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The VA Fiduciary Appointment
This is not legal advice. The following is a practical guide that you may consider when you receive notice of an impending appointment of a VA fiduciary. The VA fiduciary program is one of the most broken of all VA programs. There is no possible way to predict individual outcomes for you.
There is a lot to read on this page.
You must read all of this page carefully and then act for yourself. There are very few people who can or will help you. Don't waste time asking for help.
How To Appeal
How To Communicate With The VA
To get notice that the VA is proposing to appoint a fiduciary is usually an unpleasant, unwelcome surprise. The veteran may or may not need help and guidance with the award money he or she has earned.
The VA fiduciary appointment program is one of the more mismanaged and poorly understood problems of your VA. The program is changing however...slowly but surely. If you disagree with the appointment of a fiduciary in your case, you must act in your own interests and you must act right now.
Read this page carefully. Then proceed to act to help yourself.
QUICK FACTS:
* The first notice you receive from VA
will be a proposal to appoint a fiduciary. This is because VA believes
you may be incompetent to handle the VA money you receive each month.
This is not a final decision and you will have an opportunity to appeal.
* Most of the details of dealing with a fiduciary appointment proposal
are up to you to do for yourself. There are very few advocates who have
knowledge of how this works.
* You have a right to appeal. Just as with any VA decision process you
may appeal all the way into the federal courts system. You appeal this
just as you would any other VA decision. Click here to learn how to appeal.
* You can not choose your fiduciary. VA
should give preference to your wishes for a spouse or other close
relative to be appointed. However, anyone appointed as fiduciary will
have to undergo a thorough credit check and a criminal background
investigation. If there are blemishes on their record, VA is unlikely to
appoint that person.
* The VA fiduciary appointment is made
because VA believes you are "incompetent". This may have come up in a C
& P exam where you told the examiner that someone else helps you to
pay your bills. If you do not believe you are incompetent, you should
appeal any decision to appoint a fiduciary.
What to do when the fiduciary letter arrives
Most veterans do not understand the VA fiduciary appointment process. When a letter arrives telling the veteran he or she is incompetent to handle their VA award money, it's usually a shock.
Very few Veterans Service Officers or advocates within a Congressional Representatives office are usually of little help. Most lawyers don't have any experience with this VA action.
The veteran is usually left to fight the battle alone.
VA will often try to appoint a fiduciary when the veteran is rated at 100% for a mental health problem and there will be an award of retroactive pay that is greater than $20,000.00. There is often no particular reason for the proposal to appoint a fiduciary.
VA should always try to appoint a close family member although that doesn't usually happen. In any case, whoever is appointed will be required to complete paperwork and clear any expenditures by the veteran through the VA.
If the appointment of a fiduciary can be avoided, it should be.
The process usually works like this:
(1) The veteran has a C & P exam where the topic of finances is brought up. The examiner may write a brief note that "Veteran is incompetent to manage his finances." This may or may not be true. I've observed cases where the veteran said "My wife handles our checkbook" and that has been interpreted by VA as enough to declare the veteran incompetent.
(2) A letter will arrive that is a "proposal" to begin an investigation and to appoint a fiduciary.
(3) If the veteran does not properly and timely respond to this proposal, an appointment is made for a VA Field Examiner (or Agent) to come to the veterans home to discuss the proposal to appoint a fiduciary.
(4) If the Field Examiner does come to the home they will soon after begin to run credit reports and other background checks to determine whether the spouse, parent or perhaps a sibling may act as fiduciary.
(5) If no approval is made for a family member, the FE will see that a VA appointed "professional" fiduciary is appointed. That person may be a banker, lawyer or other VA approved person and they will then take over the veterans VA money. The veteran will then have to seek any funds through the appointed fiduciary.
Far too many veterans get this sort of notice and then they don't respond appropriately. If the appropriate response doesn't happen in a timely manner, the VA will act on the proposal and appoint a fiduciary.
The fiduciary is then free to act to control the finances and the result is often a major problem for the veteran.
The following will apply to actions the veteran must take when he/she is first notified that a fiduciary appointment is being considered. These steps must be done as soon as possible after the letter arrives. Time spent calling a Congressperson, consulting a VSO and so on is usually time wasted.
