Citation Nr: 1123679 Decision Date: 06/22/11 Archive Date: 06/28/11 DOCKET NO. 09-48 617 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Paul, Minnesota THE ISSUE Entitlement to nonservice-connected death pension benefits. ATTORNEY FOR THE BOARD Tanya A. Smith, Counsel INTRODUCTION The Veteran served on active duty from April 1943 to February 1946. He died in March 2009, and the Appellant is his widow. This case comes before the Board of Veterans' Appeals (Board) on appeal of an August 2009 decision of the Department of Veterans Affairs (VA) Pension Maintenance Center (PMC) at the Regional Office (RO) in St. Paul, Minnesota. In the December 2009 VA Form 9, the Appellant reported that "help with the home care monthly charges" [pension with special monthly pension benefits] was requested during the Veteran's lifetime but that the claim was delayed in processing until the Veteran's death. (The Appellant was designated as spouse-payee during the Veteran's lifetime). The record reflects that a letter was mailed to the Appellant and the Veteran in November 2008, noting receipt of an "application for benefits" although the letter was returned as undeliverable. The benefit sought was not described in the letter but there was the indication that action on the claim would be delayed. Thus, the Veteran may have had a claim pending at the time of his death. Accordingly, this matter is referred to the AOJ for appropriate action. FINDING OF FACT It is reasonable for the Appellant to consume some part of her net worth of $105,632.00 for her maintenance. CONCLUSION OF LAW The corpus of the Appellant's estate precludes the payment of nonservice-connected death pension benefits. 38 U.S.C.A. §§ 1503, 1541 (West 2002 & Supp. 2010); 38 C.F.R. §§ 3.2, 3.3, 3.23, 3.271, 3.272, 3.274, 3.275 (2010). REASONS AND BASES FOR FINDING AND CONCLUSION VA's Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000) (codified at 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, and 5126 (West 2002 & Supp. 2010)) redefined VA's duty to assist a claimant in the development of a claim. VA regulations for the implementation of the VCAA were codified as amended at 38 C.F.R. §§ 3.102, 3.156(a), 3.159, and 3.326(a) (2010). The notice requirements of the VCAA require VA to notify the claimant of what information or evidence is necessary to substantiate the claim; what subset of the necessary information or evidence, if any, the claimant is to provide; and what subset of the necessary information or evidence, if any, the VA will attempt to obtain. 38 U.S.C.A. § 5103(a) (West 2002 & Supp. 2010); 38 C.F.R. § 3.159 (2010). Such notice must be provided to a claimant before the initial unfavorable decision on a claim for VA benefits by the agency of original jurisdiction (in this case, the RO). Dingess/Hartman v. Nicholson, 19 Vet. App. 473 (2006); see also Pelegrini v. Principi, 18 Vet. App. 112 (2004). However, insufficiency in the timing or content of VCAA notice is harmless if the errors are not prejudicial to the claimant. Conway v. Principi, 353 F.3d 1369, 1374 (Fed. Cir. 2004) (VCAA notice errors are reviewed under a prejudicial error rule). Moreover, such notice errors may instead be cured by issuance of a fully compliant notice, followed by readjudication of the claim. See Prickett v. Nicholson, 20 Vet. App. 370, 376 (2006) (reaffirming that the issuance of a fully compliant VCAA notification followed by readjudication of the claim, such as an SOC or SSOC, is sufficient to cure a timing defect). In a July 2009 VCAA letter, issued prior to the decision on appeal, the RO provided notice to the Appellant regarding what information and evidence is needed to substantiate the claim as well as what information and evidence must be submitted by the Appellant and the types of evidence that will be obtained by VA. In particular, the VCAA letter advised the Appellant that due to the amount of net worth she reported, information concerning her monthly expenses was needed. The Appellant was also advised on how effective dates are assigned, and the type of evidence that impacts that determination. The Board finds that VA's duty to notify has been met. The record also reflects that VA has made reasonable efforts to assist the Appellant in the development of her claim. The RO has obtained relevant information from the Social Security Administration (SSA), and the Appellant has provided financial information for the period in question As discussed above, the Appellant was notified and aware of the evidence needed to substantiate her claim, the avenues through which she might obtain such evidence, and the allocation of responsibilities between herself and VA in obtaining such evidence. The Appellant was an active participant in the claims process, submitting financial information and statements setting forth her contentions. Thus, she has been provided with a meaningful opportunity to participate in the claims process and has done so. The Board finds that VA's duty to assist has been met. Analysis In an August 2009 decision, the RO denied the Appellant death pension benefits because information necessary to decide the claim was not received. Upon receipt of the Appellant's financial information, in a November 2009 statement of the case, the RO continued the denial. Death pension benefits are generally available for surviving spouses as a result of the Veteran's nonservice-connected death. 