# Veterans Benefits Administration M21-1, Part IV

# Department of Veterans Affairs Change 221

# Washington, DC 20420 August 2, 2005

> Veterans Benefits Manual M21-1, Part IV, "Authorization Procedures,"
> is changed as follows:

**Pages 18-VI-1 and 18-VI-8:** Remove these pages and substitute pages
18-VI-1 and 18-VI-8 attached.

Subparagraphs 18.31(b)(2) and 18.31(d)(1) are revised to show that all
cases involving institutional awards will require the referral of VA
Form 21-592, Request for Appointment of a Fiduciary, Custodian or
Guardian, to the fiduciary activity for oversight and proper
certification of the VAMC director or the appointment of an alternate
fiduciary.

References to VSO have been changed to VSCM. Other minor editorial
changes have been made on these pages.

By Direction of the Under Secretary for Benefits

Renée Szybala, Director

> Compensation and Pension Service

Distribution: RPC: 2068

FD: EX: ASO and AR (included in RPC 2068)

LOCAL REPRODUCTION AUTHORIZED

#### August 2, 2005 M21-1, Part IV

**Change 221**

**SUBCHAPTER VI. INSTITUTIONAL AWARDS SPECIFIC TO INCOMPETENT VETERANS**

**18.30 NOTICES RELATING TO INCOMPETENT VETERANS ADMITTED TO A VA**

**INSTITUTION OR NON-VA INSTITUTION AS A VA BENEFICIARY**

a\. **AMIE Incompetent Veterans Report.** AMIE option 8 is used to
obtain reports of veterans who have been found incompetent through
judicial proceedings or rated incompetent for VA purposes. Review each
report to determine what actions, if any, are required. Refer to
paragraph 18.10b regarding annotation of the required master log.

b\. **Subsequent Incompetency.** If a veteran is rated incompetent
subsequent to admission, any information, reports or summaries that are
required from the medical center as a result of the veteran\'s
incompetency should be requested via the AMIE system.

**18.31 PREPARATION OF INSTITUTIONAL AWARDS**

a\. **General.** Under the provisions of 38 CFR 3.852(a), when an
incompetent veteran is being furnished hospital treatment,
institutional, domiciliary or nursing home care (public or private), an
award of all or any part of the pension, compensation or retirement pay
which is payable may be made to the chief officer of the institution.
Although these institutional awards are generally restricted to cases in
which a fiduciary has not been appointed or recognized, they may also be
made on behalf of a veteran for whom a fiduciary has been appointed, but
only if specifically requested by the VSCM. The \"chief officer\" to
whom payments will be authorized is, in the case of a VA medical center,
the Director, or in non-VA institutions, the chief officer as certified
under 38 CFR 13.61 by the VSCM.

**NOTE:** The chief officer of a nursing home will not be certified
under 38 CFR 13.61 if the veteran is being maintained in that home under
38 U.S.C. 1720. See subparagraph f below.

\(1\) **Transfer of Veteran to Another Institution.** Do not interrupt
an institutional award unless the veteran is transferred to another
institution. Do not change the name of the chief officer-payee without
VSCM certification of a non-VA chief officer-payee. When award action is
not otherwise required, effect the change of name of the chief
officer-payee by using the CFID command. Send a copy of the
BDN-generated print to the VSCM of jurisdiction. See subparagraph f
below concerning transfer to nursing home.

\(2\) **Notification of Award.** Notify the Director or chief officer of
the institutional award by BDN-generated letter, locally generated
letter or VA Form 20-822 with VA Form 21-6776 as an attachment. In
addition, complete VA Form 29-4347 and refer it to the Insurance
activity.

b\. **Initial Action\--Need for VA Form 21-592.** On receipt of notice
of commitment constituting a judicial determination of incompetency,
furnish VA Form 21-592, Request for Appointment of a Fiduciary,
Custodian or Guardian, to the fiduciary activity and give consideration
to authorize current payment to a spouse payee (paragraph 17.18),
apportionment to dependents (paragraph 18.33) or institutional award. VA
Form 21-592 is required for VSCM certification prior to an award to a
non-VA institution and immediately after an award to a VA institution.

\(1\) **Private Institutions.** When a veteran is maintained in a
private nursing home or any other type of private institution (not at VA
expense), do not make an institutional award until VA Form 21-592 is
released to the VSCM at the regional office of the veteran\'s residence
and VA Form 27-555, Certificate of Legal Capacity to Receive and
Disburse Benefits, is received from the fiduciary activity.

\(2\) **VA Institution.** Incompetent veterans, with or without
dependents, who are hospitalized at a VA institution, will require
fiduciary activity oversight to ensure that their VA funds are properly
managed. Send VA

Form 21-592 and a copy of the institutional award to the fiduciary
activity having jurisdiction over the VAMC for certification of the VAMC
Director or appointment of an alternate fiduciary.

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**Change 221**

\(3\) **Controls to be Maintained.** Maintain the controls required in
paragraphs 18.34 and 18.37.

c\. **Assignment of Payee Number**

\(1\) Make institutional awards under payee number 00 (veteran), but
assign payee number 99 when the institutional award is required as an
additional award under 38 CFR 3.852 (a)(2) or (3) or (b)(2) or (3) and
there already is an existing award to a fiduciary under payee number 00.

\(2\) Handle institutional awards under payee number 99 as apportionee
awards. This will create a type C apportionee master record. Show any
amounts not paid under such award under payee number 00 as amounts
awarded or withheld (including the amount paid under payee number 99
which will be carried as a type 1 withholding).

d\. **Awards to Directors of VA Institutions**

\(1\) An institutional award to the Director of a VA medical center is
effective following the date of last payment to the veteran or, on
initial or resumed awards, from the date of entitlement, as provided
under 38 CFR 3.401(d)(2). Ensure that VA Form 21-592 is sent to the
fiduciary activity for proper certification (see subparagraph b(2)
above). Funds awarded are for comforts and desires not ordinarily
furnished in the regular support, care, treatment and maintenance
provided by institutions and for such other expenses as are clearly for
the benefit of the veteran.

\(2\) Prepare these awards at the full rate otherwise payable subject to
any amounts apportioned or amounts withheld under 38 CFR 3.551. They are
not subject to a type 3 withholding to Personal Funds of Patients
(PFOP), but the Director will place all funds not expended for the
veteran to his or her credit in the PFOP account maintained at that
institution.

e\. **Awards to Chief Officers of Non-VA Institutions.** Prior to
authorizing an institutional award to the chief officer of a non-VA
institution, obtain a certification of the official (name and title)
authorized to receive and disburse funds. See subparagraph b(1) above.

\(1\) Make the award effective as of the first day of the month in which
the award is approved or the day following the date of last payment to
the veteran, whichever is later, as provided under 38 CFR 3.401(d)(1).

\(2\) Under payee number 00 (see subparagraph c above), provide a type 3
withholding (for deposit in the PFOP account maintained at the Hines
BDC) of all sums otherwise payable in excess of the amount paid as an
apportionment or awarded to the institution (including amounts payable
for any period prior to the effective date of the veteran\'s benefits
being paid to the chief officer of the institution).

\(3\) Do not authorize a monthly rate in excess of \$60 a month. When
the award is apportioned and payments to the institution are reduced to
\$25 monthly under 38 CFR 3.852(b), enter the additional amount withheld
as a type 1 withholding.

\(4\) When the veteran does not have a spouse, child or dependent
parent, the amount payable as an institutional award will not exceed
\$60 per month unless the VSO recommends the payment of all or any part
to the chief officer for the veteran\'s use and benefit when required to
provide adequately for the needs of the veteran and avoid the necessity
for appointment of a fiduciary.

\(5\) When the veteran has a spouse or child or a dependent parent, see
paragraph 18.32.

\(6\) If an original or reopened award involving a withholding for PFOP
is prepared with a future commencing date, it should not be authorized
for processing in any cycle before the first processing cycle of the
month in which the withholding is to become effective.

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f\. **Transfers for Nursing Home Care Under 38 U.S.C. 1720.** A veteran
who has been furnished VA hospital care or any person who has been
furnished care in an Armed Forces hospital and who will become a veteran
on discharge from the Armed Forces hospital may be transferred to a
public or private nursing home for care at VA expense. A
service-connected veteran may be directly admitted to nursing home care
at VA expense if the nursing home care is for a service-connected
condition (38 U.S.C. 1720). Awards for veterans transferred or directly
admitted for care at VA expense are subject to reduction and
discontinuance under 38 CFR 3.551, 3.552 and 3.557. Maintain the
controls required by paragraphs 18.34 and 18.37 until notification is
received that care no longer is being provided at Government expense.

