VA Benefits and the Transfer of Assets to an Irrevocable Trust

Web Admin - Friday, November 27, 2015

VA benefits and irrevocable trust, Illinois employment lawThe Department of Veterans Affairs (VA) provides our nation’s veterans with important benefits after they have been discharged from service. In order to qualify for those benefits, veterans must meet certain requirements. For some veterans, it may be necessary to transfer assets into an irrevocable trust to lower his or her net worth. 

Qualifying for Pension 

The Veterans Pension benefit is a tax-free, monetary benefit for low-income veterans. In order to qualify, the following requirements must be met: 

1. Veteran must be 65 years of age or older or permanently and totally disabled;

2. He or he must have been discharged under conditions other than dishonorable;

3. He or she must have served, which generally involves a minimum period of active duty service, one day of which was during wartime;

4. Net worth must not be considered too substantial; and

5. Countable family income must be below the yearly limit as set by law. 

Veterans who are concerned about their level of net worth may consider forming an irrevocable trust. By creating an irrevocable trust, net worth can be reduced in order to qualify for the Veterans Pension. The VA does not assess a penalty for transferring assets as long as that transfer occurs prior to filing a claim or notifying the VA of an intent to file a claim. The determination of net worth is subjective—the VA has discretion in determining whether a veteran’s assets are too large to qualify for the Veterans Pension. 

An irrevocable trust can be used to hold assets that are provided by a veteran in order to reduce net worth. Importantly, a veteran claiming benefits (as well as his or her spouse) cannot be an income or principal beneficiary of the trust established in order to obtain VA benefits. This is because the VA requires that the rights to property and income from that property be actually relinquished to be considered a reduction of net worth. 

A second issue relates to whether to form the trust as a grantor trust or a non-grantor trust. The VA compares income reported to it with Supplemental Security Income (SSI) and Internal Revenue Service (IRS) income records through a process called Income Verification Match (IVM). Due to the nature of a grantor trust, there may be a discrepancy between income reported to the VA and income that appears with IRS filings. 

Under a grantor trust, all items within the trust are taxed to the grantor on his or her personal income tax return. Ordinarily, the grantor is the person who funds the trust, which, in this case, is the veteran claiming benefits. The VA may assume that the tax reported on the veteran’s tax return is based on income of the veteran, which may lead to lower (or complete denial of) benefits. Therefore, a non-grantor trust, in which the trust is responsible for any tax, is likely more desirable, in an attempt to avoid this potential issue. 

Forming a Trust 

If you would like more information on the formation of a trust, reach out to a skilled Illinois estate planning attorney today. Our firm proudly helps individuals in the communities of Inverness, Schaumburg, Palatine, Arlington Heights, Kenilworth, Long Grove, Riverwoods, Barrington, South Barrington, and Mount Prospect. We look forward to hearing from you. 

About the Author:

Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.


