What is a VA Asset Protection Trust?

In this article...
  • If you are a veteran, you may be interested to learn about VA pension benefit asset protection trusts. Learn more about this VA benefit in the sections below.
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What Is a VA Asset Protection Trust?

A VA asset protection trust does what the name says: It protects a veteran's assets so their eligibility can be maintained for other benefits unique to veterans. The VA asset protection trust is classified as an irrevocable trust, meaning the assets can not be removed once they are placed in the trust.

Assets placed in a VA asset protection trust cannot be considered when determining a veteran's eligibility for government programs that provide assistance, such as Medicaid and other VA benefits.

Placing Assets Into a VA-Compliant Trust

An irrevocable trust lets you preserve your savings so you can stay eligible for VA or Medicaid benefits. These assets won't count towards the resource limit for these programs. This process lets you preserve your savings in the trust and control what happens to them.

What happens to the money placed in the VA Benefit Asset Protection Trust?

The answer is: whatever the trustee wants. Once the assets are in the trust, the trustee (typically yourself or someone you've named) controls what happens to them, including how they're managed and how they're spent.

Can I transfer funds into a trust now in order to qualify for VA benefits?

You can, but you're likely to pay a penalty. VA benefits in particular have what's called a lookback period of three years prior to you applying for benefits, and if you've given away money or assets in that time, you might be assessed with a penalty.

It's always a good idea to confer with legal counsel prior to making any such transfers or opening a VA asset protection trust. An experienced lawyer who helps people with trust-related matters can advise you on what might be the best decision to make based on your goals, income and asset amounts.