will irrevocable trust work in selling house?

Discussion in 'Countable Income' started by lanya, Jan 13, 2014.

  1. lanya

    lanya Newbie

    My mom has been on A&A since 2008. She's in her late 80s, very low-income and living at home with the help of caregivers.

    She's now completely out of money, and the A&A doesn't cover all that she needs, so it's come time to sell her house so she can live with me. We've placed her house in an irrevocable trust, with the help of an elder care lawyer, hoping to use some of the proceeds to create a disabled suite for her in my home, plus have some assets to continue paying caregivers over time. The irrevocable trust will have about $100K in the bank after construction and moving expenses.

    Will the VA accept this irrevocable trust arrangement, or will they discontinue her A&A?
  2. vetadmin

    vetadmin Administrator Staff Member

    If she has access to the funds in the trust, it is considered an asset.
  3. lanya

    lanya Newbie

    She won't have access to them, only I will. Although, while she is living, proceeds are to be used for her benefit.
  4. I have this question too, was it answered? My father has minimal cash, and no assets other than personal residence.
    If he goes on A&A and then runs out of money and then sells the house will he have to give back the A&A money?

    or If when he runs out of money we then at that time do an Irrevocable Trust and sell the house (where he will not have access to the money) does he have to give back the A&A money? And if so can he give the $ back but then be eligible for A&A going forward?

    What if he needs paid care , goes on A&A then gets better after 6 months and no longer needs care so stops the A&A. then he gets ill again next year and needs paid care again and has zero cash. at that time we do an Irr Trust and sell the house. Does he have to give back A&A money? and will he be eligible for A&A going forward?

  5. vetadmin

    vetadmin Administrator Staff Member

    Son of a Veteran,

    For clarifications, A&A is not really intended as an on and off thing, or for short-term recovery intervals. It is intended for those who have reached a point that going forward, they will require assistance with daily living.

    The house does not count as an asset, but if here to sell it, those proceeds would have to be accounted for and if he were to be receiving A&A, those proceeds would probably make him ineligible and kick him out of the program. He would not have to pay back the money he was entitled to prior to selling the house.

    Regarding the Trust, it depends on how it is written. If it pays anything to him, or he has access to it, those monies would count.

    Also the VA is looking to make quite a few changes to the eligibility on this benefit, and one of those is putting a 3-year look back in place. If the applicant is found to have had the financial resources at the time of application, but restructured them in order to financially qualify for this pension, there could be some substantial penalties for having done so, and in that case, potentially owing back all monies that had been paid.

    I would advise you to speak with a professional on this to best determine his options should that time arrive, and keep in mind that it is better to file, when your Dad actually needs those care and services without the hope of him no longer needing them. You don't want to file too soon if he is not at that point or in that situation currently.

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