Recent Posts


Landlord Tenant Ordinance employment contract, employment law, employment at-will, Deer Park employment law attorneys, contract, Rolling Meadows medical malpractice lawyers Illinois employment law firm Chicago insurance claim attorneys Illinois estate planning law firm Arlington Heights wills and trusts lawyers denied insurance claim owner responsibility Des Plaines civil attorney IRS Riverwoods estate planning lawyer natural gas explosion Rolling Meadows insurance attorney criminal law Palatine construction attorney murder coronavirus Illinois bicycle safety Schaumburg Attorney Inverness real estate lawyer Palatine Attorney Rolling Meadows litigation lawyer Illinois car accident attorney pedestrian accident changes to mortgage law Illinois workplace lawyer Rolling Meadows drug defense attorney Affordable Care Act estate planning unauthorized overtime Illinois elder law attorney Illinois insurance lawyer probate Schaumburg estate attorney foreclosure Buffalo Grove traffic attorney Schaumburg criminal attorney Crystal Lake medical malpractice attorneys personal injury law firm Rolling Meadows car accident lawyers real estate attorneys medication errors deadly crashes Deer Park traffic accident attorney Schaumburg personal injury attorney Des Plaines real estate lawyer Fair Labor Standards Act Barrington Illinois estate planning lawyer Palatine business attorney motorcycle accident defective products insurance denials Buffalo Grove law firm premises liability wage theft contracts medical malpractice claims Rolling Meadows criminal lawyer Palatine probate lawyer Buffalo Grove probate lawyer Buffalo Grove real estate attorney Crystal Lake pedestrian accident lawyer clemency college kids real estate attorney sexual images BAIID compensatory time slip and fall POA breach of contract Rolling Meadows boating crash lawyer liability claims Illinois Wage Payment and Collection Act Illinois personal injury attorney Illinois insurance claim attorney Des Plaines collections attorney underfunded trust Schaumburg criminal law attorney landlord Illinois pet lawyer motorcycle accident lawyer modern family estate planning Crystal Lake bike accident lawyer Des Plaines insurance attorney car accidents GM ignition switches disability benefits civil rights violation Chicago attorney Inverness estate planning lawyer Buffalo Grove personal injury lawyer Illinois attorney Crystal Lake insurance lawyer power of attorney bike accident Inverness real estate attorney Home Remodeling Repair Act commercial leases Crystal Lake pet attorney civil litigation attorney Retaliatory Discharge Arlington Heights tax lawyer estate planning trusts Crystal Lake civil litigation lawyer medical research Illinois personal injury lawyers traffic deaths insurance attorney real estate zoning elder abuse Crystal lake insurance dispute attorney overtime pay Crystal Lake car accident attorney wrongful termination TBI Policy Cancellation pet law IRELA health insurance dispute real estate lawyer Barrington employment attorney condo association meal breaks traffic accidents accidental death benefits Inverness traffic law firm Long Grove estate planning attorney Des Plaines personal injury lawyers elder law subcontractor Palatine real estate lawyer Jay Andrew Illinois Rolling Meadows criminal attorney residential real estate denial of life insurance Crystal Lake personal injury lawyer Illinois estate planning attorney Rolling Meadows insurance dispute lawyers, insurance dispute Rolling Meadows Attorney Illinois wills and trusts attorneys insurance disputes Illinois speeding lawyer paid sick leave Illinois law Illinois medical malpractice claim digital information Illinois jet ski accident lawyer Palatine employment attorney operating agreements Chicago employment attorney Palatine injury attorney Kenilworth estate planning attorneys DGAA medical malpractice Arlington Heights personal injury lawyer probate lawyer criminal record employees sexual harassment head on collisions Do Not Resuscitate South Barrington real estate lawyer Crystal Lake employment attorney Deer Park medical malpractice attorney South Barrington real estate attorney jet ski living trust vs will Illinois personal injury lawyer Deer Park personal injury lawyer breathalyzer test filing a medical malpractice claim Schaumburg construction accident lawyer Illinois pedestrian accident attorney reckless homicide hiring employees gift tax exemption, estate planning, estate planning strategies, Illinois estate planning, South Barrington estate planning attorneys pedestrian-automobile accident Long Grove wills and trusts attorneys Des Plaines medical malpractice attorney Whistleblower Claims marijuana speeding distracted driving accident victims Food and Drug Administration's Food Safety Modernization Act traffic offenses Rolling Meadows business lawyer Palatine traffic lawyer Illinois trusts attorney new real estate form tax attorney Crystal Lake accident attorney Chicago estate planning bicycle dooring accidents blood alcohol content Barrington criminal defense lawyer Des Plaines injury law firm Arlington Heights Attorney probate fees Crystal Lake tax lawyer Illinois small business advance healthcare directive Arlington Heights wills and trusts attorney Buffalo Grove traffic lawyers Legal Info Illinois workers compensation lawyer Forcible Entry first degree murder personal injury lawyer Barrington employment law attorney probate process Crystal Lake personal injury attorney Chicago trucking accident attorney insurance dispute, insurance dispute lawyers, insurance claim denial, insurance claim delays, Rolling Meadows insurance dispute attorneys Illinois employment lawyer Crystal Lake medical malpractice law firm personal injury texting while driving Rolling Meadows real estate attorney Illinois Human Rights Act golf accidents Schaumburg estate planning lawyer Illinois rollover accident lawyers Arlington Heights employment law attorneys unfunded trust insurance claim delay Family Medical Leave Act Chicago insurance law firm Deer Park traffic lawyer Rolling Meadows personal injury lawyers estate tax agent power of attorney for healthcare medical marijuana severance agreements Illinois boating accident lawyer life insurance policy auto accidents Kenilworth estate planning lawyer Arlington Heights trucking lawyer rumble strips Illinois civil litigation lawyer traffic tickets real estate leasing truck collisions Chicago biking tips loss of consortium Illinois probate lawyer Barrington criminal lawyer trucking accident lawyers Des Plaines estate plan Joliet general practice lawyers probate claims Barrington business law firm hit and run accident employment law, Illinois employment laws Illinois Workers’ Compensation Commission living wills social media after death institutional trustee Schaumburg employment law attorneys car accident lawyer Rolling Meadows employment law attorney Buffalo Grove insurance claim dispute lawyers Chicago estate planning lawyer Fourth of July Arlington Heights medical malpractice lawyer employment attorney Self-Directed IRA Accounts Arlington Heights injury attorney Illinois employment law senior citizens digital evidence cell phone Long Grove estate planning attorneys Barrington real estate lawyer personal injury accidents overtime violations Colin H. Gilbert School Visitation Rights Act drug crimes lawyer food poisoning cell phone tower data spinal cord injury drug crimes traffic crimes employee rights Palatine traffic accidents Crystal Lake employment law attorney Rolling Meadows DUI lawyer Super Mario life insurance claims Barrington civil litigation attorney Des Plaines criminal attorney insurance disputes, Illinois insurance disputes, Illinois insurance dispute attorneys, denied insurance claims, Arlington Heights insurance dispute attorneys mass shooting personal injury claims Illinois home inspection Rolling Meadows Traffic Lawyer Illinois traffic attorney Palatine workers compensation lawyer foreclosed rental property Illinois defective products attorney traumatic brain injury privacy laws insurance claim denials digital assets medical malpractice, missed diagnosis, delayed diagnosis, medical mistake, Deer Creek medical malpractice lawyers personal injury claim ken apicella Chicago will attorney Rolling Meadows corporate lawyer pedestrian accidents BUI pregnant women bad faith insurance claims manufacturing dealing with problem employees Illinois Sales Representative Act right to work license revocation Buffalo Grove personal injury attorney Attorney Ken Apicella Rolling Meadows probate lawyer Des Plaines personal injury attorney construction accidents Illinois traffic attorneys dram shop law appealing an insurance claim insurance adjusters Illinois construction accident attorney Illinois red light cameras Illinois employment law attorneys vacation home fines personal injury, auto accident injuries, delayed injuries, serious injuries, Des Plaines personal injury attorneys trustee dynasty trusts license reinstatement Schaumburg personal injury lawyers insurance dispute attorney Crystal Lake estate planning lawyer Schaumburg drug defense lawyer Deer Park workers compensation lawyer income distribution deducation life insurance underinsured motorist suspended license insurance claim dispute home inspection lawyer Schaumburg wrongful death attorney commercial real estate problem employees Arlington Heights car crash attorneys Home