Attorney
As a veteran in Kentucky, you’ve dedicated your life to serving our country—now it’s time to make sure your hard-earned benefits work for you and your family. Estate planning isn’t just about drafting a will; it’s about protecting your assets, preserving your VA benefits, and ensuring your loved ones are taken care of when the time comes. Many veterans don’t realize how estate planning can impact their disability compensation, pension eligibility, and survivor benefits. Here’s what you need to know to make the most of your veteran-specific estate planning options in Kentucky.
Understanding VA Benefits in Estate Planning
Veterans are entitled to a range of financial and healthcare benefits, but improper estate planning can unintentionally disqualify you or your family from receiving them. Here are some of the key benefits you should consider when structuring your estate:
VA Disability Compensation
This tax-free benefit is available to veterans with service-connected disabilities. Unlike some other benefits, VA disability compensation is not counted as income for Medicaid or Supplemental Security Income (SSI) eligibility. However, how you structure your estate can still impact your overall financial situation.
VA Pension (Aid & Attendance Benefits)
Veterans with limited income who require daily assistance may qualify for Aid and Attendance benefits. However, there are strict asset and income limits, which means that you may need to strategically plan how your estate is structured in order to maintain eligibility.
Survivor Benefits
The Dependency and Indemnity Compensation (DIC) program provides monthly payments to surviving spouses, children, and certain dependent parents of veterans who died from service-related conditions. Proper estate planning ensures your spouse or dependents are set up to receive these benefits.
Burial & Memorial Benefits
The VA provides burial allowances, headstones, and interment in Kentucky’s national cemeteries, including the Camp Nelson National Cemetery and Kentucky Veterans Cemetery North. While this may be difficult to think about, making these arrangements ahead of time can relieve the burden on your family.
Structuring Your Estate to Preserve VA Benefits
One of the biggest mistakes veterans make in estate planning is failing to protect their benefit eligibility. Some VA benefits, especially needs-based pensions like Aid and Attendance, have strict asset limits, and a poorly structured estate could disqualify you or your spouse from receiving them. Here’s how to protect your benefits:
1. Utilizing an Irrevocable Trust
An irrevocable trust can help protect your assets while ensuring you or your spouse remain eligible for VA pensions. Assets placed in this trust are not counted as part of your net worth, which means that they won’t interfere with needs-based benefits. Unlike a revocable trust, an irrevocable trust removes assets from your direct control, which prevents them from being counted toward VA pension limits.
2. Managing Gifting & the VA Look-Back Rule
In 2018, the VA introduced a 3-year look-back rule for pension eligibility. This means that any assets you transfer or gift within three years of applying for benefits could result in a penalty period where you are ineligible. If you plan to transfer assets to family or trusts, it’s very important that you do so well in advance in order to avoid penalties.
3. Coordinating VA & Medicaid Benefits
Many veterans will eventually need long-term care or nursing home services. While the VA offers some assistance, Medicaid often covers the majority of long-term care costs. However, Medicaid also has strict asset limits and a 5-year look-back period for transferred assets. Veterans should coordinate their estate planning to ensure they remain eligible for both VA and Medicaid benefits without receiving unnecessary penalties.
4. Protecting Your Spouse & Family
If you’re married, it’s important to structure your estate so that your spouse retains financial security. A couple of options include:
- Spousal Protection Trusts – Ensures assets pass to your spouse without disrupting their eligibility for VA benefits.
- Survivor Benefit Planning – Setting up joint accounts, life insurance policies, or DIC eligibility for your spouse and dependents.
Kentucky-Specific Veteran Programs to Consider
In addition to federal VA benefits, Kentucky veterans have access to state-specific programs that should be incorporated into the planning of their estate:
- Kentucky Homestead Exemption – Qualifying disabled veterans may receive property tax exemptions that lower estate-related expenses.
- Kentucky Veterans Nursing Homes – Long-term care options at state-run veterans’ homes can be a cost-effective alternative to private nursing facilities.
Secure Your Legacy with a Veteran-Focused Estate Plan
Whether you need help setting up a trust, managing VA pension eligibility, or planning for long-term care, the process can be quite complicated. Fortunately, an experienced estate planning attorney can guide you through the process.
At Berkley Oliver, PLLC, we are committed to helping Kentucky veterans make the most of their benefits while ensuring their estate is structured to protect their loved ones. If you’re ready to create an estate plan that works for you, contact us today for a consultation.