Citation Nr: 1322329 Decision Date: 07/12/13 Archive Date: 07/18/13 DOCKET NO. 10-02 251 ) DATE ) ) On appeal from the Department of Veterans Affairs Pension Management Center at the Regional Office in St. Paul, Minnesota THE ISSUE Whether the appellant's net worth is excessive for purposes of receiving non-service-connected VA death pension benefits. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD T. Sherrard, Counsel INTRODUCTION The Veteran had active service from February 1942 to February 1945, and died in June 1984. The appellant is his widow. This matter comes before the Board of Veterans' Appeals (BVA or Board) from a June 2009 decision by the above Department of Veterans Affairs (VA) Pension Management Center (PMC). The Board has not only reviewed the physical claims file but also the file on the "Virtual VA" system to insure a total review of the evidence. Please note 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). FINDINGS OF FACT 1. The appellant was born in September 1918. 2. At the time the appellant filed her claim, she reported $82,701.70 in cash, bank accounts, or certificates of deposit (CDs); monthly Social Security income in the amount of $1,320.00; $1,318.94 per month from the Civil Service Retirement System (CSRS); a teacher's retirement payment in the amount of $2,829.30 per month; and $126.61 annually in dividends and interest, totaling $5,478.79 per month. 3. At the time the appellant filed her claim, her estimated expenses totaled $6,195.58 per month. 4. At the time she filed her claim in 2009, the appellant's life expectancy for net worth determinations was 4.4 years. 5. In 2009, it was estimated that, at the current rate of income and expenses, the appellant's net worth would be exhausted after 9.6 years. 6. It is reasonable for the appellant to consume some part of her net worth for her maintenance. CONCLUSION OF LAW The corpus of the appellant's estate precludes the payment of non-service-connected death pension benefits. 38 U.S.C.A. §§ 1503, 1541, 1542, 1543, 5103A (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.2, 3.3, 3.23, 3.271, 3.272, 3.274, 3.275 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION Death pension benefits are available to a veteran's surviving spouse as a result of the veteran's non-service-connected death. 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 (MAPR) specified in 38 C.F.R. §§ 3.23 and 3.24. 38 U.S.C.A. §§ 101(8), 1521(j), 1541(a) (West 2002 & Supp. 2012); 38 C.F.R. § 3.3(b)(4). In this case, the Veteran had the required wartime service, having served more than 90 days during World War II. Accordingly, the Veteran's service renders his surviving spouse eligible for death pension benefits. The issue on appeal centers on whether the appellant's net worth is excessive for purposes of qualifying for VA death pension benefits. Pension payable to a surviving spouse shall be denied or discontinued when the corpus of the estate of the surviving spouse is such that under all the circumstances, including consideration of the surviving spouse's income and the income of any child for whom the surviving spouse is receiving pension, it is reasonable that some part of the corpus of the estate be consumed for the surviving spouse's maintenance. 38 U.S.C.A. § 1541, 1543; 38 C.F.R. § 3.274(c). The terms 'corpus of estate' and 'net worth' mean the market value, less mortgages or other encumbrances, of all real and personal property owned by the claimant, except the claimant's dwelling (single family unit), including a reasonable lot area, and personal effects suitable to and consistent with the claimant's reasonable mode of life. 38 C.F.R. § 3.275(b). In determining whether the estate should have been used for the appellant's maintenance, factors to be considered include: whether the property can be readily converted into cash at no substantial sacrifice; life expectancy; number of dependents; and potential rate of depletion, including unusual medical expenses. 38 C.F.R. § 3.275(d). 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); see also 38 C.F.R. § 3.271(a). 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 maximum income rate allowable, 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)(1)(iii). 