Sale Contingencies murder charges Buffalo Grove car accident lawyer Arlington Heights TBI attorney Barrington estate planning lawyer estate planning lawyer Illinois traffic laws Illinois personal injury automated cars landlord tenant law blended families Inverness insurance attorney in terrorem provision drunk driving statistics Buffalo Grove employment lawyer trench injuries Barrington Traffic Lawyer marijuana crimes attorney dog bites crossover accidents Crystal Lake business law attorneys Chicago will attorney, social media platforms, Illinois estate planning lawyer, Deer Park employment law attorney wrongful death drugs Class A misdemeanor Palatine civil litigation lawyer slip and fall accidents Illinois tax attorney trauma after an accident FMLA Buffalo Grove criminal defense lawyer Palatine punch death car crash employment law, meal breaks, rest breaks, hotel employees, Des Plaines employment law attorneys estate planning attorney Inverness elder law lawyer Barrington litigation attorney consent to a search Barrington drug crime attorney unpaid assessment Crystal Lake car accident lawyer Illinois insurance claim dispute lawyer mortgage llinois Real Estate Lawyers Association license suspension Des Plaines tax law firm comparative negligence IRA benefits civil litigation involuntary manslaughter Rolling Meadows estate planning attorney Chicago corporate attorney Illinois business lawyer underage DUI internet Chicago lawyer FSLA Des Plaines pet law attorney Deer Park DUI lawyer Palatine criminal defense lawyer insurance denial appeals Mount Prospect elder law attorney no contest clauses Illinois insurance disputes Des Plaines motorcycle accident attorney Barrington estate planning attorney Palatine insurance lawyer texting and driving caretaker rights small business car accident Crystal Lake medical malpractice lawyer pay when paid contract back injuries Arlington Heights traffic attorney Illinois criminal defense attorney Des Plaines drug crimes lawyer Illinois insurance dispute lawyers insurance agents fiduciary rule delay Rolling Meadows marijuana attorney Illinois traffic ticket lawyer Schaumburg estate planning attorney independent contractor criminal defense Mt Prospect Attorney criminal Schaumburg personal injury lawyer workplace sexual harassment rollover car crashes Illinois Probate Act of 1975 DMV drug possession Long Grove real estate lawyer Illinois insurance claims lawyers estate planning, death tax, succession plans, business estate plans, Barrington estate planning lawyers Arlington Heights wills and trusts attorneys Illinois motorcycle accident lawyer DUI defense Palatine corporate attorney Inverness accident lawyer fatal car accidents digital media accounts, estate planning, Arlington Heights estate planning attorney, Illinois real estate lawyer Colin Gilbert rent to own real estate contracts Illinois registered agent Rolling Meadows personal injury attorney Crystal Lake employment lawyer traffic violations Illinois traffic accident lawyer Buffalo Grove injury lawyer preventable medical errors homestead rights Chicago traffic lawyer Illinois insurance attorney estate planning, digital assets, Revised Uniform Fiduciary Access to Digital Assets Act, Illinois digital assets, Illinois estate planning, commercial leasing Inverness probate lawyer holiday statistics boating accidents insurance claim dispute attorney taxes driving Illinois workers compensation attorney Deer Park real estate law firm Arlington Heights personal injury attorney CAM estate attorney insurance claim denial BAC Illinois wrongful termination lawyer DUI attorney Illinois mortgages controlled substance DUI penalities Chicago car accident lawyer trusts life insurance lawyer Crystal Lake traffic lawyer Palatine estate planning lawyer wills and trusts Schaumburg civil litigation attorney icy parking lots Des Plaines drug lawyer expungement corporate law Inverness injury lawyer car accident lawyers Deer Park criminal attorney Schaumburg insurance lawyers digital assets, digital fiduciary, estate planning, digital content, Long Grove estate planning lawyers Chicago employment lawyer anesthesia errors Illinois Transfer on Death Instrument drunk driving Long Grove estate planning traffic laws Illinois DUI attorney Arlington Heights criminal lawyer Rolling Meadows tax attorney liability Illinois corporate lawyer cell phone accidents real estate closing pizza emoji Des Plaines Traffic Lawyer Illinois Trust Code Arlington Heights wills and trusts lawyer Schaumburg medical malpractice lawyer insurance claim special needs trust Illinois Smoke Detector Act Arlington Heights pedestrian accidents car collision employment contract Palatine drug lawyer Rolling Meadows