On Va Pension But Just Got Life Insurance Money--Can He Keep It?

[emkath]

My brother is on VA pension (not disability related to service). He has been told he is the beneficiary on a life insurance policy for about $30k. Will the VA reduce his pension by that amount equal to what he gets now? I mean will they say okay you get $1000 a month now so you won't get money for 30 months? And will his pension status be on hold and just start up when the money's gone or will he have to start from scratch and reapply? I cannot find no matter how much I read on the VA website how this will work. Or will they let him keep the money? All the stuff I can find on the VA website is confusing about what is NOT "countable income". There are some definite things that are not counted (like money you got because of nazi persecution or being of japanese descent) but not about this. There is a lot about how your own life insurance policy value is not counted. I see things about $80k in assets but that seems more to be about what you have when you apply. We did not know about this policy or this money so this was a complete surprise. Can someone help? Thanks so much. He is ill and this is overwhelming him.

[carlie]

I believe a windfall rule / reg might apply.

Hopefully others will chime in on this.

[jvretiredvet]

The rules for NSC pension Adjustments Based on Changes in Income are here: http://www.benefits....3_ch01_secH.doc . Items 52.i through 52.m may be applicable.

For income tax purposes, inheritances and insurance awards are not considered taxable income. However, I suspect that inheritances and insurance awards are countable income for NSC purposes, because the purpose of NSC pension is to provide a bare minimum of support and not to accumulate assets.

My brother is on VA pension (not disability related to service). He has been told he is the beneficiary on a life insurance policy for about $30k. Will the VA reduce his pension by that amount equal to what he gets now? I mean will they say okay you get $1000 a month now so you won't get money for 30 months? And will his pension status be on hold and just start up when the money's gone or will he have to start from scratch and reapply? I cannot find no matter how much I read on the VA website how this will work. Or will they let him keep the money? All the stuff I can find on the VA website is confusing about what is NOT "countable income". There are some definite things that are not counted (like money you got because of nazi persecution or being of japanese descent) but not about this. There is a lot about how your own life insurance policy value is not counted. I see things about $80k in assets but that seems more to be about what you have when you apply. We did not know about this policy or this money so this was a complete surprise. Can someone help? Thanks so much. He is ill and this is overwhelming him.

[emkath]

Thanks for the info. Should he get a lawyer? And if so, when? Now or when he needs to get his pension again? Will it be difficult to get it back and harder to prove he needs the money once he had this windfall?

[jvretiredvet]

Thanks for the info. You're welcome.

Should he get a lawyer? And if so, when? Now or when he needs to get his pension again? If the veteran follows the instructions in M21-1MR, he SHOULDN'T need a lawyer because: (a) need for pension has already been established; and, (b) this is merely restarting the benefit versus a new benefit. And, I suspect a lawyer might not take this.

Will it be difficult to get it back and harder to prove he needs the money once he had this windfall? If his financial circumstances remain the same as before receiving the inheritance, it shouldn't be any more difficult, and in fact it may be easier. I suggest you/he become familiar with M21-1MR, Part IV, Subpart iii, Chapter 1, Section H http://www.benefits....3_ch01_secH.doc . Items 52.h through 52.m may address similar situations. Please note the time lines.

If the veteran does receive a letter proposing to suspend his NSC pension, I suggest he read it very carefully because it will tell him what to do if he objects to the suspension.