Unless a veteran has very few assets, none to minimal countable income, and their home is worth very little, the proceeds from selling it would put them over the net worth limit. However, there is one exception for veterans currently receiving VA benefits. To avoid the proceeds from counting as assets, veterans can purchase another home within the same calendar year. If another home is not purchased within this timeframe, the sale proceeds will be counted as assets if asset planning strategies are not utilized. Without asset protection or purchasing a new home within the same calendar year, the scenarios below may all result in ineligibility.
Single Person at Home
When a single person lives at home and sells their home (for example, if they are moving to residential care), the proceeds of the sale will count as assets once they have been deposited in the veteran’s bank account. This addition of assets most likely will cause the veteran to be disqualified from receiving VA pension benefits. However, the veteran can use the proceeds of the sale to pay for long-term care and once the extra assets have been “spent down”, the veteran can re-apply for pension benefits.
Single Person in Assisted Living / Nursing Home
When a single person lives in assisted living, their primary home is considered an exempt asset, as there is an assumed “intent” of the individual to return home. However, as soon as the individual sells their home and the proceeds are deposited into their bank account, the money from the sale is considered a countable asset. This most likely will result in disqualification of VA pension benefits. The veteran can use the proceeds of see here the home to cover the cost of assisted living and upon depleting the funds, re-apply for pension benefits.
Married Couple at Home
When a married couple lives in their home and sells it, the proceeds from the sale will count as assets once they are in the couple’s bank account. This addition of assets will likely disqualify the couple from receiving VA pension benefits. If, and when this happens, the couple can “spend down” their assets on care assistance and then re-apply for VA benefits.
Married Couple in Assisted Living or Nursing Home
When a married couple lives in assisted living or a nursing home facility, their primary home is considered to be a non-countable asset. This is because it is assumed that the couple plans to return to the home at some point. However, once the home has been sold and the proceeds deposited into their bank account, the proceeds are not exempt, meaning they are counted as part of their net worth. This will, in all likelihood, disqualify the couple from receiving VA pension benefits. If this happens, the couple can use the proceeds from the home to pay for their assisted living or nursing home fees and once the funds have been depleted, they can re-apply for VA benefits.
What Can Be Done to Protect the Proceeds from the Home?
If a veteran wishes to sell their home, it is best to sell it prior to applying for VA pension benefits. While veterans are encouraged to keep their home while receiving benefits, there are asset planning strategies, also called estate planning, for veterans who want to sell their home before receiving VA approval of pension benefits. However, with the newer VA rules implemented in , the way assets had previously been restructured to lower one’s net worth also changed. Below are some examples of asset planning strategies that had previously been utilized, as well as how the new rules impacted them.