Note that all these steps must be conducted in writing. There should be no phone calls and no emails. Faxes are not a good idea. This is a very serious matter and the veteran must initiate a strong defensive plan of action. Letters must be as brief as possible and state all the facts. Mailing must be done via USPS Certified Mail with Return Receipt Requested.
Please see http://www.vawatchdogtoday.org/Letter_Templates.html
Using the letter templates as above, write your VA Regional Office a very brief letter. This should not be more than one page.
When you write to VA you must not display anger or emotion. Do not write and tell your story. Do not express any anger.
In your letter you must say:
"This letter is a Notice of Disagreement with your proposal to consider the appointment of a fiduciary."
"I disagree with your inference/conclusion that I am incompetent to manage my finances."
"Any examination that has suggested that I am incompetent was not complete or thorough. The examination was inadequate. I request another examination."
"I request a personal hearing."
"I am not incompetent."
"I request that all my benefits be continued while I appeal your proposal and that no benefit payments be interrupted or delayed until I have exhausted all appeals venues."
(3) Send this letter via certified mail only.
(4) Wait for a reply.
While you wait...separate your checking accounts. If your spouse uses the same account as you, she (he) should open a separate account. The checking account that your VA check is deposited to should have no other funds in it. If VA seizes that account, you want as little in it as possible.
Check your credit reports. If there are blemishes you must take care of that now.
Sit down and sort out your finances. Do a financial report on yourself so that if and when VA pushes for this you will be prepared to answer questions about your finances.
Do not delay. There are no specialists out there to help you. You are the only one who can begin to solve your own issues with VA.
Jim's Mailbag ...a veteran reader tells us of his success
Hello Jim:
I received the dreaded proposal of incompetency that would ultimately appoint a fiduciary over my finances. In just three (3) months got it reversed and closed.
Here is how I did it.
I received a notice today from the VA that I am competent for VA purposes. This comes after a notice of proposal to rate me incompetent in August 2011. The notice of finding me competent is dated December 2011. It took three (3) months from the date the VA notice to rate me incompetent was sent to their decision to rate me competent. That is a very short time considering their backlog of claims.
Incompetency is considered a slap in the face and ugly stigma to we proud vets. First they tell you they want to take away our ability to manage our disability funds and also list you with the FBI as a citizen that is not allowed to own firearms. That alone made me more determined than ever to beat this proposal.
The Process:
A. I received the dreaded VA notice of proposal of incompetency in August 2011. It came right after an appeal hearing for a higher rating of my IHD in which a DRO not only gave a higher percentage of disability for IHD but back dated the rating causing the VA to owe me roughly $20K in retro pay. I read usually if a vet is 100% rated for a mental disorder (PTSD in my case) and retro pay involves around the 20K area it will likely trigger an automatic proposal of incompetency by the VA. I don't know, I'm just saying the experts use this example all the time and my case scenario fits it perfectly.
B. I sent all of my evidence registered receipt mail as you suggested along with a brief and polite explanation that the evidence provided is considered as evidence of support for reversal of their proposal. I explained that if they do choose to rate me as incompetent I will appeal the ruling as far as I can.
C. Exactly three (3) months to the day the proposal to rate me incompetent was received I get notice that the incompetency proposal has been dropped.
Thanks Jim. You do a great job. For the most part I have always fought my battles alone but your guidance on your website, the VAWatchdog dot Org, has given me knowledge to see processes more clearly and helped me channel my words and actions in a direction that I felt would lead to a more swift and positive end.
Your readers must understand one thing.
If you have a legitimate claim and wish to submit it to the VA you must first and foremost research all relevant information about your disability(s) and then make absolutely sure you are submitting the proper forms supported soundly with evidence in support of your claim.
Keep it clear. Be timely. Be honest. Submit support of your claim. Done properly your claim will be much easier and timely for the claims staff to process your claim.
If you get denied or confused...check with VAWatchdog dot Org...The Bible of VA disability guides.
<Sniper2> Vietnam Veteran
Veterans want to know about fiduciary appointments...many veterans have searched the Internet and landed on my pages.
These are a few of the queries;
"how to get spouse chosen as va appointed fiduciary"
The spouse should be the first person considered. To be appointed the individual must show a good credit history and agree to the terms and conditions of a VA imposed fiduciary appointment.
"can a va field examiner be sued"
Maybe. You will need to consult an attorney who is experienced in VA law. It's likely to be very expensive for you though.
"lawyers for veterans fiduciary"
Many veterans want to hire a lawyer as soon as they begin the fiduciary process with VA. Unfortunately, most vets don't understand that there are limits to what lawyers are able to accomplish. Vets also think that because they are outraged at the injustice of VA that lawyers will also be outraged and work for free. While many of my attorney friends do take on a lot of "pro bono" or no charge work, most fiduciary cases won't be represented for free. There are steps described on this page that vets must do for themselves, prior to trying to retain legal counsel.
"what does appointed as fiduciary mean and why is this useful"
An individual who is appointed as fiduciary is responsible for managing the VA benefits money for a veteran who is declared incompetent to handle his/her own money. Many veterans who suffer from mental health issues, dementia or other cognitive problems may need someone to protect their money for them.
"how much does VA fiduciary get paid?"
The usual fee is somewhere around 4% or 5% of the amount of money paid each month. This will vary from region to region.
Sec. 5506. Definition of "fiduciary"
For purposes of this chapter and chapter 61 of this title, the term "fiduciary" means—
(1) a person who is a guardian, curator, conservator, committee, or person legally vested with the responsibility or care of a claimant (or a claimant’s estate) or of a beneficiary (or a beneficiary’s estate); or
(2) any other person having been appointed in a representative capacity to receive money paid under any of the laws administered by the Secretary for the use and benefit of a minor, incompetent, or other beneficiary.
For purposes of this chapter and chapter 61 of this title, the term "fiduciary" means—
(1) a person who is a guardian, curator, conservator, committee, or person legally vested with the responsibility or care of a claimant (or a claimant’s estate) or of a beneficiary (or a beneficiary’s estate); or
(2) any other person having been appointed in a representative capacity to receive money paid under any of the laws administered by the Secretary for the use and benefit of a minor, incompetent, or other beneficiary.
Sec. 5507. Inquiry, investigations, and qualification of fiduciaries
(a) Any certification of a person for payment of benefits of a beneficiary to that person as such beneficiary’s fiduciary under section 5502 of this title shall be made on the basis of—
(1) an inquiry or investigation by the Secretary of the fitness of that person to serve as fiduciary for that beneficiary, such inquiry or investigation—
(A) to be conducted in advance of such certification;
(B) to the extent practicable, to include a face-to-face interview with such person; and
(C) to the extent practicable, to include a copy of a credit report for such person issued within one year of the date of the proposed appointment;
(2) adequate evidence that certification of that person as fiduciary for that beneficiary is in the interest of such beneficiary (as determined by the Secretary under regulations); and
(3) the furnishing of any bond that may be required by the Secretary.
(b) As part of any inquiry or investigation of any person under subsection (a), the Secretary shall request information concerning whether that person has been convicted of any offense under Federal or State law which resulted in imprisonment for more than one year. If that person has been convicted of such an offense, the Secretary may certify the person as a fiduciary only if the Secretary finds that the person is an appropriate person to act as fiduciary for the beneficiary concerned under the circumstances.
(c)
(1) In the case of a proposed fiduciary described in paragraph (2), the Secretary, in conducting an inquiry or investigation under subsection
(a)(1), may carry out such inquiry or investigation on an expedited basis that may include waiver of any specific requirement relating to such inquiry or investigation, including the otherwise applicable provisions of subparagraphs (A), (B), and (C) of such subsection. Any such inquiry or investigation carried out on such an expedited basis shall be carried out under regulations prescribed for purposes of this section.
(2) Paragraph (1) applies with respect to a proposed fiduciary who is—
(A) the parent (natural, adopted, or stepparent) of a beneficiary who is a minor;
(B) the spouse or parent of an incompetent beneficiary;
(C) a person who has been appointed a fiduciary of the beneficiary by a court of competent jurisdiction; or
(D) being appointed to manage an estate where the annual amount of veterans benefits to be managed by the proposed fiduciary does not exceed $3,600, as adjusted pursuant to section 5312 of this title.
(d)
Temporary Fiduciaries.—
When in the opinion of the Secretary, a temporary fiduciary is needed in order to protect the assets of the beneficiary while a determination of incompetency is being made or appealed or a fiduciary is appealing a determination of misuse, the Secretary may appoint one or more temporary fiduciaries for a period not to exceed 120 days. If a final decision has not been made within 120 days, the Secretary may not continue the appointment of the fiduciary without obtaining a court order for appointment of a guardian, conservator, or other fiduciary under the authority provided in section 5502 (b) of this title.
38 USC 5502 - Payments to and supervision of fiduciaries
(a)
(1) Where it appears to the Secretary that the interest of the beneficiary would be served thereby, payment of benefits under any law administered by the Secretary may be made directly to the beneficiary or to a relative or some other fiduciary for the use and benefit of the beneficiary, regardless of any legal disability on the part of the beneficiary. Where, in the opinion of the Secretary, any fiduciary receiving funds on behalf of a Department beneficiary is acting in such a number of cases as to make it impracticable to conserve properly the estates or to supervise the persons of the beneficiaries, the Secretary may refuse to make future payments in such cases as the Secretary may deem proper.
(2) In a case in which the Secretary determines that a commission is necessary in order to obtain the services of a fiduciary in the best interests of a beneficiary, the Secretary may authorize a fiduciary appointed by the Secretary to obtain from the beneficiary’s estate a reasonable commission for fiduciary services rendered, but the commission for any year may not exceed 4 percent of the monetary benefits under laws administered by the Secretary paid on behalf of the beneficiary to the fiduciary during such year. A commission may not be authorized for a fiduciary who receives any other form of remuneration or payment in connection with rendering fiduciary services for benefits under this title on behalf of the beneficiary.
(b) Whenever it appears that any fiduciary, in the opinion of the Secretary, is not properly executing or has not properly executed the duties of the trust of such fiduciary or has collected or paid, or is attempting to collect or pay, fees, commissions, or allowances that are inequitable or in excess of those allowed by law for the duties performed or expenses incurred, or has failed to make such payments as may be necessary for the benefit of the ward or the dependents of the ward, then the Secretary may appear, by the Secretary’s authorized attorney, in the court which has appointed such fiduciary, or in any court having original, concurrent, or appellate jurisdiction over said cause, and make proper presentation of such matters. The Secretary, in the Secretary’s discretion, may suspend payments to any such fiduciary who shall neglect or refuse, after reasonable notice, to render an account to the Secretary from time to time showing the application of such payments for the benefit of such incompetent or minor beneficiary, or who shall neglect or refuse to administer the estate according to law. The Secretary may require the fiduciary, as part of such account, to disclose any additional financial information concerning the beneficiary (except for information that is not available to the fiduciary). The Secretary may appear or intervene by the Secretary’s duly authorized attorney in any court as an interested party in any litigation instituted by the Secretary or otherwise, directly affecting money paid to such fiduciary under this section.
(c) Authority is hereby granted for the payment of any court or other expenses incident to any investigation or court proceeding for the appointment of any fiduciary or other person for the purpose of payment of benefits payable under laws administered by the Secretary or the removal of such fiduciary and appointment of another, and of expenses in connection with the administration of such benefits by such fiduciaries, or in connection with any other court proceeding hereby authorized, when such payment is authorized by the Secretary.
(d) All or any part of any benefits the payment of which is suspended or withheld under this section may, in the discretion of the Secretary, be paid temporarily to the person having custody and control of the incompetent or minor beneficiary, to be used solely for the benefit of such beneficiary, or, in the case of an incompetent veteran, may be apportioned to the dependent or dependents, if any, of such veteran. Any part not so paid and any funds of a mentally incompetent or insane veteran not paid to the chief officer of the institution in which such veteran is a patient nor apportioned to the veteran’s dependent or dependents may be ordered held in the Treasury to the credit of such beneficiary. All funds so held shall be disbursed under the order and in the discretion of the Secretary for the benefit of such beneficiary or the beneficiary’s dependents. Any balance remaining in such fund to the credit of any beneficiary may be paid to the beneficiary if the beneficiary recovers and is found competent, or if a minor, attains majority, or otherwise to the beneficiary’s fiduciary, or, in the event of the beneficiary’s death, to the beneficiary’s personal representative, except as otherwise provided by law; however, payment will not be made to the beneficiary’s personal representative if, under the law of the beneficiary’s last legal residence, the beneficiary’s estate would escheat to the State. In the event of the death of a mentally incompetent or insane veteran, all gratuitous benefits under laws administered by the Secretary deposited before or after August 7, 1959, in the personal funds of patients trust fund on account of such veteran shall not be paid to the personal representative of such veteran, but shall be paid to the following persons living at the time of settlement, and in the order named: The surviving spouse, the children (without regard to age or marital status) in equal parts, and the dependent parents of such veteran, in equal parts. If any balance remains, such balance shall be deposited to the credit of the applicable current appropriation; except that there may be paid only so much of such balance as may be necessary to reimburse a person (other than a political subdivision of the United States) who bore the expenses of last sickness or burial of the veteran for such expenses. No payment shall be made under the two preceding sentences of this subsection unless claim therefor is filed with the Secretary within five years after the death of the veteran, except that, if any person so entitled under said two sentences is under legal disability at the time of death of the veteran, such five-year period of limitation shall run from the termination or removal of the legal disability.
