VA Incompetency and Fiduciary Program

If you or a loved one is deemed incompetent by the Department of Veterans Affairs (VA) or if you’re worried about the future of your finances, you aren’t alone.

In fact, there are over 2 million retired veterans in the United States who should all be aware of the potential for benefits from the VA.

What is VA Incompetence?

The US Department of Veterans Affairs defines someone who is mentally incompetent as: “One who because of injury or disease lacks the mental capacity to contract or to manage his or her own affairs, including disbursement of funds without limitation.”

Essentially, those found incompetent can no longer be in control of or responsible for their VA benefits and somebody else will have to be put in place to handle them.

How Is Incompetence Determined?

A veteran is ruled incompetent due to mental disability, advanced age, or physical infirmity. In order to be found incompetent, there must be a ruling by medical evidence or a court ruling. In some cases, a court may have ruled you incompetent and then the VA will also find you incompetent to manage your benefits.

When the VA proposes a finding of incompetency, they are required to notify you of this proposed action and of your right to a hearing. If you didn’t receive this notice, it is likely because it is not necessary if you have been declared incompetent by a court or if you have an appointed guardian based on a previous court finding of incompetency.

If you request a hearing, the court must hold one prior to a decision of incompetency. The Veterans Claims Assistance Act does not apply to veterans seeking restoration of competency because it is seeking a change in how they distribute benefits, not a change to the benefits themselves.

Because of this, the VA does not have any obligation to assist under the VCAA (Veterans Claims Assistance Act) when it comes to determining competency.

Why Was I Declared Incompetent?

Since this is on a case-by-case basis, speaking directly with the medical professional who found you to be incompetent will give you the most accurate information about your personal ruling.

However, for some general guidance, here are some factors that VA raters will look at to make their determination:

• What the impact of the injury or disease is on your ability to manage your financial affairs. This includes the consideration of factors like:
  • Knowing the amount of your money in your payments from the VA
  • Knowing the types and amounts of bills owed monthly
  • Handling the payment in a proper way
• The specific type of mental disorder that is affecting your emotional/behavioral state.

Essentially, all veterans begin with the assumption of competence. If enough evidence shows you to be incompetent to take care of your finances based on the way you score on the Compensation and Pension Exam, then they may deem you incompetent.

One of our VA disability lawyers has tips for your C&P Exam.

How to Avoid an Incompetence Ruling

If you’re reading this article and you haven’t been deemed incompetent, here is some useful advice for you. When you apply for disability compensation, the VA will send you for a Compensation and Pension Exam at your local VA medical center to evaluate your disability.

If you are able to manage your own money, and you’ve been doing so without any issues or late payments, make sure you are as clear as possible about this when you get asked about it.

The doctor who examines you will write a detailed report for the VA. If the VA doctor asks you about your ability to manage your finances, your answers will appear in the report.

If you tell the examining doctor that you need help paying your bills or have problems budgeting your money, then the VA could deem you incompetent to manage your VA benefits. It is best to explain thoroughly that you are able to handle your money without assistance, assuming that is the case.

Answers to Veteran’s most common questions from an experienced VA disability lawyer.

What Happens When You Are Recognized With VA Incompetence?

“Where do we go from here?”

That’s the question most veterans will have after they are told they can no longer manage their own finances. It’s not an irrational question, so let’s find out what happens next.

If you’ve been in control of your VA benefits for a long time, it is often disheartening and creates some unease to know that you won’t have that control anymore.

Well, the VA has thought of that. There are systems in place to make sure your money is going to the right places. Let’s talk about those.

Use our VA disability calculator to estimate your
combined VA rating and monthly payment

What Is A Fiduciary?

If you’ve never heard the term “fiduciary”, don’t get confused. Simply put, a fiduciary is another word for trustee.

A fiduciary is essentially a person to take care of your benefits and finances. You will have a fiduciary appointed to you in order to ensure that your benefits and payments from the VA are being used wisely to benefit you.

A fiduciary does not take a portion of your benefits. The fiduciary is put into place to ensure that the money you are receiving is going to the right places. Your bills and health insurance premiums need to be paid on time, and this takes the burden off of you.

How Is a Fiduciary Appointed?

In most cases, the veteran will get to choose their fiduciary. Typically, they will choose a family member to take care of their finances.

This fiduciary will have to undergo a background investigation, including credit checks, criminal history, and reference checks before being given responsibility for the veteran’s finances.

In other circumstances, such as the veteran being unable to select their own fiduciary, the VA will appoint one for them. They have trustees available who have already been vetted to help in these situations.

Why Is This Process Necessary?

The incompetence ruling was established with good intentions. In most cases where a veteran was deemed incompetent, it is necessary that their benefits are used for the benefit of that veteran. Placing a designated fiduciary in charge of the benefits ensures that there is only one person responsible, and therefore, held accountable, for your finances.

Will My Benefits Change?

Your benefits should not be affected, they will only be controlled by a third party. Your fiduciary will be fully responsible for your complete benefits payments, and your payment schedule should remain uninterrupted.

If that is not the case, speak with your regional VA office immediately to address the situation. The number of benefits should not change due to a newly appointed fiduciary.

What Are the Risks?

Nobody wants to lose control of their finances, especially if the fiduciary is not someone you know or trust. For many veterans, this is their primary source of income and benefits. No system is perfect. While statistics are unknown, the rate of fraud is believed to be fairly low. However, cases have existed in the past with fiduciaries and guardianships.

Because of this, if there is any suspicion of fraud on the part of your appointed fiduciary, it is critical to contact the VA Fraud and Misuse line to file a report ASAP. 

How to Fight It 

Let us be clear, that is not always the right option. In many cases, it would be safe to heed the guidance of medical professionals. However, in many circumstances, such as the belief of an unfair court ruling with inaccurate evidence, it may be necessary. Consulting with your family may be the right choice to find out if this is the right plan for you.

Essentially, if somebody needs these benefits and assistance, there is no reason to fight this ruling. However, if you feel you are fully capable of handling your own finances and the benefits that you deserve, you would want to appeal it.

Can You Appeal a Ruling of Incompetence?

Yes. If there is new medical evidence available, veterans can appeal a VA finding of incompetency to the VA Regional Office that issued the finding or they can appeal to the Board of Veterans Appeals.

If the VA Regional Office does not reverse the finding of incompetency, you can appeal to the Board of Veterans Appeals, and, when necessary, to the Court of Appeals for Veterans Claims.

At any time, you have the option to ask to have the VA reassess your ability to manage your VA benefits by submitting a reevaluation request, in writing, to your regional office. This is a good option if you are confident it was an unfair or inaccurate ruling.

Basically, when a proposed finding of incompetency is made, you can appeal it and submit evidence in favor of competency. However, if you have already been found incompetent, what you could do is file a new claim to restore competency. 

Can You Appeal an Appointed Fiduciary?

Veterans can appeal the VA’s selection of a fiduciary to the Board of Veterans Appeals or to the VA Regional Office that made the selection.

For years, the VA claimed that its selection of fiduciaries was entirely within its own authority and not subject to judicial review. This gave many veterans no recourse when they have mismanaged or withheld funds. However, in April 2011, the U.S. Court of Appeals for Veterans Claims changed that. Veterans now have the right to appeal the selection of a fiduciary to the CAVC.

How Do I File an Appeal?

If you have made the decision to file an appeal, then it needs to be with the issuing body.

You file an appeal by submitting a Notice of Disagreement with the Regional Office that issued the decision you disagree with. It is best to consult with a legal representative prior to doing this for the best outcome.

At any time, you can also ask to have the VA reassess your ability to manage your VA benefits by submitting a reevaluation request to your regional office. This has to be in writing for documentation purposes.

After you have filed, if they refuse the appeal or if you are unhappy with their ruling on the appeal, you can file an appeal with the VA Court of Appeals. This is when you will need the proper representation.

Getting Legal Help

Your benefits and your rewards for all of your sacrifices are nothing to joke around about. If you believe you have been wrongfully ruled incompetent or been wrongfully appointed a fiduciary, it’s time to act.

This affects your financial well-being and your control over your finances. If you believe you are competent to handle your benefits, your regular attorney is not best positioned to help you. You should get yourself an experienced VA legal team to ensure that you get a fair ruling.

What Else?

There is plenty more to know about VA incompetence and how you can best prepare yourself and get the most out of your VA benefits. Don’t be afraid to reach out for more information or a helping hand. Contact us and let us give you the help that you need. We know how to set up a fiduciary and set up a power of attorney for you if you are unable to go through the long VA disability application process.