Citation Nr: 18157810
Decision Date: 12/13/18	Archive Date: 12/13/18

DOCKET NO. 16-60 051
DATE:	December 13, 2018
ORDER
Entitlement to payment of VA death pension benefits is denied. 
FINDING OF FACT
It is reasonable for the appellant to consume part the corpus of her estate for her maintenance during her lifetime.
CONCLUSION OF LAW
The criteria for payment of VA death pension benefits with special monthly pension have not been satisfied. 38 U.S.C. §§ 1503, 1513, 1521, 1522, 1541, 1542, 5103, 5103A (2012); 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272, 3.274, 3.275 (2018). 
REASONS AND BASES FOR FINDING AND CONCLUSION
Entitlement to death pension benefits based on the appellant’s income and net worth
Death pension is available to the “surviving spouse” of a Veteran because of a nonservice-connected death, as long as the Veteran served for the required period of time during wartime subject to certain income limitations. See 38 U.S.C. §§ 101, 1521(j), 1541 (2012); 38 C.F.R. §§ 3.3 (b)(4), 3.23(a)(5), (d)(5), (2018). Additionally, the appellant must meet the net worth requirements found in 38 C.F.R. § 3.274. 38 U.S.C. §§ 1543; 38 C.F.R. §§ 3.3 (a), 3.23, 3.274.
Basic entitlement to pension exists if, among other things, the claimant’s income is not in excess of the maximum annual pension rate (MAPR) specified in 38 C.F.R. § 3.23. See 38 U.S.C. § 1521 (a), (b) (2012); 38 C.F.R. § 3.3 (a)(3). The MAPR is published in Appendix B of the VA Adjudication Procedures Manual M21-1 and is given the same force and effect as if published in VA regulations. 38 C.F.R. § 3.21 (2018). The MAPR is revised every December 1st and is applicable for the following 12-month period. The MAPR shall be reduced by the amount of the countable annual income of the surviving spouse. 38 U.S.C. §§ 1503, 1521; 38 C.F.R. §§ 3.3, 3.23(b).
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 during the 12-month annualization period in which received, except for listed exclusions. 38 U.S.C. § 1503 (a); 38 C.F.R. § 3.271 (a). Income from SSA is not specifically excluded under 38 C.F.R. § 3.272. Such income is therefore included as countable income.
For purposes of calculating pension benefits, total income may be reduced by amounts equal to amounts paid by a claimant for unreimbursed medical expenses that were “in excess of 5 percent of the applicable maximum annual pension rate or rates... as in effect during the 12-month annualization period in which the medical expenses were paid.” See 38 U.S.C. § 1503 (a)(8); 38 C.F.R. § 3.272 (g)(1)(iii). 
For the purpose of determining initial entitlement, or resuming payments on an award that was previously discontinued, the monthly rate of pension shall be computed by reducing the applicable maximum pension rate by the countable income on the effective date of entitlement and dividing the remainder by twelve. 38 C.F.R. § 3.273 (a). 
In essence, VA subtracts the total amount of countable income in one year, less excluded income, from the MAPR for that year; then, if a positive amount remains, the rest is divided by twelve to determine the monthly death pension benefit. When a change in the MAPR occurs, the Board repeats the calculation with the new MAPR as the starting amount. 38 C.F.R. § 3.273 (b)(1). When a change in income occurs, the MAPR will be reduced by the new annualized income effective on the date that the increased income began. 38 C.F.R. § 3.273 (b)(2).
There is no specific dollar limitation on net worth (as opposed to income) that bars an otherwise eligible claimant from receiving pension benefits. Entitlement to pension will be denied however, when the corpus of a claimant’s estate is such that, under all circumstances, including consideration of the annual income of the claimant, spouse, and any cohabitating children, it is reasonable that some part of the corpus of such estates be consumed for the claimant’s maintenance. 38 C.F.R. § 3.274 (a). 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 and personal effects. 38 C.F.R. § 3.275 (b).
In determining whether some part of the claimant’s estate should be consumed for maintenance, consideration will be given to the amount of the claimant’s income together with the following: Whether the property can be readily converted into cash at no substantial sacrifice; life expectancy; number of dependents who meet the definition of a member of the family; and potential rate of depletion, including unusual medical expenses for the claimant and the claimant’s dependents. 38 C.F.R. § 3.275 (d). A gift of property to someone other than a relative residing in the grantor’s household will not be recognized as reducing the corpus of the grantor’s estate unless it is clear that the grantor has relinquished all rights of ownership, including the right of control of the property. 38 C.F.R. § 3.276 (b). 