accident lawyer brain injury workers comp boating DUI privacy installment contracts construction accidents, personal injury, wrongful death, Arlington Heights personal injury attorneys, workers' compensation swimming pools Kenilworth estate planning attorney Palatine law firm defective products lawyer Illinois living will fault based insurance Deer Park motorcycle accident lawyer PTSD estate planning for college students gift taxes Illinois employment law attorney traffic violations defense Palatine personal injury lawyer Rolling Meadows employment attorney startup company employment lawyer insurance agent negligence employee discrimination Barrington personal injury lawyer insurance claims Buffalo Grove medical malpractice lawyers ObamaCare ACA capital gains tax Schaumburg probate attorney Rolling Meadows traffic attorney Barrington employment law firm unpaid overtime revenge porn Rolling Meadows traffic law firm Illinois employment laws Crystal Lake criminal defense attorney Long Grove real estate attorney distracted driving accidents Arlington Heights car accident lawyer deed transfer irrevocable trust nursing home negligence DUI Barrington attorney insurance negligence Palatine employment lawyer Employment Discrimination Law Rolling Meadows Illinois LLC creation Arlington Heights accident attorney Transfer on Death Instrument employee misclassification Barrington injury attorney medical malpractice compensation Detainer Actions spinal cord injuries Illinois trucking safety job lawyers jet ski accidents Des Plaines DUI attorney guardianship attorney vacation home employment law financial advisors car crashes Arlington Heights real estate lawyer uninsured motorist products liability caregiver DNR workers compensation real estate contract living trust Illinois employment attorneys fiduciary rule forming a corporation in Illinois sole proprietorship Arlington Heights insurance attorney eluding a police officer workers compensation benefits Schaumburg real estate lawyer insurance dispute low-ball insurance settlement Schaumburg corporate attorney liens product liability personal injury attorney surgical mistakes Schaumburg car accident attorney Thanksgiving Palatine trusts lawyer living trust benefits IRA trust transfer Illinois medical malpractice lawyers wrongful termination, employment law, whistleblower protections, Illinois employment laws, discrimination in the workplace Inverness DUI lawyer Crystal Lake will lawyer Illinois real estate Crystal Lake traffic attorney pedestrian injuries, pedestrian fatality minimum wage preventing accidents creditors Rolling Meadows insurance lawyer traumatic brain injuries federal crimes Barrington personal injury attorney Des Plaines claims law firm comp time Buffalo Grove corporate attorney denied insurance claims Illinois business law atorneys Rolling Meadows personal injury lawyer Illinois wills and trusts Inverness civil lawyer Illinois employee rights attorney. Illinois job attorney Exclusions business litigation child safety investment property Arlington Heights employment attorney Illinois insurance claim dispute lawyers Schaumburg Crystal Lake injury attorney Arlington Heights Traffic Lawyer Mount Prospect real estate lawyer Inverness personal injury attorney Inverness corporate attorney boating under the influence drug crime bicycle accidents Arlington Heights lawyer Illinois driving without license Schaumburg employment attorney Liquor Control Act trucking accidents probate claims process Schaumburg injury lawyer Illinois workplace discrimination attorney Barrington boating accident attorney natural gas LLCs Palatine elder law attorney pain and suffering rest breaks Arlington Heights estate planning attorney Crystal Lake law firm whistleblower protections wills trust payments field sobriety test Illinois injury lawyer Illinois estate planning Illinois medical malpractice attorney Barrington workers compensation attorney Illinois collections attorney Palatine civil attorney murder defense Palatine corporate law attorneys Deer Park accident attorney Federal Food Drug and Cosmetic Act Barrington medical malpractice lawyers Illinois lawyer healthcare healthcare claims rollover accidents condo Mount Prospect wills and trusts lawyers real estate Des Plaines personal injury lawyer license Des Plaines accident attorney Schaumburg elder law lawyer work unions Illinois will lawyer Rolling Meadows employment law attorneys Illinois medical malpractice case construction contracts Palatine employment law lawyer Rolling Meadows insurance dispute lawyers federal regulations for LLCs pet bites attorney fees Schaumburg traffic lawyer hands free device loopholes Des Plaines real estate attorney car crash injuries