If you or your spouse are a qualified war veteran, one or both of you may qualify for the Aid and Attendance Pension benefit. The purpose of this benefit it to assist to with the cost of long term care including in home care, assisted living and nursing homes.
To qualify for this benefit, the VA will look at the amount of your financial assets and whether or not you own a home. If you own a home but are no longer living there, you may need to transfer your home in to an irrevocable residence trust. This is required even if your home is owned by your revocable living trust. Once the home is transferred to the trust and assuming you qualify financially otherwise, you can start receiving tax free income from the VA in the amount of approximately $1,000.00 – $2,000.00 per month. Your financial assets can be placed in this trust as well and then will not count towards the resource limits.
The other benefits/characteristics of the trust in addition to qualifying for the Aid and Attendance Pension benefit include:
- The home will be protected from the Medi-Cal Estate Recovery Lien
- The low Prop 13 tax basis in your home will be preserved and can be passed to the children
- The benficiaries of the trust will get a stepped up basis in any inherited property from the trust. This will result in little, if any, capital gains taxes due upon the sale of the property. If the a trust is not used, the beneficiaries will receive a lower carry over basis in the property if the property is gifted to them while the parent is alive and thus would have to pay capital gains taxes upon the sale of the property.
- Any real estate owned by the trust can be sold by the trust and the proceeds from the sale of the home will not affect the seniors financial qualifications for the VA Aid and Attendance Pension Benefit or for Medi-Cal (assuming the property was the primary residence of the senior).
Click on the link below to watch MSNBC’s news clip about this little known benefit available to our veterans.
