In 2014, Congress proposed a law that would penalize veterans and surviving spouses of veterans who were looking to apply for the VA Benefit if they transferred assets within the three year period from when they applied for benefits. If the veteran or surviving spouse did transfer assets, there would be a penalty imposed on the veteran or surviving spouse.
However, that bill failed and never saw the light of day.
In early 2015, the VA took another route to get the “3 Year Look-back” rule implemented. Instead of a change in law through Congress, they looked to change the administrative rules.
With that goal in mind in early 2015 they made a proposed rule change that would implement a 3 year look-back. There was a comment period that closed March 24th. There were over 900 people who made comment, including many elder law lawyers.
There were credible rumors in the elder law attorney community that the proposed rule change would go into effect in the spring of 2016.
The Elder Care Firm’s VA Accredited Attorneys have consistently advocated for veterans, and argued the VA did not have independent authority to make such changes and needed Congressional approval. Apparently the VA agrees, so it secured the support of a few senators to craft a bare-bones House Resolution called the “Veterans Care Financial Protection Act of 2016.” Essentially, this Act would approve any “standards” developed and implemented by the VA “that protect individuals from dishonest, predatory, or otherwise unlawful practices relating to increased pension available … on the basis of need for regular aid and attendance.”
If this Resolution passes, all of the proposed changes to Title 38 of the Code of Federal Register, as drafted by the Veterans Administration, affecting veterans, imposing transfer penalties of up to 10 years, would become law.
However, according to VA law expert Victoria Collier, there is one glaring problem, “neither the bill nor the proposed changes in Title 38 define “dishonest, predatory, or otherwise unlawful practices.”” For example, lawyers who draft estate planning documents, licensed to do so in the state where the client resides, are acting lawfully. Certainly, misrepresentation that a trust or an annuity is required in order to get VA benefits is dishonest. But making transfers of assets to trusts and the purchase of an annuity itself are not unlawful. Holding educational seminars is not predatory.
Collier goes on to comment, “This is yet another example of a poorly drafted piece of legislation designed to appeal to the emotions of the ignorant, and it purposely does not adequately explain the consequences for or against the cause.”
Veterans will be harmed by the changes in the laws, not protected. The VA could punish the group of professionals using unethical practices or committing illegal acts.
Let your representatives know the real issues behind the reason for this new resolution. Urge them not to pass this blindly – know what the proposed rules are that affect pension benefits and veterans.
The earlier a family starts planning for a Veteran or surviving spouse of a veteran, the more options are on the table as the loved one navigates the long-term care journey. Often, as VA Accredited Elder Law Attorneys, we utilize special asset protection trusts to help qualify for the VA Benefit or Medicaid.
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The post VA Tries Again to Get Rule Changes Approved by Congress first appeared on SEONewsWire.net.]]>On January 23rd, the Federal Register released Document No. 2015-00297. So, what does that mean? You haven’t read it? I don’t blame you. However, if you’re involved in the elder care or long-term care community in Michigan you might want to check it out.
The document is an unexpected rule proposal by the VA regarding net worth determinations, asset transfers and income exclusions for VA pension eligibility (Aid and Attendance).
It’s a 62 page document, but basically, the VA has stated that it was their intent to “respond to recent recommendations made by the Government Accountability Office (GAO) to maintain the integrity of VA’s needs based benefit programs and to clarify issues necessary for consistent administration of pension claims.
The proposal will establish clear net worth asset limits, linking it to Medicaid type resource allowances. For example, the Community Spousal Resource Allowance used by Medicaid of $119,220. Net worth will be a combination of assets and income with a proposed 36 month look-back period.
The 36 month look back period differs from the Medicaid 60 month look back period. One key point is how the divestment penalty will work for the VA look back period. Under the proposed VA look-back rules, there is the possibility of a 10 year look back period. It’s calculated by looking at the amount transfered and dividing by the maximum monthly pension rate for a veteran or surviving spouse.
The most important thing is that if you have a veteran or surviving spouse of a veteran who needs care, you start the planning process now, before this rule gets imposed–if it does.
Who does the hurt? Veterans and surviving spouses of veterans who need long-term care.
In the meantime, I’ll stay on this as this could be a huge change in how we plan for long-term care.
Do you have questions—I’ll answer them in the comments below.
