Charging for advice: When is it OK to charge a client for consultation for the Aid and Attendance Program?

By Kevin Wedmore

A2Z Annuity Marketing


For those of you who are familiar with the Veterans Aid and Attendance program, you may have heard rumors about the illegality of charging clients for assisting them with the filing of claims. If you were to ask a VA caseworker, an elder law attorney, or most financial planners if you can, indeed, charge for your services related to counseling a client or their family on the program, you would most assuredly hear a resounding "no." The fact is, the question is not simple and the answer is probably more difficult.

The question should probably be phrased as such: When can you charge a client for providing information about the VA Aid and Attendance program, and more importantly, who can charge for counseling?

If the question is properly structured, then the answer changes from "no" to "anytime" and "anyone." Yes, you can charge for providing advice and counseling and yes, anyone, whether certified or not, can charge a fee.

First, let's look at the original premise and why there is so much confusion. The VA has made it very clear that you cannot charge for assisting a veteran or their family in completing the application for Aid and Attendance benefits, or, as they put it, the "preparation" or "presentation" of a claim. It is perfectly legal (and supported by VA documentation) to charge a fee for providing information about the program and in helping gather the necessary forms and documents to apply for the benefit. Many practitioners charge a fee and many don't. There is no overriding majority on either side.

Another concern that comes up is who can charge a fee? Many believe that only accredited attorneys can do so. This, again, is false. Only accredited individuals may represent the claimant before the VA once a claim is denied, but prior to that point, anyone can assist a veteran with advice about the program and the process.

Here is what is considered the fine line: Once the veteran expresses the desire to file a claim, no one, not even an accredited attorney, can charge a fee for the preparation of the claim. This can get confusing. Many attorneys or financial planners simply "engage" the family or veteran for a set amount for consulting with them about the program and then include in their engagement letter that they will assist the client in preparing the application on a pro bono basis. This strategy is backed by a letter from the general counsel for the Veterans Administration addressed to Congressman Lane Evans, Ranking Democratic Member of the Committee on Veterans' Affairs and dated May 24, 2004. In this letter, Tim McClain cites examples (backed by legislative code) of why it is acceptable to charge a fee for the pre-filing consultation with a veteran and when it is prohibitive to do so.

Now, there is one more question: Is it legal to charge a veteran or their family a fee if you will be writing annuities, funeral trusts, life insurance, or other financial instruments that will result in you being paid a commission for their sale. The answer to this question is generally "no." Most state departments of insurance state that you can do one or the other -- be a fee-based planner or live on commissions -- but not both.

One proper way of setting up your practice so that you can charge a fee for consulting with a veteran is to have individuals who are not commission-driven do the background work of educating the client as to what forms, records, etc. are needed and having the fees paid to a separate entity that solely performs that service. Many of the firms that I have spoken with that do charge a fee have this type of arrangement. In some states, you may be able to charge a fee simply by having a client "sign off" on the fact that they are being charged a consultation fee and that the producers may also be compensated by various companies if financial products are sold. Again, you may want to check your state laws before you put together a plan of action. Fees typically range from several hundred to several thousand dollars.

There is also some confusion about the "third party" restrictions on who can pay the fee. The "third party" is limited to those who are "disinterested," meaning that an assisted living facility or other entity that would benefit from a favorable result would not be allowed to pay for the services of an organization to file the claim. And, the charging of a fee, whether by a financial planner, attorney, or other organization, cannot be dependent upon whether or not the claim is approved. Therefore, if you are going to charge a fee, you should probably pre-package your services to include not only the VA Aid and Attendance benefit, but also a review of other long term care issues such as private insurance and Medicaid planning.

On the other side, many planners do not charge for consulting in the hope that by helping the veteran or their family, they will be in a position to not only make commissions on the sale of products to assist the veteran in qualifying for benefits, but also from the grown children of the veteran because they have assisted the family during this stressful time. Some of my largest sales have come from 401(k) rollovers, asset preservation and income planning strategies for the grown children of veterans.

If you are not familiar with the VA Aid and Attendance program, you may be missing out on one of the most lucrative forms of prospecting in our industry. If properly established, a specialist in this market would never have to prospect again -- people are being referred to you by agencies that want to help them qualify for benefits, and these referrals are eager to purchase products from you so that they can qualify for up to $23,388 of tax free income per year to help them pay for home health care, assisted living or nursing home benefits. The market for this planning is estimated to be in excess of 14 million eligible veterans or their surviving spouses. This represents almost one out of every three people older than the age of 65.

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