No. There is no penalty period (sometimes called a “look back”) for gifting any excess assets to family members or to a trust. This differs, in ways, from Medicaid which does have a five year look back period to see if you gave up any assets.
The VA does prohibit transferring assets to a dependent as the dependents income and assets will be considered the veteran’s income and assets.
The VA only looks at what are your assets as of the date of the application.
There are certainly issues to consider when transferring assets — giving them away — to family members. These include tax consequences when the asset is sold (i.e. a house), how this affects medicaid eligibility, etc.
If you live in Alabama and have questions about this benefit for you or your spouse or your parents, please let us know by calling us at 205-879-2447 or you can fill out a contact form on our Alabama Consumer site. Do note we are creating a separate site just for this area of the law in Alabama but it is not up and running yet so feel free to give us a call at 205-879-2447.