There are several things you need to keep in mind about these practices.
- While planning for retirement and estate preservation is a good thing, it is not ethical to hide money from the VA by using legal loopholes to gain a benefit meant for low-income veterans.
- So-called "irrevocable trusts" do not work well for VA purposes. In order for trusts to even be effective under 38 C.F.R. 3.276(b) which allows disposal of assets, you must lose control over the asset. Appellate courts have held on at least two occasions that instructions to trustees by the grantor of the trust constitute control. Plus in our experience there is no trust that can be Medicaid compliant and VA compliant at the same time. It's one or the other!
- Annuities are usually a "less tan optimal" investment. Do not be fooled into buying one just to get VA benefits. If your asset is permanently tied up, you lose its benefit. If it is available (even at a penalty), the VA still counts it as your money!
Dr. Glenn Osborne, Dr. App. Sc. (Gerontology)
Elder Veterans Legal Aid Group, P.C.