Introduction:
If you are a disabled veteran a special needs trust may be
an important tool to protect your benefits.There are two
veteran disability programs administered by the Veterans
Administration, Veterans Disability Compensation
(Compensation) and Veterans Disability Pension (Pension). If
you receive Veterans Compensation a special needs trust is
probably not needed. If you receive a Veterans Pension
then a special needs trust may be important to preserve your
benefits.
Veterans Disability Compensation is for
disabled veterans in cases where their disease or injury was
incurred or aggravated while on active duty in the military.
Veterans receiving Compensation have a rating of disability
in percentages and the monthly benefit is based upon the
percentage rating. If you are receiving veterans
Compensation you do not need to worry about a special needs
trust because Compensation benefits are not based upon
financial need. In other words, your assets and income will
not affect your eligibility.
Veterans Disability Pension is for low
income veterans who are permanently and totally disabled.
Your disability does not have to be connected to the time
you were on active duty in the military.The amount of the
monthly pension will depend upon the number of dependents in
the household. Other income, including income from other
household members, will off-set the Pension benefit.
Veterans receiving Pension benefits are entitled to free
care at a VA hospital and free medications prescribed by a
VA doctor. There is also a very important Pension benefit
called Aid and Attendance that helps with the cost of
caregivers, assisted living or other supported living
arrangements.
The Pension benefit is a needs-based benefit, however,
similar to the Supplemental Security Income or Medicaid
programs.You must establish financial need by showing that
your assets and income are below the allowed amount. Your
assets and income and the income and assets of your spouse
and dependents will affect your eligibility for the Pension
benefit.
In determining eligibility for Pension benefits your home
and one vehicle are not counted. In most cases your
remaining assets must be below $80,000 to establish
financial need. If you have monthly income from other
sources it will reduce your Pension amount dollar for
dollar.
Why Is a Special Needs Trust Important? If
you receive an outright inheritance from a friend or family
member the inheritance could put you over the $80,000 asset
limit. It is not necessary for your family to disinherit
you, however, in order to protect your Pension benefits. If
your family members provide for a special needs trust in
their estate plan, your eligibility for Pension benefits
will be protected.The trust would not be included with your
other assets to determine if you are below the $80,000 asset
limit but the trust will be there to supplement your needs.
If you are a disabled veteran and you receive a lump sum
from an auto accident or other personal injury lawsuit you
could lose your Pension benefits. In that case you can
transfer your assets to an irrevocable special needs trust
for your benefit. The trust would be for your benefit but
you would not be the legal owner of the trust so it would
not be included in the Pension benefit asset limit.
Whether the special needs trust is funded with assets from
friends and family members or funded with your own assets,
the special needs trust will protect your Pension benefits
and protect the funds in the trust to supplement the Pension
benefits. There are very few restrictions on how the trust
can be used for your benefit. The trust cannot give you cash
distributions because that will offset your Pension benefit
dollar for dollar. The trust can, however, pay some of your
bills, purchase goods and services you could not afford on
your limited Pension income, or purchase exempt assets like
a home or a vehicle.
If you are a disabled veteran or a family member of a
disabled veteran you should consult with an attorney
familiar with special needs trusts to be sure all veterans
benefits are protected. With good planning and good
legal advice benefits for low income disabled veterans can
be enhanced with the invaluable tool of a special needs
trust.
About
the Author:
Barbara A. Isenhour has practiced law for over 33 years,
focusing on the legal issues facing the elderly and disabled
persons of all ages. She is a member of the
Special Needs Alliance. Barbara was selected as
one of the city's best attorneys in Seattle Magazine for
three years and has been selected as a "Super Lawyer" in Law
and Politics Magazine for the past five years. She and
her husband have three sons. The younger twin boys
attend college in California.
About
this Newsletter:
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all about. Contact information for a member in your state
may be obtained by calling toll-free (877) 572-8472, or by
visiting
www.specialneedsalliance.com.