38 U.S.C.A. § 1541(a) (West 2002). Basic entitlement exists if (i) the veteran served for 90 days or more during a period of war; or (ii) was, at the time of death, receiving or entitled to receive compensation or retirement pay for a service-connected disability, and (iii) the surviving spouse meets the net worth requirements of 38 C.F.R. § 3.274 and has an annual income not in excess of the maximum annual pension rate specified in 38 C.F.R. §§ 3.23 and 3.24. See 38 C.F.R. § 3.3(b)(4) (2010). The Veteran in this case served on active duty from April 1943 to February 1946, during World War II. The Appellant is the Veteran's surviving spouse. See 38 C.F.R. § 3.50(b) (2010). Thus, as the Veteran served during a period of war, in order to be entitled to nonservice- connected death pension benefits, the Appellant must only meet the specific income and net worth requirements. See 38 U.S.C.A. § 1541 (West 2002); 38 C.F.R. § 3.3(b)(4) (2010). A surviving spouse who meets these requirements will be paid the maximum rate of death pension, reduced by the amount of countable income. 38 U.S.C.A. § 1541 (West 2002); 38 C.F.R. § 3.23 (2010). In determining income for this purpose, payments of any kind from any source are counted as income during the 12-month annualization period in which received unless specifically excluded. 38 U.S.C.A. § 1503 (West 2002); 38 C.F.R. § 3.271 (2010). The maximum annual rate of improved pension for a surviving spouse is specified by statute and is increased periodically under 38 U.S.C.A. § 5312. See 38 C.F.R. § 3.23 (2010). Pension will be denied when the corpus of the estate is such that under all the circumstances, including consideration of annual income, it is reasonable that some part of the corpus of such estate be consumed for the surviving spouse's maintenance. See 38 U.S.C.A. § 1543(a)(1) (West 2002); 38 C.F.R. § 3.274(c) (2010). The terms 'corpus of estate' and 'net worth' are interchangeable, and mean the market value, less mortgages or other encumbrances, of all real and personal property owned by the appellant, except the appellant's dwelling (single family unit), including a reasonable lot area, and personal effects suitable to and consistent with the appellant's reasonable mode of life. See 38 C.F.R. § 3.275(b) (2010). In determining whether some part of the estate should be used for the appellant's maintenance, factors to be considered along with the appellant's income include: whether the property can be readily converted into cash at no substantial sacrifice; life expectancy; the number of dependents; and, the potential rate of depletion, including spending due to unusual medical expenses. See 38 C.F.R. § 3.275(d) (2010). In determining annual income, all payments of any kind or from any source (including salary, retirement or annuity payments, or similar income, which has been waived) shall be included except for listed exclusions. See 38 U.S.C.A. § 1503(a) (West 2002); see also 38 C.F.R. § 3.271(a) (2010). Social Security benefits are not specifically excluded under 38 C.F.R. § 3.272; such income is therefore included as countable income. Medical expenses in excess of five percent of the applicable maximum annual pension rate (MAPR), which have been paid, may be excluded from an individual's income for the same 12-month period, to the extent they were paid. 38 C.F.R. § 3.272(g)(2)(iii) (2010). Effective December 1, 2008, the MAPR for a surviving spouse was $7,933.00. See VA Fast Letter 08-42 (November 20, 2008). Amounts paid by a spouse before a veteran's death for expenses of the veteran's last illness will be deducted from the income of the surviving spouse. 38 C.F.R. § 3.272(h)(1)(i) (2010). Amounts paid by a surviving spouse or child of a veteran for the veteran's just debts, expenses of last illness and burial (to the extent such burial expenses are not reimbursed under chapter 23 of title 38 U.S.C.) will be deducted from the income of the surviving spouse or child. 38 C.F.R. § 3.272(h)(1)(ii) (2010). The term "just debts" does not include any debt that is secured by real or personal property. Id. Expenses of last illnesses, burials, and just debts that are paid during the calendar year following that in which death occurred may be deducted from annual income for the 12-month annualization period in which they were paid or from annual income for any 12-month annualization period which begins during the calendar year of death, whichever is to the claimant's advantage. 