When a veteran is receiving a VA Pension (aid and attendance), the veteran has to establish continuing eligibility financially each year. Potentially, many kinds of receipts can cause the Pension to be reduced or lost if the veteran’s income exceeds VA’s income limit.
One source of income can be the lump sum proceeds received from a lawsuit settlement. If such a settlement would cause the veteran’s income to be over the limit, is there any planning the veteran can do to preserve the pension?
A possible solution would be a so-called “structured settlement.” Under such a settlement, instead of receiving a large lump cash amount, the veteran could agree to receive settlement payments in the form of an annuity.
Such an annuity would have to be very carefully designed to avoid a number of potential problems. It would have to result in payments of a monthly amount that would not disqualify the veteran for excessive income. It also might have to take into account various income tax considerations, as well as Medicaid qualification should nursing home care be necessary at some future time.
Reconciling all these issues is a task that should be left to a VA-accredited attorney with experience with both tax and Medicaid planning. It is not something that can be handled well without professional guidance.