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Volume 6 - Opinions of Counsel SBEA No. 99

Opinions of Counsel index

Veterans exemption (eligible funds) (subsistence allowance paid to child of deceased or totally disabled veteran) - Real Property Tax Law, § 458:

A portion of a subsistence allowance paid to the child of a deceased or totally disabled veteran pursuant to Chapter 35 of Title 38 of the United States Code constitutes eligible funds for purposes of the veterans exemption (Real Property Tax Law, § 458). However, since these moneys are normally paid to a child between the ages of 18 and 26, and since the child of a veteran can receive the exemption only until he or she attains the age of 21, any exemption granted on the basis of a purchase of real property with such moneys will usually be of relatively short duration.

Our opinion has been requested concerning the veterans exemption (Real Property Tax Law, § 458). An exemption is being sought by a husband (a veteran) and his wife (a child of a totally disabled World War II veteran), each of whom is claiming a portion of education allowance received as eligible funds.

Section 458(1) provides, in part, that an exemption shall be granted to “real property purchased with the proceeds of a pension, bonus, or insurance, . . . hereinafter referred to as eligible funds, . . . and owned by the person who rendered such services [i.e., the veteran] . . . or the children under twenty-one years of age of such person.”

We have previously expressed the opinion that an education allowance received by a veteran, minus his educational costs, constitutes subsistence allowance (5 Op.Counsel SBEA No. 64), and that a portion of subsistence allowance constitutes eligible funds (1 Op.Counsel SBEA No. 29, 3 Op.Counsel SBEA No. 6). Accordingly, assuming there is no question as to “purchase” (see, 4 Op.Counsel SBEA No. 29) of the property, an exemption could be granted in this case based on the funds received by the husband.

More difficult is the issue involving the wife's status and her moneys.

Chapter 35 of Title 38 of the United States Code (38 U.S.C. §§ 1700-1766) is entitled “Survivors’ and Dependents’ Educational Assistance,” and the purpose of that chapter, as indicated in section 1700, is to provide “opportunities for education to children whose education would otherwise be impeded or interrupted by reason of the disability or death of a parent from a disease or injury incurred or aggravated in the Armed Forces. . . .” This chapter provides for “an educational assistance allowance to meet, in part, the expenses of the eligible person’s [i.e., child of a disabled or deceased veteran] subsistence, tuition, fees, supplies, books, equipment, and other educational costs” (38 U.S.C. § 1731(a), emphasis added).

In our opinion a veteran’s child’s subsistence allowance should be computed in the same manner as a veteran’s own subsistence allowance would be computed, and a portion of these moneys (again computed as if received by a veteran) constitutes eligible funds. It is clear that these moneys have been paid in recognition of the veteran’s service, and the fact that the veteran’s child, rather than the veteran himself, receives the direct benefit of the moneys is not determinative.

However, an educational assistance allowance under Chapter 35 is normally paid “during the period beginning on the person’s eighteenth birthday, or on the successful completion of the person’s secondary schooling, whichever first occurs, and ending on the person’s twenty-sixth birthday . . .” (38 U.S.C.; § 1712(a)). There are exceptions to this payment schedule, including payment for vocational training for the mentally and physically handicapped (who can receive moneys as early as age 14 (§ 1712 (a)(2))), but it is clear that the allowance is usually paid for college attendance. Since a veterans exemption can be granted to property owned by the child of a veteran only until that child attains the age of 21 (2 Op.Counsel SBEA No. 102), an exemption based on the use of moneys paid under Chapter 35 will normally be of relatively short duration.

Thus, in the instant case, if the wife has already attained the age of 21, no exemption based on her subsistence allowance can be granted. If she has not yet become 21, an exemption based on the purchase of property with her eligible funds may be granted, and if her husband can also prove purchase with his moneys, the veterans exemption granted will be based on both funds (2 Op.Counsel SBEA No. 106), until she attains the age of 21, when the first assessment roll prepared on the basis of the taxable status date occurring on or after her 21st birthday should be adjusted to reflect only the exemption granted on the basis of the husband's eligible funds.

March 5, 1980

Updated: