Estate Planning for VA Aid and Attendance Eligibility

I copied the following dialogue from an elder law / estate planning listserv in which the participants were discussing strategies that they claimed veterans could use to qualify for VA Aid and Attendance benefits. Do you think the suggested strategies would work?

Q – Does anyone have knowledge or experience on how the VA is currently treating Aid and Attendance applications from individuals/couples who have divested assets?

A- Currently there is no look back period and no direct penalty for transfers of assets. Additionally, joint assets are “split” by number of joint owners as long as the joint owner do not live in the same household (dependents). However, if a person transfers an asset and the VA is aware of it, the agency can deny the claim based on the applicant having “sufficient means” to support him /themselves.

Actually, the VA doesn’t even ask about divestitures. However, to avoid problems, we hold off on submitting the VA application until the bank and brokerage statement beginning balances show the post-gift balances, i.e., so the statements do not reflect the donations.

Q – Do I understand your post to mean that if war-time Veteran lives, say, in an assisted living facility and his / her spouse lives in the couple’s house, the resource limit is $80K plus $80K, for a total of $160K?

A – No, that is not what I meant. I am sorry for the confusion. What I meant was, if a claimant has $150,000, then he can add his 2 children to the accounts (assuming the children are not dependents living in the same household), then the VA is supposed to “split” the assets based on number of owners. Thus, the claimant in this case would have only $50,000 countable for VA purposes, and each child would have $50,000 (each person having a 1/3 interest). Thus, no actual transfers have occurred, yet, the claimant has immediately reduced assets for VA purposes. Please let me know if this makes it any clearer.