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The post VA Benefits for Long-Term Care Dead in Michigan? first appeared on SEONewsWire.net.]]>A. Amendment to Rule 506
The SEC amended Rule 506 by adding subsection (c), which permits general solicitation and general advertising under the following conditions:
B. Verification Standards
To take advantage of the general solicitation and general advertising permitted under Rule 506(c), there is an affirmative requirement that the issuer take “reasonable steps to verify that the purchasers of the securities are accredited investors”. The specific steps required to be taken are not dictated by the new rules. Instead, the reasonableness of the steps taken turns on the objective assessment of the issuer. However, the final rules do set forth a non-exclusive and non-mandatory list of methods that are deemed to satisfy the verification requirement for purchasers who are natural persons, including:
In addition to the foregoing, issuers may verify the accredited status of Rule 506(c) investors in any other reasonable manner that they select. The SEC discusses various other available methods, including a review of pay stubs or a review of an SEC or other governmental filing listing the investor’s annual compensation. Alternatively, if the amount of the investment is very high, such that only accredited investors would reasonably be expected to make such an investment, and the investor certifies that the investment is not being financed by a third party, this could be taken into account in determining that the investor is accredited. Conversely, merely having the investor check the “accredited investor” box on a questionnaire would not alone be a sufficient basis to demonstrate that the issuer has taken “reasonable steps” to verify the investor’s accredited status.
C. Proposed Form D Amendments
The SEC proposed amendments to Form D that would require additional information from issuers, such as the methods used to verify the accredited investor status of investors and the types of general solicitation and general advertising used. An issuer relying on new Rule 506(c) would also be required to file Form D with the SEC no later than fifteen days prior to commencing a Rule 506(c) offering and an amended Form D within thirty days following the completion of the offering. The SEC also proposed disqualifying issuers from relying on Regulation D for one year if they fail to file Form D and requiring additional legends and disclosures in all offering materials relying on Rule 506(c). Additionally, the SEC is proposing that for the first two years after the effective date of the rule an issuer relying on Rule 506(c) be required to file all general solicitation and general advertising materials with the SEC.
D. Bad Actor Disqualification
As mandated by Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the SEC also approved final rules to disqualify securities offerings involving certain felons and other so-called “bad actors” from reliance on the exemption from Securities Act registration pursuant to Rule 506. If such “bad actors”, which now include investment managers and principals of private investment funds, are the subject to certain “disqualifying events”, then they will disqualify an issuer from relying on Rule 506. Disqualification will not arise as a result of triggering events that occurred before the effective date of the rule. However, matters that existed before the effective date of the rule and would otherwise be disqualifying are subject to a mandatory disclosure requirement to investors.
E. Retention of the Existing Rule 506 Safe Harbor
The SEC is retaining the existing ability of issuers to conduct Rule 506(b) offerings without engaging in a general solicitation or general advertising.
F. Amendment to Rule 144A
The SEC also adopted an amendment to Rule 144A to permit securities sold under Rule 144A to be offered to investors other than qualified institutional buyers (“QIBs”), including by general solicitation or advertising, so long as the securities are only sold to investors that the issuer reasonably believes to be QIBs at the time of sale.
The final rules will go into effect sixty days after their publication in the Federal Register (mid-September 2013). The proposed Form D amendments are currently open for comment for sixty days.
G. Noteworthy Considerations
Rule 506 Offerings
Secondary Market Transactions
Offerings in Close Proximity
Please contact Mitchell C. Littman, Esq. at mlittman@littmankrooks.com, Steven D. Uslaner, Esq. at suslaner@littmankrooks.com or Lesley DeCasseres, Esq. at ldecasseres@littmankrooks.com if you have questions concerning the Rule.
* General solicitation and general advertising include advertisements published in newspapers and magazines, website postings, press releases, communications broadcast over television and radio, and seminars or meetings where attendees have been invited by general solicitation or general advertising.
The post The SEC Approves Final Rules Regarding General Solicitation and General Advertising in Rule 506(c) Offerings first appeared on SEONewsWire.net.]]>The Securities and Exchange Commission (SEC) has issued new rules for broker-dealers requiring them to search for securities holders if they lose contact with them. The rules require for the first time that broker-dealers attempt to find securities holders that they have lost touch with. Broker-dealers and other participants in the securities market must also notify people who have not processed checks that were issued to them in association with their securities.
Record-keeping transfer agents, who function as intermediaries between broker-dealers and the clearing house, were already subject to a similar rule. The SEC was required to apply the same requirement to broker-dealers under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Elisse Walter, the Chairman of the SEC, said that the new rules have a common-sense objective and would help investors receive funds that they may not realize they are owed.
Specifically, under the new rules, broker-dealers must conduct the same searches for lost securities holders that transfer agents conduct. In addition, broker-dealers, transfer agents, and other paying agents must notify unresponsive payees in writing of unprocessed checks, unless the check is for less than $25.
The previous rules required only record-keeping transfer agents to use reasonable care to find the addresses of missing securities holders and conduct searches of databases to find them. When a missing securities holder cannot be located, the securities, interest and dividends may be at risk of being designated as abandoned under state laws.
The new rules will go into effect 60 days after they are published in the Federal Register, and broker-dealers will have one year to achieve compliance.
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