The VA’s Form 21P-0969 specifically asks if the claimant made any transfers during the current year or during the three prior tax or calendar years. This means they are looking at the years 2023, 2022, 2021, and all of 2020 which is a total of 42 months if the claim was received in June of 2023, BUT since the transfer was actually made before the 36-month look-back, it should be exempt from penalty.

The VA’s primary application forms 21P-534EZ and 21P-527EZ ask, “In the three calendar years before this year, did you or your dependents transfer any assets?” This is allowing the VA to look at transfers for the years 2022, 2021, and all of 2020. Although this is indeed a total of 36 months which is correct, it does not take into account that those 36 months should be from June of 2023 when the claim was received back to June of 2020 when the transfer took place thus generating no penalty since the trust was funded in February of 2020, prior to the 36-month penalty period.

Because the VA forms ask for specific time periods, a claimant must answer honestly even if the VA’s guidelines do not follow actual federal regulations, HOWEVER, in a case like this where the claimant may suffer an unjustified penalty, he or she must explain that the transfer should generate no penalty pursuant to 38 CFR 3.276(a)(7).