Paul O. Dillon, Attorney at Law

What Is a Flexible Irrevocable Trust?

Estate planning attorneys use a variety of trusts and often recommend irrevocable trusts, according to a recent article from Kiplinger, “Sophisticated Planning with Flexible Irrevocable Trusts.” Irrevocable trusts are commonly used for Special Needs Trusts to help individuals become eligible for Medicaid and veterans’ benefits and to minimize tax liabilities.

The term “irrevocable” can cause concerns for people who are used to maintaining complete control over their assets. However, careful drafting of these documents can allow indirect control over assets, income and ownership, while providing flexibility usually not associated with irrevocable trusts. A flexible irrevocable trust provides the ability to respond to changes in circumstances, a welcome option for many.

How do flexible irrevocable trusts work? Assets are not transferred directly into the irrevocable trust. Instead, they are transferred to a legal entity like a Limited Liability Corporation (LLC), an S-Corporation, or a Family Limited Partnership (FLP) controlled by an individual. An interest in the entity is then transferred to the irrevocable trust. Nonvoting interests in the entity are then transferred to the trust. Done correctly, the individual retains control of both the entity and the asset.

In this situation, the person who is directing the creation of the trust will need to designate the initial trustee who will oversee transactions and activities for the trust. Some people are more comfortable appointing themselves as the initial trustee. However, it’s better in this case if they are not the initial trustee. For instance, if they are the initial trustee for a trust created for their children, distributions will be limited to pay for the health, education, maintenance and support, known as HEMS, if the goal is to exclude assets from the estate for tax purposes.

HEMS distributions, however, could eliminate or impede beneficiary protection from creditors. The creditor could say the beneficiary has a right to the HEMS distribution and take this amount from the trust.

The trustee, when not the individual who created the trust, may have total control to make distributions, which provides better asset protection to the trust’s beneficiaries. You must be 100% certain that the trustee will act on your instructions.

When selecting a trustee, keep two things in mind: while you are living, you want the trustee to follow your instructions, and after your death, you want someone whose judgment you trust implicitly. The best candidate may be an adult child if the family dynamics and history support this decision.

Having the ability to remove the trustee and designate a new one without cause is another critical part of drafting the trust.

If the need to replace the initial trustee occurs, be careful not to select someone who is related to you, a lineal descendent, or an uncle or aunt. Don’t name someone who is an employee of a business of which you own a significant share. While a related or subordinate person may be a successor trustee, they should not be the primary trustee.

These types of trusts require the knowledge of an experienced estate planning attorney. Consult an estate planning attorney if your circumstances warrant a flexible, irrevocable trust.

Reference: Kiplinger (Jan. 30, 2025) “Sophisticated Planning With Flexible Irrevocable Trusts.”

Will Vets Get to Train Service Dogs to Help with Mental Health Issues?

“It’s really simple: these service dogs can save lives, they can improve the veterans’ health, lower their incidence of mental health issues, reduce their amount of medication, give them their mobility back and give them their lives back,” Ohio Republican Representative Steve Stivers said at a news conference.

Military Times’ recent article, “Should veterans be able to train and adopt service dogs at the VA’s expense?” says the bill has 136 co-sponsors, 45 Democrats and 91 Republicans.

The grant program is devised to defray costs from veterinarian appointments, medical procedures, diagnostic tests and medications.

The legislation was introduced in September to instruct the Department of Veterans Affairs to execute a pilot program on dog-training therapy, pairing veterans diagnosed with PTSD with service dogs and encouraging them to train the dogs themselves.

When the program is concluded, the vets would be able to adopt their dogs to continue the therapy.

Representative Michael Waltz, R-Fla., another co-sponsor of the bill and an Army veteran, questioned why the VA doesn’t cover the costs of getting and training a service dog.

“This should be part of the menu of what the VA provides. […] The benefits are clear,” Waltz said. “Our veterans right now are finding [service dogs] through their own means or through wonderful veterans services.”

Nonprofit organizations associated with providing and training the dogs would be responsible for the training cost and some of the food, while the dogs are being trained.

Last summer, Joint Base San Antonio-Lackland announced that retired military working dogs are in search of families, homes and couches.

According to the 2019 National Veteran Suicide Prevention Annual Report, more than 6,100 veterans died by suicide in 2017. That accounted for 14% of all deaths by suicide among adults. The report said almost 60% had been diagnosed with a mental health disorder or substance abuse.

Reference: Military Times (November 19, 2019) “Should veterans be able to train and adopt service dogs at the VA’s expense?”

Photo credit: https://puppyhero.com/ 

Why Don’t Some Border National Guardsmen Receive Veterans Benefits?

In April 2018, President Trump ordered 2,000 National Guard troops to the U.S.-Mexico border to help Homeland Security.

However, Colorado Public Radio’s recent article, “Even After Years In Uniform, Some National Guardsmen Don’t Get Veterans Benefits,” reports that some of those guard troops who worked along the border in uniform may never meet the federal definition of a veteran.

To qualify for Veterans Affairs benefits, such as health care or GI Bill education benefits, individuals are required to serve 180 days continuously on active duty. That means being requested by the federal government under specific circumstances.

National Guard troops are usually under the control of a state's governor, who can call them up to help with natural disaster. However, there are a variety of orders that can be used to mobilize Guard members. Despite the fact that President Trump called guard troops to the border and the federal government paid for the operation, in most cases, the kind of orders they were under do not qualify those troops for benefits.

Representative Mike Levin, a California Democrat, chairs a veterans subcommittee that recently held a hearing on the issue.

"We haven't followed a very basic principle," Levin said, "which is if you're expected to be doing the same sort of thing, putting your life on the line for whatever particular mission, I believe you should be able to get the same pay and benefits."

Representative Levin said Congress has been slow to respond to the changing role of the guard, which has been used more consistently since the terrorist attacks on Sept. 11, 2001.

"The expectations and the demands placed on our national guard and reserves that perhaps weren't there previously, we have to make sure that federal policy reflects that," he said.

In 2016, Congress changed the law, so anyone who retires from the guard or reserves after 20 years has honorary veteran status, no matter the amount of time they spent in active service. However, this legislation didn’t allow them to qualify for federal benefits.

The federal benefits that guard troops often aren't eligible for, include long-term mental health care in the VA health system. The Veterans Administration estimates that there were 919 suicides in 2017 among guard and reserve members, who never achieved veteran status.

Reference: Colorado Public Radio (November 29, 2019) “Even After Years In Uniform, Some National Guardsmen Don’t Get Veterans Benefits”

Where Will Veterans Reside in the Next 25 Years?

Rebecca Burgess, who is an American Enterprise Institute expert on veterans, told a national audience at a conference earlier this year how expanding the VA’s health benefits made her question how geography and demographics impact perceptions from the public and politicians about veterans. However, she discovered that it's difficult to find good data on where veterans live or predict future residences.

"In fact, the more one tries to piece together a clear picture of veteran demographics, the less coherent the data seem to be," Burgess wrote in her study. "States, counties, and the federal government seem to arrive at different outcomes in terms of veteran numbers, even using the same projection model, VetPop 2016."

Military.com’s recent article, “These States Will Be the Most Popular for Veterans in the Next 25 Years,” explains that VetPop 2016, or "Veterans Population Projection Model 2016," is data from the VA that’s used by the agency and other groups, such as Congress, for policy planning and budgeting.

Burgess said she examined the VA's data and compared it to other sources, like the Census Bureau's American Community Survey. She found that the actuarial projections didn’t always agree. Burgess said that the VA's core data about veterans is nearly 20 years old and the Census Bureau stopped collecting veteran status data with the 2010 Census. However, she says, visualizing where vets will be over the next three decades will offer at least two benefits: providing the best idea of where VA resources will be most needed in the future and which congressional districts might see veteran policies soon become an electoral issue.

The VA has estimated that the overall veteran population will drop about 40% in 25 years. Burgess's research shows geographic population shifts, grouped by states and counties from 2015 to 2045.

Unlike the general shifts in the veteran population, with most veterans in the South and West, high numbers of Vietnam-era vets remain in the Northeast and Midwest—especially compared to the West. Already with the Gulf War and post–Gulf War veterans, the data shows higher numbers in the Southeast, but a good number (in the 240,000–300,000 range) who reside in Arizona, Colorado, Illinois, New York, Ohio, Pennsylvania, South Carolina, and Tennessee. Post-9/11 vets are moving to Texas, but also going to Georgia, North Carolina, Virginia and Washington State

Burgess would like to see better data regarding the veteran’s demographics. She also said that the VA should develop an updated veteran population projection model, regardless of what the Census Bureau does.

Reference: Military.com (November 26, 2019) “These States Will Be the Most Popular for Veterans in the Next 25 Years”

When Will the VA Process My Vietnam “Blue Water” Benefits?

House lawmakers have expressed worries that even minor issues in the processing of “blue water” Vietnam veterans disability claims, could result in major delays for veterans who have already waited decades for these benefits.

Military Times reported in its recent article that asks “Will VA be ready to process new ‘blue water’ Vietnam veterans benefits next year?” VA officials promise that they will start processing cases in January 2020. However, critics and veterans’ advocates want that to happen more quickly. Advocates have also demanded that the White House speed up the timeline for the benefits.

“These people have waited too long, and we finally have the legislation in place,” said Rep. Mike Bost, R-Ill., ranking member on the House Veterans’ Affairs committee’s panel on disability assistance. “We need to get it done.”

Last summer, President Trump signed into law a bill that finalized presumptive benefits status for “blue water” veterans who served on vessels off the coast of Vietnam during the war.

Under Veterans Administration regulations, vets who served on land in the war are presumed to have toxic exposure related to spraying of the defoliant known as Agent Orange during the Vietnam War. However, sailors on ships off the coast of Vietnam weren’t given the same concession.

However, the new law will see as many as 90,000 veterans become eligible for the new presumptive status, which will mean thousands of dollars in disability benefits each month.

This legislation let VA officials delay processing those cases until the beginning of 2020, even though some cases were already being considered due to a federal court ruling earlier in this year.

Advocates and some members of Congress have complained that the delay has put another unfortunate burden on veterans, who have suffered from Agent Orange exposure for decades.

In an update hearing before the committee, Veterans Affairs Deputy Under Secretary for Field Operations, Willie Clark emphasized that the delay was required to get department systems prepared for the anticipated onslaught of blue water claims.

Reference: Military Times (October 31, 2019) “Will VA be ready to process new ‘blue water’ Vietnam veterans benefits next year?”

What Should I Know About Getting Veterans’ Disability Benefits?

Individuals who have medical conditions from service are eligible for disability benefits. However, there are a number of myths that make many veterans reluctant to claim them. The process of receiving benefits is also lengthy, confusing and—at times—discouraging.

patch.com’s recent article, “What Every Vet Should Know About Receiving Disability Benefits,” tries to dispel the myths and explain five facts that every veteran should know about disability benefits.

1. Your Claim May Be Denied. Don’t assume because a claim was denied it has no merit, because local offices can reject up to 71% of their claims because of processing errors. Even without errors, denials are frequent. If your claim was unfairly denied, file a Notice of Disagreement Form and consider hiring an attorney.
2. You Can Claim Disability at Any Time. Many vets don't realize a condition was caused by their service, until years after the incident. Many vets also assume they won't require benefits, until their condition worsens. No matter how long ago they served, veterans are allowed to file a claim for disability provided they meet basic requirements. There’s often an issue in demonstrating a connection between a soldier's disability and his or her time in service, because the evidence can be harder to provide years afterwards.
3. Vets Only Have a Year to Dispute a Rating Claim. Unlike filling a claim itself, veterans have only a year to dispute a rating provided by Department of Veterans Affairs. The VA determines ratings by considering any evidence provided, along with required exams and federal data and information from other sources. Ratings for individuals with more than one condition are calculated using a combined ratings scale.
4. Some Vets Are Entitled to Presumptive Service Disabilities. The government has accepted presumptive service disabilities for many veterans who were in particular situations. Presumptive conditions are chronic medical conditions that the government recognizes were most likely due to service. Those who experienced imprisonment, the Vietnam War, the Gulf War and ionizing radiation may have a presumptive condition.
5. Additional Benefits. In addition to disability services, vets can also obtain other benefits, which can include federal hiring preference, health care and prescription costs, VA home loan waivers, job training and an increase in benefits for dependents. Other supplemental options can help vets find jobs, support their families and afford medicine.

Although the process of fighting for disability benefits can be discouraging, veterans deserve these benefits. They earned them and deserve compensation for their duty to their country.

Reference: patch.com (October 7, 2019) “What Every Vet Should Know About Receiving Disability Benefits’

How Does a Federal Court Decision on The Department of Veterans Affairs Impact Vets?

