Citation Nr: 1751965 Decision Date: 11/14/17 Archive Date: 11/22/17 DOCKET NO. 17-03 443 DATE Advanced on the Docket THE ISSUE Whether the appellant's net worth is determined to be a bar for the purposes of receiving nonservice-connected VA death pension benefits. ORDER The appellant's net worth is determined to be a bar for the purposes of receiving nonservice-connected VA death pension benefits. FINDINGS OF FACT 1. At the time the appellant filed her claim for death pension, she reported a net worth of $88,800.00. 2. At the time the appellant filed her claim, her yearly income was $33,070.30. 3. At a maximum, the appellant's estimated expenses (including medical expenses) were $56,458.80 annually. 4. The difference between the appellant's income and expenses showed an annual net deficit of $23,388.50. 5. At the time the RO adjudicated her claim in February 2016, the appellant had a life expectancy of 5.3 years. 6. At the rate of income and expenses outlined above, the appellant's net worth would be depleted in 3.8 years. 7. It was 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 nonservice-connected VA death pension benefits. 38 U.S.C.A. §§ 1503, 1542, 1543, 5103 (West 2014); 38 C.F.R. §§ 3.2, 3.3, 3.23, 3.271, 3.272, 3.274, 3.275 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from May 1943 to October 1945. The Veteran passed away in December 2012. The appellant is his widow. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a February 2016 administrative decision by a Department of Veterans Affairs (VA) Regional Office (RO). Whether the appellant's net worth is determined to be a bar for the purposes of receiving nonservice-connected VA death pension benefits. Death pension benefits are available to a Veteran's surviving spouse as a result of the veteran's nonservice-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 2014); 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 at the time she filed her claim was excessive for purposes of qualifying for VA death pension benefits. She asserts that she was eligible for such benefits back to July 2015. 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). 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 or 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 or her estate for maintenance. 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 Procedures Manual (M21-1), M21-1, Part V, Subpart iii, Chapter 1, Section J, Topic 1, Blocks g, h; see also M21-1, Part V, Subpart iii, Chapter 1, Section J, Topic 4, Block a. The Board must first address the issue of the appellant's irrevocable trust. In the December 2016 statement of the case, the RO determined that the corpus of the irrevocable trust must be included in the appellant's net worth. See M21-1, Part V, Subpart iii, Chapter 1, Section J, Topic 4, Block f. The RO cited VA General Counsel Opinion 33-97 that held, "Assets transferred by a legally competent claimant, or by the fiduciary of a legally incompetent one, to an irrevocable "living trust" or an estate-planning vehicle of the same nature designed to preserve estate assets by restricting trust expenditures to the claimant's "special needs," while maximizing the use of governmental resources in the care and maintenance of the claimant, should be considered in calculating the claimant's net worth for improved-pension purposes." VAOPGCPREC 33-1997. The RO then determined that, in this case, the trust documents state that the trustee has the ability to distribute income from the trust to the grantor and that this allowed the grantor certain rights and access to the trust. Therefore, the RO included the principal of the trust as part of the appellant's net worth. Upon review of the VA General Counsel Opinion (VAOPGCPREC) 33-97, the facts of this case contrast the facts at issue in the VAOPGCPREC 33-1997. In that instance, the trustee had the ability to distribute some or all of the income or principal of the trust to or for the benefit of the surviving spouse only for the surviving spouse's special needs for health, safety, and well-being, when such requisites were not being provided by any public entity. In this case, the terms of the trust specifically state that, during the lifetime of the settlor, the trustee may at any time or times pay all or any portion or portions of the income to the settlor, her husband, the settlor's child, or the settlor's two grandchildren at her discretion for their health, education, support, or maintenance. During the lifetime of the settlor, the trustee may pay all or any portion of principal, even to the extent of exhausting principal, to the settlor's child at the trustee's discretion for their health, education, support or maintenance. Neither the settlor, nor her husband, their guardians, conservators, nor attorneys are or