Our office is OPEN to help Maryland Residents.

Beware of VA and Medicaid information on the internet, even from professional sources

Beware of VA and Medicaid information on the internet, even from professional sources. In an article “Family trust could save mom's benefits” by Steve McLinden, of Bankrate.com, this question was asked:
    “My elderly mother needs assisted living. She owns a home in which she has lived for 50 years. If she     sells the home, valued at about $150,000, she wouldn't be eligible for Veterans Affairs benefits for     assisted living. Is there any way she might be able to place the home in some kind of trust and not     realize any monetary benefit from the sale?”

Unfortunately, Mr. McLinden’s answer, is wrong.

Mr. McLinden states that a “Living trust or revocable living trust, this type of trust protects a home and other assets such as stock from remaining on the books as part of her net worth. “

A living trust or revocable trust does not protect your assets from the VA, if you are in an assisted living facility. Additionally, the aforementioned trust does not protect your home from the nursing home.

Unfortunately, Mr. McLinden’s answer is wrong, again.

Also, Mr. McLinden states that “Gifting the house outright to the children, who could then sell it, is another option…. The negatives to this are the tax consequences, since federal law only permits an annual exclusion of up to $13,000 per family member without payment of federal gift tax.”

The $13,000 is a reporting mechanism for the IRS, if you “gift” more than $13,000, you must report it to the IRS. However, you can gift up to $1,000,000, in your lifetime, without any tax consequences to you, or the person who received the gift. The tax problem with gifting, is you loose the stepped up basis, unlike being a beneficiary.

Basically, the only good advice, Mr. McLinden states correctly is “Consult with an estate-planning attorney or other asset-protection professional who is steeped in knowledge of VA pensions and assisted-living benefits.”

I would add that you must meet with an accredited VA attorney, claims agent or VSO to discuss VA benefits. Ask if they are “accredited” or go to the VA website to check for yourselves.

See our previous blog “Is your Independent Financial Advisor Accredited?”

Tags: , , , , , , , , , , , , ,
Posted on: No Comments

Leave a Reply