and that if they wanted different rules, offer the changes for consideration as part of the legislative process. All of these changes were wrapped into one piece of legislation that also addressed the backlog of claims that the VA currently has. Who doesn't want the VA to clean up its act and catch up on the backlog of claims - some over 15 months old? And thus we have this bill. Now, imagine if they had said it was 'An Act to Limit Access to Benefits for Wartime Veterans and Their Spouse or Surviving Spouses'. Do you think that would have gotten the same number of votes? Of course not. Nor would it have likely received the same consideration as a stand alone measure. Packaging was essential and someone played it well.

Will the three year look back come into existence? I believe the question is not "will it come into existence?" but rather "when will it come into existence?" Either way, such a change will not prohibit us from helping seniors obtain benefits as they become eligible. We have been through similar circumstances in Medicaid planning (most notably the DRA 2005 changes). The good things is this . . .Whatever rules we have to live by, we will still be relied upon to assist families through the difficulties of providing care for their loved ones. We will still get great satisfaction by helping others. Will we be hurt? Not really. We will still be needed. The people who will be hurt are the very people we are trying to help . . .

For a full version of this bill, please go to: