Citation Nr: 1316129	
Decision Date: 05/16/13    Archive Date: 05/29/13

DOCKET NO.  13-02 990	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office and Insurance Center in Philadelphia, Pennsylvania


THE ISSUE

Whether the Veteran's net worth constitutes a bar to receipt of nonservice-connected pension benefits.


REPRESENTATION

Appellant represented by:	Lise Linehan


WITNESS AT HEARING ON APPEAL

Appellant


ATTORNEY FOR THE BOARD

J. Barone, Counsel


INTRODUCTION

Please note that this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2012).  38 U.S.C.A. § 7107(a)(2) (West 2002).

The Veteran had active service from July 1951 to July 1954.

This matter comes before the Board of Veterans' Appeals (Board) from a decision of the Department of Veteran's Affairs Regional Office and Insurance Center (ROIC) in Philadelphia, Pennsylvania.

The Veteran testified before the undersigned Veterans Law Judge (VLJ) via videoconference in March 2013.  A transcript of the hearing has been associated with the record.


FINDING OF FACT

It is not reasonable for the Veteran and his spouse to consume part of his total family net worth for maintenance, for purposes of entitlement to VA pension benefits.


CONCLUSION OF LAW

The corpus of the estates of the Veteran and his spouse does not preclude the payment of nonservice-connected pension benefits.  38 U.S.C.A. §§ 1521, 1522 (West 2002); 38 C.F.R. §§ 3.23, 3.274, 3.275 (2012).



REASONS AND BASES FOR FINDING AND CONCLUSION

In view of the favorable outcome of this appeal, compliance with the Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096  (2000) (codified at 38 U.S.C.A. §§ 5100 , 5102-5103A, 5106, 5107, 5126 (West 2002 & Supp. 2012)) need not be discussed. 

Analysis

The Veteran filed a claim for VA nonservice-connected disability pension benefits in November 2011. His claim was denied on the basis that he had excessive net worth, and, hence, entitlement to pension was denied.  See 38 U.S.C.A. §§ 1521, 1522.

Pension will be denied (or discontinued) when the corpus of the estate of a Veteran, or, if married, the corpus of the estates of a Veteran and his or her spouse is such that under all the circumstances, including consideration of the annual income of a Veteran and his or her spouse, it is reasonable that some part of the corpus of such estate be consumed for a Veteran's maintenance.  38 U.S.C.A. § 1522(a); 38 C.F.R. § 3.274(a). 

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).

In determining whether the estate should be used for a Veteran's maintenance, factors to be considered include family income, whether the property can be readily converted into cash at no substantial sacrifice, life expectancy, the number of qualifying dependents, and the potential rate of depletion, including spending due to unusual medical expenses.  38 C.F.R. § 3.275(d); see also 38 C.F.R. § 3.274(a).

"Reasonable Maintenance" includes not only housing, food, clothing, and medical care sufficient to sustain life, but such items beyond the bare necessities as well as other requirements reasonably necessary to provide those conveniences and comforts of living suitable to and consistent with a reasonable mode of life.  See 38 C.F.R. § 3.250(b)(1). 

In connection with his claim received in November 2011, the Veteran reported income of $2192.90 per month, consisting of his and his wife's Social Security, and pension income of $2010.88.  He also reported yearly income in the form of an individual retirement account (IRA) distribution of $15,887.87.  He indicated that the IRA totaled $142,990.00, that he also had joint accounts with his wife of $1396.00 and $38,505.00, and that the interest and dividends amounted to $83.18.  He reported yearly expenses of $56,700.00 for a senior living facility, $2,313.60 for Medicare Part B, $1,154.40 for Medicare Part D, and $1,224.00 for supplemental health insurance.  

In December 2011, the Veteran submitted a statement indicating that he and his wife could not live alone due to their medical conditions.  He noted that he suffered from arthritis, chronic obstructive pulmonary disease, valvular heart disease, coronary artery disease, chronic kidney disease, aortic regurgitation, asthma, and obstructive sleep apnea.  He noted that in particular, his wife had Alzheimer's disease which he could not handle on his own.  

In his notice of disagreement, the Veteran stated that the only significant asset he had was his traditional IRA annuity, of which he was able to withdraw only 10 percent per year.  He indicated that the surrender charge for withdrawal of funds from the IRA was $20,000.00, which he asserted was a substantial sacrifice.

