Here is a unique idea from attorney/VA benefits estate planner Dale M. Krause on how a war-time veteran can reduce his or her net worth in order to attain eligibility for Veterans Improved Pension with either the Housebound or Aid and Attendance benefit supplement through the purchase of a Single-Premium Immediate Annuity, or SPIA:

For those veterans looking for economic assistance to pay for home healthcare, assisted living, or nursing home care, they might want to investigate whether they are eligible for a monthly VA Aid and Attendance Benefit (“A&A”).  In order to qualify, the veteran must have served during an active wartime, received a quality discharge, be permanently and totally disabled, be in need of daily aid and attendance, and have nominal assets and a low monthly income.  For most veterans who served during WWII, the Korean War, and the Vietnam War, who need the required care, the most difficult qualifier is the requirement of nominal assets and a low monthly income.

To illustrate, assume that Robert Smith served during the Korean War, is age 77, and is required to live in assisted living in order to meet all of his activities of daily living (“ADL”) – eating, bathing, dressing, transferring, toileting, and continence.  The assisted living facility charges him $3,500.00 per month for all his ADL needs.  He has no other assets, other than $130,000.00 in a savings account.   With only $1,250.00 of social security income, Robert was concerned that his life savings would only afford him the opportunity to stay in the assisted living facility for 57 months.

Concerned about this result, and with longevity in his family history, Robert met with an elder law/VA attorney to discuss his situation.  The attorney informed him that he was not eligible for an A&A benefit with $130,000.00 in savings. However, the attorney did inform him that he could qualify if he restructured his assets.  To receive the maximum monthly A&A benefit of $1,644.00, Robert was instructed to retain $30,000.00 in savings, and invest $100,000.00 into a Single Premium Immediate Annuity (“SPIA”).

The SPIA was structured to immediately commence paying $605.00 per month for 140 months.  The SPIA was also structured so that once a year the monthly payment amount automatically increased by 5%.  Thus, in year 2, the monthly payment would increase to $635.25.  In year 3, the monthly payment would increase to $667.01…

As a result of restructuring his assets, Robert qualified for the maximum monthly A&A benefit and was able to economically stay in the assisted living facility for more than 140 months/11.66 years.

Mr. Krause’s article was taken from the Veterans Advocates Group of America(VAGA) October 2009 Email Newsletter.

I previously blogged about VA Benefits here, here and here.