38 C.F.R. § 3.272(h) (2010). Otherwise, such expenses are deductible only for the 12-month annualization period in which they were paid. Id. The Board notes that VA's pension program is intended to give beneficiaries a minimum level of financial security; it is not intended to protect substantial assets or build up the beneficiary's estate for the benefit of heirs. Pension entitlement is based on need and that need does not exist if a claimant's estate is of such size that he/she could use it for living expenses. The basic issue in evaluating net worth is to determine whether or not the claimant's financial resources are sufficient to meet the claimant's basic needs without assistance from VA. In other words, if net worth is a factor for the benefit claimed, VA should consider if it is reasonable, under all the circumstances, for the claimant to consume some of his/her estate for maintenance. If a claimant's assets are sufficiently large that the claimant could live off these assets for a reasonable period of time, pension should be denied for excessive net worth. If net worth is later depleted, the claimant can always reopen the pension claim. There are no precise guidelines, however, which establish what size estate would preclude the payment of pension. What constitutes excessive net worth is a question of fact for resolution after considering the facts and circumstances in each case. The Appellant filed her claim for VA death pension benefits in May 2009. Based on the May 2009 VA Form 21-534 (Application for Dependency and Indemnity Compensation, Death Pension, and Accrued Benefits by a Surviving Spouse), August 2009 VA Form 21-8049 (Request for Details of Expenses), various statements, and information obtained from the SSA, the Appellant's financial picture is described below. In regard to assets, the Appellant reported $700.00 in cash, bank accounts, and certificates of deposits, and $104,932.00 in stocks. In regard to income, an SSA inquiry indicated that the Appellant received social security income of $1,377.40 per month. The Appellant reported expected income of $12,000.00 from dividends and interest for the next 12-month period (or $1,000.00 per month), and she later reported that she received a dividend payment that averaged $1,050.00 for three months (or $350.00 per month). (The Board observes that the RO treated the reported $12,000.00 and $1,050.00 amounts as being derived from different income sources according to the November 2009 statement of the case. The Appellant did not dispute such treatment in her response in VA Form 9.) The Appellant's monthly income is $2,727.40, or $32,728.80 annually. In regard to monthly expenses the Appellant reported the following: $100.00 (miscellaneous, house cleaning, church donations, newspapers); $386.00 (food); $161.00 (taxes); $300.00 (interest); $60.00 (clothing); $509.00 (utilities); $125.00 (automobile, liability, and home insurance); $130.00 (home maintenance repairs, termite contract); $120.00 (car expenses); and $250.00 (credit card payments). The foregoing monthly expenses total $2,141.00, or $25,692.00 annually. In regard to unreimbursed medical expenses, the Appellant reported that she paid $206.75 per month for private health insurance (BlueCross/Blue Shield) and $325.40 per month for prescription medications (Dillon Pharmacy) (the RO did not include the latter expense in its calculation of countable income). An SSA inquiry indicated that the Appellant's supplementary medical insurance (SMI) (Medicare Part B) premium amount is $96.40 per month. The foregoing totals annual expenses of $7,542.60 ($628.55 times 12). As noted above, effective December 1, 2008, the MAPR for a surviving spouse was $7,933.00. Five percent of $7,933.00 is $396.65, which is the deductible for the unreimbursed medical expenses. Thus, $7,542.60 reduced by the deductible of $396.65 is $7,145.95, which is the amount to be considered in reducing the Appellant's annual income. In regard to the expenses of the Veteran's last illness and burial, the Appellant reported she paid the following amounts: $5,000.00 (Bryant Funeral Home) in March 2009; $197.29 (insulin) (included as an expense even though the Appellant notes "for future use" as she did not indicate that she was diabetic and the record reflects that the Veteran was diabetic) in March 2009; $1,068.00 (Central Kansas Medical Center) in April 2009; $96.00 (VA prescription medications) in April 2009; $71.25 (ambulance) in April 2009; $52.64 (pace maker) in April 2009; $54.86 (Central Kansas Family Practice) in April 2009; $5,000.00 (Bryant Funeral Home) in May 2009; $98.61 (Emergency Special Services) in May 2009; $15.51 (United Radiology Group) in June 2009; $2,016.22 (Pathways Res Care) in June 2009; and $500.00 (Bryant Funeral Home) in June 2009. (The RO