In August 2012 the Veteran stated that he had recently been diagnosed with prostate cancer.  He listed his living and insurance expenses, and also indicated that prescription costs for he and his wife had already added up to $3,000.00 for 2012, and that he anticipated that he would spend an additional $9,000.00 in the remainder of the year.  At that time, he also submitted an updated net worth statement, indicating total income from Social Security as $2272.00 monthly, pension of $2010.88, and yearly income of $62.14 from interest and dividends and a distribution from his IRA of $14,523.00.  He listed bank accounts amounting to $2019.00 and $33,980.00, and the IRA amounting to $130,769.00.  With respect to expenses, he listed $56,700.00 per year for living expenses, $2397.60 for Medicare Part B, $1749.60 for Medicare Part D, and $1176.00 for supplemental health insurance.  

In March 2013 the Veteran stated that he and his wife would soon be forced to find more attentive care at an assisted living facility because of their worsening medical conditions.  He reiterated that his wife had Alzheimer's disease, and noted that his heart condition had worsened and required daily monitoring.  He reported that his assets consisted of two checking accounts amounting to $1350.00, two savings accounts amounting to $31,949.00, and his traditional IRA annuity account valued at $132,016.00.  He pointed out that his total net worth had decreased from his original submission by 9.6 percent due to the considerable cost of his total expenses.  He indicated that he withdrew the maximum amount allowable from his IRA, and that cashing out the account would result in a surrender charge of $17,405.00.  

During his March 2013 hearing, the Veteran and his representative (his daughter) indicated that the Veteran's current rent was $4,725.00 and that he and his wife each required approximately $800.00 in monthly medical expenses.  The Veteran's daughter noted that assisted living facilities were considerably more expensive, but that with her mother's Alzheimer's disease and the Veteran's heart condition, an assisted living facility was the only option.  She explained that there were restrictions on how much the Veteran could withdraw from his IRA, and that there was a substantial penalty for withdrawing more.  

In April 2013, the Veteran submitted an updated care provider statement, indicating that he and his wife had relocated to an assisted living facility.  The statement listed total out of pocket yearly expenses for the Veteran and his wife of $94,740.00.  

The Board observes that the Veteran's current life expectancy is 7.5 years, and his wife's is 6.6 years.  See VA ADJUDICATION PROCEDURE MANUAL, M21-1MR, Part V.iii, Ch. 1, § j, ¶ 72a.  

Based on the information provided by the Veteran in November 2011, he would have a yearly excess of only $5,024.41, this being before any out of pocket expenses for prescriptions.  Notably, he subsequently reported an estimated $12,000.00 would be paid for prescriptions in 2012, so it is reasonable to assume that the excess in 2011 would easily be consumed by prescription and other medical costs.  Based on information provided by the Veteran in August 2012, and factoring in the estimated $12,000.00 in prescription costs, the Veteran would have a deficit in excess of $8,000.00 per year.  This would amount to a deficit of $60,000.00 over the remainder of his life, should he reach his current life expectancy, a figure that exceeds the amount in accounts held jointly with his wife.  The Board acknowledges that while there is a traditional IRA of considerable size, it has been established that the Veteran is limited to a distribution of 10 percent yearly of that account, and that a surrender charge of more than $17,000.00 is considered a substantial sacrifice considering the expenses of the Veteran and his wife.  In sum, the Board has determined that for the period prior to March 2013, it is not reasonable to apply the net worth toward the maintenance of the Veteran and his wife based on their income, expenses, life expectancy and the inability to convert IRA assets to cash without substantial sacrifice. 

Based on the information provided by the Veteran in April 2013, out of pocket living expenses increased to a yearly cost of $94,740.00.  Assuming that the other living expenses remained essentially the same, and income remained the same, the Veteran would experience a yearly deficit in excess of $30,000.00, without accounting for prescription costs.  Clearly, this deficit would deplete the Veteran's family net worth in a very short time.  As such, the Board has concluded that it is unlikely that there will be any build up of the estate of the Veteran and his wife during the remainder of their lifetimes. The Board therefore finds that the family net worth is not excessive, given the life expectancies, financial situation, and health status of the Veteran and his wife.  Accordingly, his family net worth is not a bar to pension entitlement.  In reaching this determination, the benefit-of-the-doubt rule has been applied.  38 U.S.C.A. § 5107(b); see Ortiz v. Principi, 274 F.3d 1361 (Fed. Cir. 2001); Gilbert v. Derwinski, 1 Vet. App. 49 (1990). 


ORDER

The Veteran's family net worth is not a bar to pension entitlement; the appeal is granted.



____________________________________________
S. S. TOTH
Veterans Law Judge, Board of Veterans' Appeals



Department of Veterans Affairs