The U.S. Court of Appeals for Veterans Claims said the VA has been wrongfully refusing to reimburse veterans, who sought emergency medical care at non-VA facilities, MSN reports in its recent article, “Court rules VA must pay veterans' ER bills, a decision that may be worth billions to vets.” The Court also struck down the VA regulation that blocked those payments.

"All of this is unacceptable," said the ruling, which ordered the VA secretary to "re-adjudicate these reimbursement claims."

Plaintiffs' attorneys say that, based on past estimates by the VA, the department is now responsible for between $1.8 billion and $6.5 billion in reimbursements to hundreds of thousands of veterans who’ve filed or will file claims between 2016 and 2025.

Former Coast Guardsman Amanda Wolfe, who is one of the plaintiffs in the case, told NBC News "I'm just overjoyed. I think it means change, it means that veterans don't have to be afraid of receiving care, emergency care. They can have that sense of security that sense of peace knowing they are covered if they have emergency care."

"I served side by side with some of these veterans who were impacted and to think that this is going to make a difference for them is what is most important to me."

In 2015, the court struck down a previous version of the internal VA rule that denied coverage for an emergency claim when another form of insurance covered, even a small portion of the bill. The court said the regulation violated a 2010 federal law.

The recent ruling held the department violated the same federal law with its revision of the reimbursement regulation. The Court said the new rule, issued last year, actually created another issue for vets, by forbidding the VA from reimbursing medical expenses for emergency services at non-VA facilities.

In 2016, Wolfe went to the ER because her appendix was about to burst. After a quick recovery, she figured she was okay because she had two kinds of insurance, a private plan she paid for and her VA benefits.

Wolfe’s private insurance covered most of the more than $20,000 bill for her hospital stay. However, six months later, the VA denied her claim for the remaining $2,500. This put her in an unexpected financial bind. She paid off the bill in 2017 but has been fighting for reimbursement ever since. This year, her case made it all the way to the Court of Appeals for Veterans Claims.

A VA's Inspector General released a report in August that found that in just one recent six-month period, the VA left roughly 17,400 veterans to pay out-of-pocket for $53 million in emergency medical treatment the government should have covered.

"The Court's decision rights a terrible injustice and its order ensures that veterans who were unjustly denied reimbursement for critical emergency treatment at non-VA facilities will finally be reimbursed," said Bart Stichman, executive director of the National Veterans Legal Services Program, which represented Wolfe in the case. "It is a hard-won victory for hundreds of thousands of veterans."

Reference: MSN (September 11, 2019) “Court rules VA must pay veterans' ER bills, a decision that may be worth billions to vets”

What Types of Senior Care is Available for Veterans?

The U.S. Department of Veterans Affairs offers some funding programs that can help offset the cost of some types of senior care.

U.S. News & World Report’s recent article, “Veteran Benefits for Assisted Living,” explains that many senior living companies try to help many veterans maximize their benefits, which in some cases can significantly reduce the cost of senior living.

Note that the VA won’t pay for a veteran’s rent in an assisted living facility. However, VA benefits may pay for some of the extra services required, like nursing assistance, help with bathing and toileting, and possibly meals.

There are a variety of benefits that may help, based on a vet’s specific service history and eligibility. The most commonly used benefits are the Aid & Attendance Pension. Another common benefit is the Survivor’s Pension for spouses of a deceased veteran with wartime service.

The VA’s Aid & Attendance and Housebound program is part of the pension benefits paid to veterans and survivors. The VA says these benefits are paid, in addition to monthly pension. A vet must satisfy one of the potential conditions, including:

• Requiring the aid of another person to perform personal functions, like bathing, dressing, eating, toileting, or staying safe from hazards;
• Being disabled and bedridden, above what would be thought of as recovery from a course of treatment, such as surgery;
• Being a patient in a nursing home due to physical or mental incapacity; and
• Having very poor eyesight (5/200 corrected visual acuity or less in both eyes) or a field of vision limited to five degrees or less.

Vets may qualify for these benefits, which are added to the standard monthly pension, when he or she is “substantially confined to your immediate premises because of permanent disability,” the VA says. Eligibility for the program is based on a case by case basis and involves a review by the VA.

It’s important to begin the application process early, rather than waiting for a crisis to occur. Ask an experienced estate planning or elder law attorney to help you and to discuss your options.

Reference: U.S. News & World Report (August 12, 2019) “Veteran Benefits for Assisted Living”

Why Are Veterans’ Medical Claims Being Denied?

