How to Sell a Home and Protect Your VA Benefits

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I’ve heard numerous times about families who want to or have qualified for VA Benefit, but are concerned about what to do with their home. Should we Sell it?

The typical scenario is that Dad was living on his own. He breaks his hip. Goes into the hospital, is discharged to a nursing home for rehab, covered by Medicare. Then from the nursing home the family scrambles to find where he should go, because he can’t go home.

The family decides on an assisted living for Dad’s long-term care. At this point, with Dad paying $3,000 per month in long-term care costs, the family struggles to find ways to pay for long-term care. They discover the little known VA Benefit that can help pay for long-term care. This year that benefit would be $1,200 per month.

However, the VA Benefit has an asset test and the home is an exempt asset so it doesn’t count towards the asset test. But if Dad qualifies for the VA Benefit, without any planning, then he has less than $30,000 in his name. As the assets dwindle covering the short fall they look to sell their home.

Wouldn’t Selling the Home Disqualify Dad from his VA Benefits

Wouldn’t selling the home disqualify Dad from the VA Benefit? Not if the family takes legal steps to protect the VA Benefit. The family, prior to sale, would consult with a attorney who would then create a Veterans Asset Protection Trust and deed the home to the trust. Once the home is deeded to the trust, the home could be sold, and the proceeds of the sale would be available to help pay for Dad’s long-term care in his assisted living.

Another Benefit of Placing the Home in a Veterans Asset Protection Trust

Not only would Dad be able to maintain his VA Benefit, and would also be able to protect the proceeds of the home from Medicaid or Nursing Home spend-down. The assets in a Veterans Asset Protection Trust do not count towards the Medicaid asset limit of $2,000, assuming Dad makes it long enough without needing Medicaid.

This means that Dad, if he needs nursing home level care can qualify for Medicaid to have Medicaid pay his base level of care, while having a pot of resources in her trust to improve her quality of life and pay for additional services.

Next Steps to Protect the Home

If you have a loved one who needs long-term care, could qualify for the VA benefit, and wants to sell their home–but are afraid to, because of a loss of VA Benefits, then give us a call (949) 680-4491 at Integrated Realty Group in Laguna Hills.

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Grant Gerhart

ABR, CRS, e-PRO, GREEN, RSPS, SFR, SRS