did not include any of the foregoing expenses in its calculation of countable income.) The foregoing monthly expenses total $14,170.38. A July 2009 rating action reflects that the RO paid the Bryant Funeral Home $600.00 for funeral costs and cemetery/plot costs. Thus, the Appellant is entitled to a one time deduction for the Veteran's last expenses of $14,170.38. Although the Appellant reported that she owed expenses of the Veteran's last illness and burial in the amount of $2,333.43 (Pathways Res Care) and $1,258.43 (Bryant Funeral Home), and explained that in order to protect her credit, she was forced to use credit cards (now totaling $5,800.00) to pay off all medical bills, home/health care bills, and the Veteran's financial expenses, only amounts paid may be deducted from income. Also, in December 2009, she reported that she was recently seen in the emergency room/hospital, and she had cataract surgery last month, but she did not provide any financial information. Thus, from the Appellant's countable annual income of $32,728.80, should be deducted $25,692.00 (non-medical expenses), $7,145.95 (unreimbursed medical expenses), and $14,170.38 (Veteran's last expenses). Her assets total $105,632.00. As indicated above, size and liquidity of net worth, family income, life expectancy, and the potential rate of depletion are considered in a net worth determination. The Appellant's net worth of $105,632.00 is considerable. The evidence of record indicates that the Appellant's entire net worth is invested in the form of cash/bank accounts/certificates of deposits and stocks, and thus may be considered to be readily convertible into cash without substantial sacrifice. The Board is cognizant of the Appellant's contention that she borrowed the limit against her stock account because the sale of her stock in this economic recession was not a good idea. It, however, is immaterial on whether the property was worth more in the past or might be worth more in the future. VA's income-based benefits programs are intended to help low-income beneficiaries secure the basic necessities of life, and are not intended to insure substantial assets against changes in market conditions. The Appellant was 85 in 2009 according to an SSA date of birth inquiry. According to the October 2009 Corpus of Estate Determination, the Appellant's life expectancy was "59 years, 69 months." The Board is unable to discern this calculation, and will assume a generous/high actuarial life expectancy of 10 years as the Appellant has only reported that she has arthritis of the lower back, a cataract of the left eye, and that she is hard of hearing and has trouble with balance. Clearly, the Appellant's expenses exceeded income in 2009, but included the Veteran's last expenses. In regard to the potential rate of depletion, with exclusion of the Veteran's last expenses, the Appellant's monthly income of $2,727.40 and monthly expenses of $2,736.50 ( $2,141.00 plus ($7,145.95 divided by 12)) shows her expenses exceed her expenses by $9.10 monthly or $109.20 annually. Spending at this rate would deplete her estate after 967 years ($105,632.00 divided by $109.20). With a life expectancy of an additional 10 years, this is well short that it would require to deplete her net worth. For these reasons, the Board finds that the Appellant's net worth is a bar to VA pension benefits. The Board recognizes the Appellant's sincere belief that she needs and is entitled to death pension benefits. Given her net worth detailed above, however, the Board finds that some portion of the corpus of her estate may reasonably be consumed in order to provide for her maintenance. 38 U.S.C.A. § 1522(a) (West 2002); 38 C.F.R. § 3.274(a) (2010). The purpose of the pension program is to aid veterans and their dependents who are unable to provide themselves the basic necessities. Based on the information the Appellant has provided, this is not the situation in the instant case. Her financial resources, if fully exploited, are sufficient to meet her basic needs for the remainder of her actuarial life expectancy. It is inconsistent with the intent of the pension program to allow a claimant, as here, to collect a pension while simultaneously retaining a sizeable estate. If the Appellant's net worth becomes significantly depleted in the future, she may again file a claim for pension benefits and submit the appropriate financial documentation. Since, however, for the reasons discussed above, she does not currently have sufficient financial limitations, the preponderance of the evidence is against her claim, and the benefit-of-the-doubt doctrine does not apply. See 38 U.S.C.A. § 5107 (West 2002). ORDER The Appellant's net worth constitutes a bar to VA death pension benefits, and the appeal is therefore denied. ____________________________________________ K. PARAKKAL Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs