What is the VA Fiduciary Process?
The veterans benefits fiduciary process occurs when the Department of Veterans Affairs (VA) has approved a claim but has proposed a finding of incompetency of the claimant. This means that the VA believes the claimant does not have the mental ability to manage receipt of VA funds. To help the claimant with his or her VA benefit, a fiduciary needs to be appointed. The term “fiduciary process” is used to describe what happens from the time the VA approves a claim with a proposed finding of incompetency through the time the VA appoints a fiduciary and releases any withheld retroactive benefits. This process can take from three months to over a year to complete.
When can you expect to encounter the VA Fiduciary Process?
You will generally know from the first meeting with a client or client’s family members whether to expect a proposed finding of incompetency that would require that a fiduciary be appointed. At that meeting, you should note for the file the client’s medical condition, especially as it relates to competency. Another alert is the way that the doctor completes the physician statement (VA form 21-2680). If a claimant has a diagnosis of dementia, and/or if the physician indicates on the statement that the claimant does not have the ability to manage his or her own financial affairs, you can expect a proposal of incompetency by the VA.
What should you do when filing the original claim?
If you expect a proposal of incompetency, include a VA form 21-4138, Statement in Support of Claim, regarding the fiduciary process with the fully developed claim. Your statement should acknowledge evidence of incompetency, waive the right to carry a gun under the Brady Handgun Bill, waive the right to a hearing, and include the name, relationship, and contact information for the person who will be nominated as fiduciary (usually a competent spouse or other family member). The purpose of the proposal of the finding of incompetency is to give the claimant a 60-day due process period to object to this proposal. In submitting VA form 21-4138 acknowledging evidence of incompetency, the goal is to expedite the process by waiving the due process period.
What about after a claim is approved?
After filing the formal claim, you will not hear anything about the proposal of incompetency or the fiduciary process until the approval letter arrives. This letter may state that retroactive benefits are being withheld because a finding of incompetency has been proposed. However, the claimant may also receive a separate fiduciary letter regarding their legal rights during the fiduciary process. The VA will start to pay the monthly awarded benefit shortly after the date of the award letter, but any money owed back to the effective date of the claim will be withheld until a fiduciary has been appointed. Even though you may have already submitted a waiver of this waiting period with the formal claim (on the aforementioned 21-4138, Statement in Support of Claim), you should respond again by re-sending the VA form 21-4138 regarding the fiduciary process. This time, file the statement with the Pension Management Center as well as mail it directly to the appropriate fiduciary hub (the VA department that administrates the fiduciary program).
The law firm generally does not get copied on any correspondence from the fiduciary hub, even when the lawyer is acting as the VA representative. The attorney is kept in the loop for the purpose of the claim adjudication process, but once there is an approval with a proposed finding of incompetency, the fiduciary hub deals directly with the nominated fiduciary. Thus, the representative must rely on the claimant or proposed fiduciary to get information and updates. However, you can call the fiduciary hub as long as you are the VA-recognized authorized representative at (888) 407-0144 for a status update.
Then what?
Then it is a waiting game until a fiduciary hub field examiner contacts the nominated fiduciary to schedule an in-person interview. You should instruct the client to contact you when they have scheduled this interview so you can then provide further guidance as to what they should say or not say during the interview. The nominated fiduciary should expect to provide references, a credit check and possibly a surety bond if the retroactive benefit is large. After the interview has taken place, the fiduciary hub will send a letter appointing the fiduciary. The last action the firm takes is to follow up with the fiduciary to confirm that the withheld benefits are deposited and that the lump sum deposit is correct.
If you're a Lawyers With Purpose, for further information regarding the fiduciary process, especially recommendations regarding the interview and the yearly accounting, log into the members section of the website and take a look at the webinar “VA Tech School – Fiduciary Process”. The Lawyers with Purpose software and systems have an automatic workflow to assist members with this part of the VA application process.
Did you know we are hosting a FREE webinar on October 15th at 5 EST on the VA Proposed Rule Changes. Attend this webinar presented by Victoria L. Collier, CELA, the nation’s expert on VA Pension Benefits and Lawyers With Purpose to discuss these sweeping changes to the laws. At the webinar you will learn the details of the proposed changes, how to advise your clients between now and when the law changes, when we can expect the laws to change and how you can influence a more positive change. Click here to register now.
By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC, and Director of VA Services for Lawyers With Purpose.
Victoria L. Collier, Veteran of the United States Air Force, 1989-1995, and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; and Co-Founder of Lawyers With Purpose.