When a former Coast Guardsman had to go to the emergency room because her appendix was about to burst in September 2016, she thought her insurance would take care of the cost. This veteran had two kinds of insurance, a private plan she paid for and her Veterans Affairs benefits.

NBC News’ recent article, “VA wrongfully denied $53 million in veterans' medical claims in one 6-month period, says report,” reports that the emergency appendectomy went well. The vet made a quick recovery. Her private insurance covered the lion’s share of the $20,000 bill for her hospital stay. However, six months later, the VA denied her claim for the remaining $2,500. This placed the vet in an unexpected financial bind.

She has been appealing ever since.

"It's one of those things where you thought that they would be there and they're not," the Coast Guard veteran explained. She also adopted her nephew soon after the surgery and has been watching her budget to care for him.

The vet believed that she was living in her own private insurance hell, until a report from the VA's Inspector General showed many issues in the way that the VA reimburses veterans for emergency care at non-VA facilities. In one recent six-month period, the VA left about 17,400 veterans to pay out-of-pocket for emergency medical treatment the federal government should have covered. The report said that between April 1 and Sept. 30, 2017, veterans who received emergency care at non-VA facilities had to pay $53.3 million in medical bills.

Members of Congress, including the chairs of the House and Senate Veterans Affairs Committees want answers.

"No veteran should be afraid to seek care in an emergency room," said Rep. Chris Pappas, D-N.H., who signed the letter. "Clearly the bureaucracy is favoring speed over accuracy, it's favoring efficiency over the health of our veterans. We've got to make sure that we're putting veterans first."

The Inspector General found that the office that processes emergency claims had been prioritizing speed over accuracy. This happened as workers were offered incentives, like overtime pay, for processing claims quickly and without concern for accuracy.

The report said that 31% of denied or rejected emergency care claims had been inappropriately processed.

Reference: NBC News (August 16, 2019) “VA wrongfully denied $53 million in veterans' medical claims in one 6-month period, says report”

How Will New Legislation Help New Jersey Veterans?

TAPinto.net’s recent article, “New Law Will Assist NJ Veterans with Housing, Legal Services” reports that one of the laws in the Garden State that’s designed to assist vets, is the Securing Electronic Records for Veterans Ease (SERVE) Act. This law will require landlords to count federal military or veteran housing allowances as income, when evaluating a prospective tenant who is a military service member or veteran.

“The benefit of this law is that it will help veterans secure rental housing,” said John Armato (D-Atlantic). “It is also beneficial to those military service members or veterans that are full-time students who often have limited or no income.”

“Our veterans have made so many sacrifices for our country,” said Assemblyman Vincent Mazzeo (D-Atlantic). “We should always look for ways to make their lives easier. They have earned and deserve such consideration.”

The second law modifies the current law for the New Jersey Homeless Veterans Grant Program. It directs the Adjutant General of the Department of Military and Veterans’ Affairs (funds permitting) to enter into contracts with public or private entities to fund some of the legal services that these entities provide to homeless veterans and veterans at risk of homelessness.

“New Jersey has between 1,500 and 2,000 homeless veterans,” said Armato, a U.S. Air Force veteran, who served in the Philippines Islands and Korea. “These statistics are unacceptable, and this law looks to correct such disturbing figures by helping these veterans get the services that they need and deserve.”

The Adjutant General would make certain that, to the extent practicable, contracts signed under this section are made with entities located in the northern, central, and southern regions of the state. The legal services would include legal services for the following:

• Housing issues, including eviction defense, representation in landlord-tenant cases and representation in foreclosure cases;
• Family law, including assistance in legal proceedings for child support, divorce, estate planning and family reconciliation;
• Income support including assistance in obtaining public benefits; and
• Criminal defense, including for matters symptomatic of homelessness, like outstanding warrants, fines and driver’s license revocation.

The bill also calls for helping vets with any other legal services, as the Adjutant General deems appropriate.

“Sadly, our veterans comprise some of the highest rates of unemployment, homelessness and suicide in our communities,” said Assemblyman Joe Danielsen (D-Middlesex, Somerset) who served in the U.S. Army Reserves’ 78th Division here in New Jersey and comes from a long line of veterans in his family. “We must continue looking for ways to better serve our veterans, and this legislation is a step in the right direction.”

Both laws will take immediate effect.

Reference: TAPinto.net (August 5, 2019) “New Law Will Assist NJ Veterans with Housing, Legal Services”