(e) Any funds in the hands of a fiduciary appointed by a State court or the Secretary derived from benefits payable under laws administered by the Secretary, which under the law of the State wherein the beneficiary had last legal residence would escheat to the State, shall escheat to the United States and shall be returned by such fiduciary, or by the personal representative of the deceased beneficiary, less legal expenses of any administration necessary to determine that an escheat is in order, to the Department, and shall be deposited to the credit of the applicable revolving fund, trust fund, or appropriation.
Under the direction of David R. McLenachen, the newly created Pension and Fiduciary Service begins to make long overdue changes.
Enclosures & Attachments
Enclosure "C"
Enclosure "D"
Timeliness Report: Fiduciary Field Examinations
VETERANS BENEFITS ADMINISTRATION, FIDUCIARY ACTIVITIES
§ 5502 Payments to and supervision of fiduciaries
§ 5506 Definition of "fiduciary"
§ 5507 Inquiry, investigations, and qualification of fiduciaries
VA Fiduciary System Seriously Flawed
Chairman Johnson said the problems facing the VA fiduciary system “represent gross misfeasance on the part of VA. I have seen the evidence of veterans, their friends, and family repeatedly notifying VA of these matters and time after time, their appeals for help is ignored. This needs to stop. Identifying and correcting situations like these is certainly not rocket science.”
Subcommittee investigators also uncovered that the VA Fiduciary Program has been hurt by failures in oversight and an unwillingness to listen to veterans. “Last week, in a hearing before the Full Committee, VA Deputy Secretary Scott Gould stated that ‘the wrong way became the way we’ve always done it.’ This mindset seems to have permeated the VA’s Fiduciary Program as well, and it’s a culture we need to change.”
Subcommittee to Investigate VA Fiduciary System
On Thursday, February 9, 2012, at 10:00 a.m. the Subcommittee on Oversight and Investigations will hold an oversight hearing entitled, “Reforming VA’s Flawed Fiduciary System.” The Subcommittee will continue its investigation into VA’s Fiduciary Program and address the numerous concerns raised by veterans regarding fiduciaries.
VAWatchdog began to report on what may be the most mismanaged VA benefit program ever in 2007. Since then we have seen the CAVC decision in Freeman v. Shinseki where the Court issued a scathing opinion regarding the way that the appointments of VA fiduciaries are managed by VBA. The only significant VA response in these years has been to shift the administration of the program around by the mostly unannounced creation of a new division...the Pension and Fiduciary Service, headed up by Dave McLenachen.
The creation of the new business unit has served to buy VA more time while no real change is required. The new business unit has also created opportunity for promotions and lateral transfers of long time employees who had nowhere else to go within the DVA.
The new business unit was created almost one year ago. Since that time, there has been no announcement of any program improvements...really, no announcements at all. A Google search turns up a single brief article by respected attorney Victoria Collier. While Attorney Collier attempts to highlight the promises being made for significant improvements, the reality from the veterans perspective has been that overall, things are as bad as ever before.
Veterans who suffer the consequences of falling into the bottomless pit of a VA determination and the subsequent labeling of incompetence deserve much better. The CAVC report said what needed to be said and stated the case clearly. Today, we'll have the opportunity to listen to the excuses and ever-continuing empty promises that will be proffered during this hearing.
"Never mistake motion for progress", as an engineer friend once told me. This is not progress.
