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I know once proceeds of house hits Dad's bank account, Aid&Attendance is over. But as my father always planned to give the proceeds to my disabled brother, could he continue or would he have to re-apply for Aid & Attendance? Would gifting to a disabled child incur a Penalty from the VA or no? Thank you!

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Once Dad has the proceeds, he will go off Aid and Attendance. It will take a while to spend that down. In that time you can expect Dad will need greater care, a nursing home. A&A won't be enough to cover that, so you will need to apply for Medicaid. Both Medicaid and the VA are now doing 5 year looks back. Do NOT give money to the disabled brother for two reasons:
1. The sudden influx of brother's income will stop his low income benefits until he spends it all down.
2. The missing proceeds will trigger a gift penalty for Dad. You will have no way to pay it back.
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I understand the concern. You might try another route - contact a VFW or American Legion branch, w/o identifying your father, and ask information about this issue. Or have a relative who's knowledge of the situation call - he/she could easily say that neither of her parents are receiving A & A, but she's doing some short and long term planning and wants to know how a house sale factors into the benefits equation.
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Thank you for your input. Because it is delicate and want to avoid any red flags with the VA, I preferred to hear if anyone had experience with this. My father is living in Memory Care Assisted Living. But, we will in the next 6 months have to sell his house in order to pay for his care and am looking for guidance.
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Do you mean he's receiving Aide and Attendance through the VA, or he's received home aid through attendance of caregivers, through Medicaid?
Seems as though it's the former?

I've never seen a question on gifting as it might affect VA Aide & Attendance. I think this is a question for someone at the VA to make sure that you get the right answer and don't jeopardize any benefits.
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