The needs-based pension program from the Department of Veterans Affairs (VA) is a disability benefits program available to compensate veterans for non-service-connected disabilities. Like the VA compensation program, the pension program is based upon disability. However, unlike the VA compensation program, the pension program is also based on income and need, and the veteran’s disability must be total and permanent (but need not be “service-connected”).

To qualify for VA pension benefits, the veteran must be discharged under other than dishonorable conditions; must have wartime service (in general, for those entering military service before September 7, 1980, consisting of at least 90 days of active service, one day of which was during a wartime period); must have limited income; must meet net worth limitations; and must be age 65 or older, or be permanently and totally disabled.

Under new regulations governing VA pension eligibility, asset transfers, or “gifts,” made by a veteran may result in the imposition of a penalty, or a period of ineligibility, for VA pension benefits. The impact of asset transfers,or “gifts,” depends upon the date when the transfer or gifting occurred. If the transfer or gift was completed prior to October 18, 2018, the date when the new VA regulations took effect, the transfer is not subject to a penalty, nor would it be a countable asset towards total net worth, provided that the transferee relinquished all ownership and control, and did not retain any benefit from the transferred asset for his/her personal use.

However, if the transfer was completed on or after October 18, 2018, it would fall within the new federal regulations. In that case, a penalty would be imposed on the applicant by the VA if the amount transferred caused the total net worth to exceed the net worth asset limit at the time of the transfer.

The new net worth asset limit is $123,600 under the new federal regulations. For purposes of entitlement to VA pension, countable net worth includes all countable assets plus annual gross income. Example of “net worth” calculation: A claimant’s assets total $117,000 and annual income is $9,000. Therefore, adding the claimant’s annual income to assets produces net worth of $126,000. Under the new rules, the VA will deny or discontinue pension if a claimant’s or beneficiary’s net worth exceeds the net worth limit.

If you’ve applied for a non-service-connected pension claim recently from the VA and received a denial due to the transfer or gift of assets made prior to October 18, 2018 when the new regulations became effective, an immediate appeal is suggested.

Some VA adjudicators are not applying the older regulations to those transfers and gifts made prior to October 18, 2018. Instead, they are applying the new regulations to the older transfers and are denying claims, thereby forcing certain claimants into unnecessary appeals.

Three recent Board of Veterans Appeals (BVA) decisions will be of interest to you if you have also encountered this problem.

Citation Nr: 19122257 (Docket No: 17-58-532), dated March 25, 2019, held that the appellant’s net worth was not a bar to payment of survivor’s non-service-connected pension benefits. In this case, the Surviving Spouse had created an Irrevocable Living Trust in 2012 which designated her children, who did not live with her, as sole beneficiaries with no provision in the trust for her personal care. She had also relinquished all rights of ownership and control. The total value of the trust was roughly $355,000, of which $155,000 was considered that of her primary residence. This decision goes on to state, “…the trustees, once they have distributed any trust assets to themselves as beneficiaries of the trust, which the trust allows them to do in any amount, in any manner, and at any time they wish, may in their personal capacities as beneficiaries use such assets for the appellant’s maintenance. But that would be entirely up to them, just as it is entirely up to them to use any other property they own for that purpose.”

Citation Nr: 19109669 (Docket No. 17-43-195) dated February 7, 2019, held that the Veteran’s family’s net worth was not a bar to entitlement to non-service-connected pension benefits. In this case, the Veteran created an Irrevocable Trust in March of 2015. Although the trust also held the Veteran’s primary residence, he retained no ownership interest in the assets held by the trust, nor was he receiving income or principal from the trust. The BVA held that since the trust contained the residence, the trust could sell the residence when the Veteran ceased to use it without penalty to the Veteran, since none of the proceeds were distributed to him.

Citation Nr: 19112706 (Docket No: 18-38-292) dated February 21, 2019, held that the Veteran’s net worth was not a bar to entitlement to pension plus A & A benefits. In this case, benefits were granted since the Veteran did not retain an ownership interest, nor control of the Non-Grantor Irrevocable Trust, nor was he the trustee. In addition, the trust clearly establishes that its assets are not available for the Veteran’s maintenance.

Throughout these BVA decisions, OGC opinions were mentioned; specifically: VAOPGPREC 15-92, VAOPGPREC 33-97, VAOPGPREC 72-90, and VAOPGPREC 73-91.

Note that annuity purchases are treated essentially in the same manner as transfers to trusts.  Whether or not the principal of the annuity counts as an asset or the purchase is subject to penalty also depends on when the annuity was purchased, whether or not the owner has retained the right to liquidate the annuity, and whether or not the amount of the purchase would have adversely affected the total net worth if the annuity had not been purchased.

(Adapted from a recent article on the Veterans Family Matters and VAGA News newsletter. See

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VA Compensation and Pension Benefits