Written By: Brandy Miller | February 2, 2017 | No Comments
Veterans in Berks County and Reading, PA are heroes who have served their country. Unfortunately, they often do so at considerable sacrifice to themselves and their families. Veterans often face long deployments and may be injured as a result of active duty. They may return with serious medical conditions which can affect their employment for years or even a lifetime.
The Department of Veteran Affairs (VA) offers a number of programs and benefits for veterans who have served. Unfortunately, many of these benefits are dependent on medical costs as well as income. Trusts can be one way veterans can protect their assets while building their finances and still securing the benefits they are entitled to.
What Is a VAPTs?
One of the trusts most appropriate for veterans are VAPTs (Veterans Asset Protection Trusts). These are irrevocable trusts which allow eligible veterans and their surviving spouses to protect their assets and to enjoy a number of benefits, including:
- VA benefits. VAPTs protect assets veterans have from being counted toward VA benefits, ensuring veterans who have been injured and their eligible spouses can secure all the benefits they may qualify for.
- Better quality of life and care. By allowing veterans and their surviving spouses to be eligible for VA benefits, VAPTs ensure veterans get medical care when they need it and are able to enjoy a good quality of life.
- Tax benefits. Since VAPTs protect a veteran’s assets from being counted as resources, they can also offer tax advantages.
Ensuring VAPTs Offer Protection
Of course, in order to be useful, VAPTs have to be drafted carefully. A VAPT needs to be drafted so the claimant does not maintain control of the property. In addition, the grantor of the trust should not be taxed on income from the trust and should not in fact have the right to receive income from the trust. If the grantor is taxed on income from the trust or has the right to withdraw income from the trust, the VA may continue to count the trust as an asset and a resource.
In addition to these considerations, veterans establishing a VAPTs will want to name a lifetime beneficiary who can receive distributions from the principal during the lifetime of the grantor. The lifetime beneficiary should not be the grantor and must not be someone living in the grantor’s household.
In addition to these, there are many other considerations when setting up a VAPTs. Unfortunately, not creating a VAPT according to current best practices can mean the VA continues to regard the property in a trust as an asset. The trust will not offer tax benefits and may mean a veteran’s benefits are reduced or cut off. A well-drafted VAPT may be able to offer you protection.
Miller Law Group takes the protection of veterans seriously. If you’re a veteran or a veteran’s surviving spouse in Berks County or Reading, PA, and would like assistance with creating a Veterans Asset Protection Trust, contact our Estate Planning Attorneys at Miller Law Group. Our legal team understands current VA practices and guidelines and can help guide you to the right financial planning process to protect you and your family.