Legal Guardianship vs VA Fiduciary Program

VA Fiduciary Program

Legal Guardianship and the VA Fiduciary Program are intended to help veterans who have mental or physical disabilities rendering them incapacitated in some fashion, but both work in very different ways.

The VA Fiduciary Program is a Department of Veterans Affairs (VA) program that appoints a person to manage the veteran’s VA benefits money when the veteran lacks capacity to do so.  Unlike a guardianship, which can extend to all areas of the veteran’s life, the VA Fiduciary Program is more narrowly focused on administration of VA benefits funds only.

If the VA determines a veteran lacks capacity in a way that interferes with his or her ability to manage financial affairs, the VA will appoint someone to serve as a VA fiduciary. The VA fiduciary is somewhat similar to a guardian of the estate, with three important limitations:  First, the fiduciary is not appointed by a court. Second, the fiduciary is in charge of administering only those benefits the veteran receives from the VA.  Third, the VA, and not the court, will have oversight.

Generally, the VA will find a veteran requires a fiduciary based on the medical condition giving rise to the claim to VA benefits in the first place.  But if a veteran has been determined to be lacking capacity as a part of a guardianship proceeding, that also might be an instance where the VA will select a fiduciary, which might or might not be the court-appointed guardian.

One other point regarding the VA Fiduciary Program: In addition to wounded veterans, a VA fiduciary also might be required to be appointed for a veteran’s beneficiary if that beneficiary receives VA benefits.  For example, if a deceased veteran has a spouse who is eligible for the veteran’s VA benefits, but the spouse is incapacitated due to mental illness, the VA may require a fiduciary for the spouse. Similarly, a minor child of a deceased veteran may have a fiduciary (which may be the child’s surviving parent) required to receive the veteran’s benefits.

An important thing to be aware of when dealing with the VA is that they tend to use terminology that has very specific meanings under the law but has very different meanings in the way the VA uses it. Incapacity in the guardianship context is a legal status determined by a court after a thorough review and assessment of objective evidence about a person’s physical and mental condition. The VA determines someone is incompetent based on a VA rating decision, a court decree, or both a VA rating decision and a court decree. The VA generally receives incompetency information from VA examinations, VA outpatient treatment records, private treatment records, or a court order that a beneficiary might be unable to manage his or her financial affairs (including disbursement of VA funds).

A VA incompetency determination for purposes of appointment of a fiduciary concerns only the beneficiary’s inability to manage VA benefits and is not the same as incompetency under guardianship law.  The VA can determine someone incompetent simply by having a field manager meet with the veteran, talk to family members, and conduct whatever background review the field manager deems appropriate. It is a far less rigorous process and therefore is not the same as incapacity under guardianship law.  A determination of incompetence by the VA can be used as evidence presented in a guardianship proceeding, but a court is not required to find a veteran incapacitated just because the VA has said so.

For more information visit https://www.benefits.va.gov/FIDUCIARY/index.asp

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