shall under any circumstances be beneficiaries of all or any part of any principal distribution from the trust. The Board notes, therefore, that the appellant does not have access to the principal of the trust under any circumstances. The appellant may receive the income from the trust at the discretion of the trustee for her health, education, support, or maintenance. The facts of this case are not consistent with the facts set forth in VAOPGCPREC 33-1997. Rather, under the findings of that opinion the principal of the trust may not be included in the appellant's net worth. The income from the trust, however, may be included as it may be used for the appellant's health, education, support, or maintenance. The question then becomes whether the appellant's net worth at the time of her date of claim is a bar to her receiving nonservice-connected VA death pension benefits. The Board notes that the appellant's claim is dated July 24, 2015. The appellant submitted her net worth statements in August 2015. The Board finds that the dates of the statements are close enough to the appellant's date of claim to be considered effective and applicable back to the date of the July 24, 2015 claim. The appellant's assets near her date of claim included $88,800.00 in a bank account. As the principal funds in the appellant's trust are not included in her net worth, the appellant's net worth near the date of her claim was $88,800.00. The appellant's monthly income includes $1,120.90 from Social Security, $1,267.00 from an annuity, and $25.00 in dividends and interest. The records also show that the income from the trust is $4,115.50 annually. The appellant's yearly income was therefore around $33,070.30. The appellant's monthly expenses included $3,875.60 for her assisted living, $104.90 for Medicare, and $25.00 for prescription medications near the date of claim. In February 2016, the appellant listed her monthly expenses as $4,480.00 for her assisted living, $20.00 for clothing, $100.00 for miscellaneous personal care, and $104.90 for Medicare. The appellant's maximum yearly expenses were $56,458.80. The appellant's yearly expenses exceeded her yearly income by $23,388.50 per year. VA also indicated on its February 2016 corpus of estate determination that the appellant had a life expectancy of 5.3 years. See M21-1, Part V, Subpart iii, Chapter 1, Section J, Topic 6, Block a. By dividing the appellant's net worth (calculated at the time to be $88,800.00) by the total yearly debt ($23,388.50), the corpus of the appellant's estate was projected to be depleted in 3.8 years. 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 Board acknowledges that an appellant is not expected to completely exhaust his or her assets for the purpose of establishing entitlement to nonservice-connected pension benefits. At the time, the appellant's assets could have sustained the appellant and paid her debts for 71 percent of her life expectancy. The Board accordingly finds that denial of a death pension award based on excess net worth in February 2016 was appropriate. The Board recognizes the appellant's sincere belief that she needs, and is entitled to death pension benefits. Given her net worth detailed above as presented at the time of her claim, however, the Board finds that her net worth is excessive under the applicable criteria. The Board notes that the appellant may file a new claim when should her assets decrease or her expenses increase. In sum, regardless of the total net worth of the appellant, the Board must apply a standard of reasonableness to determine whether the net worth can be consumed to provide for maintenance. While it is possible the appellant's assets as calculated would deplete just prior to her projected life expectancy, the Board emphasizes that the purpose of VA pension benefits is to give beneficiaries a minimum level of financial security. The Board finds that her assets at the time would, in the context of her estimated income and expenses, have continued to provide financial security that exceeds that minimum level throughout the relevant period of review and, in fact, for the majority of her expected lifetime. In light of the above, the Board finds that the appellant did not meet the net worth eligibility requirement for pension benefits at the time of her date of claim. A preponderance of the evidence of record is against the claim, so the benefit of the doubt doctrine is not for application. 38 U.S.C.A. § 5107(b); Gilbert v. Derwinski, 1 Vet. App. 49, 55 (1990). The claim for a death pension benefit is denied. ______________________________________________ YVETTE WHITE Veterans Law Judge, Board of Veterans' Appeals ATTORNEY FOR THE BOARD Patricia Veresink, Associate Counsel Copy mailed to: Patricia A. Servaes Department of Veterans Affairs