Happy Veterans Day! In honor of our veterans, let’s take a look at the structure of the Veterans Asset Protection Trust (VAPT). The VAPT is a powerful tool that can protect assets while enabling the grantor to qualify for needs-based pension benefits. There are two sub-trusts within the VAPT – one is a grantor sub-trust and the other is a non-grantor sub-trust. Why is it structured this way? The Veterans Affairs (VA) has a direct line of communication with the IRS. The VA routinely checks the tax returns of pension recipients, to get income information. Because of this, it is best to avoid any “phantom income” from a grantor trust being reported on the grantor’s tax return. This additional reported income may jeopardize eligibility for benefits.

When consumers experience a “breach” of certain categories of information, state laws have required organizations to notify those affected and, in some instances, to also notify state agencies, consumer reporting agencies, and the media. A growing number of states—including California, Colorado, Connecticut, Maryland, Massachusetts, Texas, and, most recently, New York—have gone a step further, requiring organizations to develop and implement “reasonable safeguards” to secure the personal information they collect and use. 

Decanting can be a great way to add flexibility to irrevocable trusts. Beyond correcting scrivener’s errors, resolving ambiguities, or clarifying trust language, decanting allows trustees to change some provisions of an irrevocable trust by pouring the assets into a new trust with modified terms.