The Board finds that the appellant’s income is not a bar to the receipt of pension benefits. However, it is reasonable that some part of the corpus of her estate be consumed for her maintenance such that entitlement ot pension is denied based on her net worth.
The MAPR for a surviving spouse with no dependents at the aid and attendance rate in December 2014 was $13,794.00.
In her December 2014 claim, the appellant reported receiving $1,263.00 a month in SSA income and $568.00 a month in pension. However, an attached SSA showed a higher rate of payment beginning April 2013 and an SSA inquiry shows that for the appeal period beginning December 2014, she was paid at a rate of $1,454.00 a month. The Board will, therefore, use the income information reported by SSA for the appeal period. A IRS Form 1040A U.S. Individual Income Tax Return shows that for 2014, the appellant reported receiving $6,823.00 from pension and annuities. Thus, the appellant’s annualized income, as reported by her, was $21,979.00 
Amounts paid for unreimbursed medical expenses included $2,000.00 a month paid toward a personal caregiver, and $104.00 a month for Medicare Part B. Annualized medical expenses totaled $25,248.00. Total income may be reduced by amounts paid for unreimbursed medical expenses in excess of 5 percent of the applicable MAPR. Five percent of the applicable MAPR ($13,794.00) was $690.00. Thus, annual medical expenses in the amount of $24,558.00 may be deducted from the total income. This reduction resulted in no income for the appeal period from December 2014.
It is unclear from the record how much interest income was earned for the appeal period beginning December 2014. An income verification match (IVM) identified sources of undisclosed interest income. The appellant and her representative indicated that all of the listed accounts were closed prior to the start of the appeal period, with the exception of a Prudential Annuity, which a transaction confirmation dated in May 2013 shows was valued at $112,821.00. The appellant’s accounts from Hartford Funds were shown to be closed in August 2015. While the appellant’s representative contends that the amounts received prior to the start of the appeal period cannot be counted toward income, the appellant has not submitted updated account information for the amounts held in the Prudential annuity and has not specified the amount of any disbursements or interest income received from the annuity from December 2014. An IRS Tax Form 1040A shows that the appellant received $9,867.00 in 2014 in IRA distributions, and in a November 2016 substantive appeal, the appellant reported receiving a $5,741.00 return on the premium from the Prudential Live Insurance proceeds in 2013. 
Even assuming that the appellant continued to receive annual interest income approximating the $9,876.00 reported on her 2014 tax form, the Board finds that her annualized income would still be less than the MAPR of $13,794.00 applicable from December 2014. Thus, her income is not a bar to the payment of pension benefits, but her entitlement would be reduced by the amount of her interest income. In this case, because the appellant’s net worth is a bar to the receipt of pension benefits, the Board finds that additional development is not necessary to assess interest income amounts received by the appellant during the appeal period. 
At the time the appellant submitted her claim, the record shows that the appellant’s net worth consisted of $112,821.00 from a Prudential annuity. In her December 2014 claim, the appellant also reported having $14,539.00 in her bank account. The appellant reported that other accounts identified in an IVM were closed. Thus, she had a net worth of $127,360.00. The appellant had an annualized income of $21,979.00 without consideration of any interest income received from the Prudential annuity or other investment accounts. She had annualized medical expenses totaling $24,558.00. In a July 2016 Request for Details of Expenses, FA Form 21-8049, the appellant did not identify other monthly expenses for housing, food, or utilities. At the time the appellant submitted her claim, she was 83 years old, and her life expectancy for VA pension purposes was 6.6 years. Thus, the Board finds, based on the available information, that the appellant’s expenses exceed her income by approximately $2,579.00 a year. With consideration of the appellant’s net worth of $127,360.00, her life expectancy of 6.6 years at the time of the submission of her claim, and the $2,579.00 a year rate of depletion, the Board finds that it is reasonable for the appellant to consume part the corpus of her estate for her maintenance during her lifetime, and her net worth is a bar to the receipt of pension benefits. 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. Therefore, entitlement to death pension is denied. 

 
K. PARAKKAL
Veterans Law Judge
Board of Veterans’ Appeals
ATTORNEY FOR THE BOARD	Christine C. Kung