Veterans Benefits Planning FAQs

What Happens When Income or Net Worth Becomes Excessive?


Q: If a pension recipient receives a lump sum that would disqualify her from further benefits due to excess income, can that recipient withdraw from the program to avoid the issue of excessive income?

A: The answer is yes, the recipient can withdraw, but she cannot reapply for 12 months after the date of renouncement pursuant to 38 CFR 3.106(c). This section states that if a new application for pension is filed within one year after the VA receives a renouncement of that benefit, the application shall not be treated as an original application and benefits will be payable as if the renouncement had not occurred. In other words, the renouncement will be ignored, and the income counted as if the recipient had never renounced her benefits.

Q. What if a pension recipient acquires assets that result in excess net worth?

A. The VA will terminate pension benefits as of the first day of the next calendar year, unless an earlier termination date is appropriate due to excess income.

Once the claimant’s net worth is no longer excessive, the veteran has 1 year after the notice of termination to file a claim based on reduction in net worth. If the claim is filed within one year, then the award will resume from the date net worth ceased to be excessive. M21-MR, Part V, Subpart iii, 7.C.30. If the claimant waits longer than 1 year to re-file, then it is treated as a new claim. 38 CFR 3.660(d)