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. Thus, 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 of 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 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. See VA Adjudication Procedure Manual, M21-1MR, Part V, Subpart iii, Chapter 1, Section J, Topic 67, Blocks g, h (February 13, 2007). See also M21-1MR, Part V, Subpart iii, Chapter 1, Section J, Topic 70, Block a (February 13, 2007). At the time the appellant filed her claim, she reported assets of $82,701.70 in cash, bank accounts, or certificates of deposit (CDs). She reported no IRAs, Keogh Plans, stocks, bonds, mutual funds, value of business assets, real property other than her home, or any other property. She also reported monthly Social Security income in the amount of $1,320.00; $1,318.94 per month from the Civil Service Retirement System (CSRS); and a teacher's retirement payment in the amount of $2,829.30 per month. Further, she reported $126.61 in dividends and interest during the next twelve months. Thus, her total reported monthly income at the time she filed her claim was $5,478.79. On a Medical Expense Report (VA Form 21-8416) for the period from January 1, 2009 to December 31, 2009, she listed the following expenses: $1,182.00 for Medicare, $52,609.44 to her nursing home, $901.44 for prescriptions, $92.00 for dental care, and $7.00 for her hearing aids. A VA Form 21-0779 completed by the Social Service Director at the appellant's nursing home reveals that, as of August 2009, the appellant was responsible for $5,195.14 per month for the nursing home, which is higher than what the appellant reported. Thus, her monthly expenses at the time she filed her claim totaled $6,195.58, which means she needs the amount of $716.79 to cover her total monthly expenses. At that rate, her spending would be exhausted after approximately 9.6 years. The "Corpus of Estate Determination," notes that the appellant's life expectancy was 4.4 years at the time she filed her claim. See M21-1MR, Part V, Subpart iii, Chapter 1, Section J, Topic 70, Block a (February 13, 2007). 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. At her current rate of spending, the projected rate of depletion of the appellant's net worth of $82,701.70 exceeds her life expectancy. The evidence indicates that this property can be readily converted into cash at no substantial sacrifice. Further, the appellant has no dependents. As noted above, the standard by which the Board is to determine whether the net worth can be consumed to provide for maintenance is one of reasonableness. While there may be some depletion of the appellant's financial resources, the Board emphasizes that the purpose of VA pension benefits is to give beneficiaries a minimum level of financial security. They are not intended to protect substantial assets, subsidize discretionary spending, or build up the beneficiary's estate. 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); 38 C.F.R. § 3.274(a). The Board emphasizes that, if her net worth becomes significantly depleted in the future, or there is a substantial increase in necessary out-of-pocket medical expenses, the appellant is encouraged to again file a claim for pension benefits and submit the appropriate financial documentation in support of that claim. Under the circumstances and the facts as presented regarding the appellant's net worth at the present time, however, her assets are sufficient to meet her needs for the foreseeable future. In light of the above, the Board finds that, at present, the appellant does not meet the net worth eligibility requirement for pension benefits. The Veterans Claims Assistance Act of 2000 (VCAA) enhanced VA's duty to notify and assist claimants in substantiating their claims for VA benefits, as codified in pertinent part at 38 U.S.C.A. §§ 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.102, 3.159, 3.326(a) (2012). Here, a letter was not sent to the appellant prior to adjudication of her claim, but this was not prejudicial as subsequent communications complied with VA's duty to assist, and she had sufficient opportunity to submit evidence and, in fact, did so. At the time of the denial, the appellant was informed that the basis of the denial was that her annual income exceeded the maximum set by law, and she was told that she could reapply and submit evidence of changes in net worth and/or medical expenses. The appellant submitted such information, and a letter was then sent to her in October 2009 requesting additional information on her expenses and informing her what evidence VA would obtain and what evidence she needed to submit. These notices were followed by reconsideration of the claim in the statement of the case and supplemental statement of the case. As for the duty to assist, all information relevant to this claim is within the appellant's control, such as details of her income, assets, and expenses. There is no evidence VA could solicit or obtain on her behalf. The Board concludes that no further notification or development of evidence is required. ORDER The appellant's net worth is excessive for purposes of receiving non-service-connected VA death pension benefits. ____________________________________________ MICHELLE L. KANE Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs