What Could Possibly Go Wrong? ANYTHING!

With veterans benefits – ANYTHING! I receive emails no fewer than three times a week from lawyers saying, “I don’t understand what went wrong,” or “How do I fix this,” or “Why would the VA do or ask that?”

The latest one was from an attorney who assisted a client with long-term care planning, creating a trust wherein assets were retitled. After the repositioning of the assets, the client was referred to a veteran service organization to complete and file the application for pension with aid and attendance. The lawyer was no longer involved.

Yet a year later, the prior client calls the lawyer and says the VA is asking questions about transfers of assets within the two years prior to filing the application. The lawyer wanted to know why the VA would ask such a question. What would possibly have been entered or omitted from the application that would have triggered such a question?

Had the lawyer been familiar with the VA application process and the VA laws regarding transfers of assets, this situation would have (or should have) gone very differently.

For starters, it is critical to know the different application forms for benefits. There were THREE different initial application forms to choose between for a wartime veteran seeking pension with aid and attendance. The “old” standard form was VA Form 21-526, wherein the claimant could apply for either service-related disability compensation or non-service-related disability pension. If the claimant had ever filed a previous claim, then he could have filed the VA Form 21-527 for pension with aid and attendance. But, if he had wanted his claim “expedited” through the process, he could have filed VA Form 21-527EZ.

Although the Veterans Administration and the VA laws do not have a true “look back” period, like Medicaid, that penalizes transfers of assets, there is a law that states that if transfers are made to a person in the same household or if the claimant retains control or ownership, then the transfer will be voided and the assets will continue to be counted toward the net worth limitations. Thus, the VA can ask if there have been any transfers.

Beginning in 2011, the VA specifically included in the “instructions” of the VA application of benefits a statement that the claimant must disclose transfers of assets. But this declaration was only mandated in VA Form 21-526 and VA Form 21-527. Moreover, in VA Form 21-527, the form itself at Section VII, Item 29A and 29B specifically asks questions about transfers. If these forms are used and these blocks are left blank, the VA will then follow up and inquire.

Yet in VA Form 21-527EZ, the fully developed claim (expedited process) does not ask questions about transfers. Also, claims filed with this form go through the system much faster. The veteran service organization should have used this form to avoid a delay in processing the claim as well as to avoid all the questions about transfers.

It is not enough for a lawyer to create an asset protection plan. The lawyer, when advising about a specific VA claim, must be accredited by the VA and should also know enough about the application process to understand where the problems can arise and how to avoid or address them. Passing the ball to another without understanding the end game is dangerous to the lawyer (malpractice) and the client (denial of benefits).

This is one reason why I REALLY advocate that lawyers who engage in VA benefits planning should assist their clients with the applications in-house, pro bono as the law mandates, instead of farming them out to a VSO. It is only through personal experience that you can discover and truly know the benefits and consequences of the plan you created. When you refer the application to an outside source, you have no idea what they are doing and have no control over the process, which can totally unravel the planning. And, likely, when a problem does happen, the client comes back to you to fix it.

The best way to fix it is to be properly trained on all aspects of VA, not just the planning, and to keep it in house. Lawyers With Purpose has a VA processing system, to include application benefits software (being introduced in November) that will make it easy, efficient and cost effective for you to feel confident in maintaining control of the VA application for your clients.

Victoria L. Collier, Certified Elder Law Attorney, Fellow of the National Academy of Elder Law Attorneys, Co-Founder of Lawyers with Purpose, LLC, Co-Founder of Lawyers For Wartime Veterans, LLC, Veteran of the U.S.A.F. and author of “47 Secret Veterans’ Benefits for Seniors…Benefits You Have Earned but Don’t Know About.”