\(1\) If an institutional award to the Director of a VA medical center
was in effect at the time of a veteran\'s transfer to a nursing home,
continue the award until payment may be made directly to the veteran or
until VA Form 27-555 is received from the VSO authorizing payments to a
fiduciary.

\(2\) The VA medical center will furnish a summary to the appropriate
regional office on the veteran\'s transfer to a nursing home if there is
a change in competency. The rating board will review the summary and
ascertain if the veteran is still incompetent and if he or she is
entitled to either A&A or the Housebound rate.

\(a\) If the rating board determines the veteran is competent, follow
the procedures in paragraphs 18.35b and 18.36c. Establish necessary
controls to release withheld funds (paragraph 18.43).

\(b\) If the rating of incompetency is continued and no fiduciary has
been appointed, send a VA Form 21-592, if not previously sent, to the
VSO, calling attention to the nursing home placement, the date of the
veteran\'s transfer to the nursing home, a notation of possible release
in six months and the name and address of next of kin. Attach a copy of
the hospital summary to VA Form 21-592.

\(3\) The transferring VA healthcare facility will authorize and
administratively control nursing home care and notify the appropriate
regional office of the veteran\'s release from the nursing home or when
care at VA expense is terminated. Immediately make any adjustment in the
award necessitated by the release. If a fiduciary has not yet been
appointed, continue the institutional award to the Director of the VA
medical center but send the VSO a copy of the notice of release.

\(4\) When payments for an incompetent veteran are discontinued because
of the \$1,500 estate limitation, either before or after transfer to a
nursing home, follow the procedures established in subparagraph f(2)
above. If, after such transfer, the payment may be resumed because the
veteran\'s estate is reduced to \$500 or less, make the resumed award
payable, in the absence of other certification by the VSO, to the
Director of the transferring VA medical center. See paragraphs 18.40 and
18.42.

**18.32 AWARDS TO DEPENDENTS**

a\. **Non-institutionalized Incompetent Veterans.** When a veteran has
been rated incompetent and apportionment is in order, take action
immediately unless payment can be made to a fiduciary or to the spouse
as \"wife or husband\" under 38 CFR 13.57. No claim is required and,
generally, the full monthly rate otherwise payable is the apportioned
share for dependents.

b\. **Institutionalized Incompetent Veterans.** When an incompetent
veteran receiving institutional care by the United States or political
subdivision thereof has a spouse, child or dependent parent who is not
being adequately provided for by an award to a fiduciary or spouse as
\"wife or husband,\" take action as follows:

\(1\) **Immediate as Wife or Husband Award.** When an immediate award
may be made to the spouse \"as wife or husband\" subject to concurrent
submission of VA Form 21-592 to the VSO (paragraph 17.18), take such
action in lieu of an apportionment and award the spouse the full benefit
otherwise payable to the veteran.

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**M21-1, Part IV August 2, 2005**

**Change 221**

\(2\) **Apportionment to Dependents with an Institutional Award.** When
an institutional award of pension to a non-VA institution is being made,
the provisions of 38 CFR 3.454(a) apply, limiting the institutional
payments to \$25 with an award of the balance to the dependents.

\(3\) **Estranged Spouse.** When an incompetent, married veteran is
receiving disability pension as a single veteran and is receiving
institutional care at VA expense, the award is subject to reduction
under 38 CFR 3.551 on the basis of estrangement from or failure to
reasonably contribute to the support of his or her spouse. However, the
difference between the institutional rate and the rate payable to a
veteran living with a spouse may be paid as an apportionment when:

\(a\) There is a claim for an apportionment and

\(b\) There is a showing of hardship (38 CFR 3.452(c)(3) and 3.454(b)).

\(4\) **Dependent Parent Cases.** When an incompetent veteran having
neither spouse nor child is hospitalized by the United States or
political subdivision thereof, on receipt of a claim for a dependent
parent, all or any part of the benefit otherwise payable may be paid to
the dependent parent under 38 CFR 3.451, as follows:

\(a\) In compensation cases, to a dependent parent in an amount not less
than the amount of additional compensation payable on behalf of the
parent (paragraph 19.01a(3)).

\(b\) In a pension case for an incompetent veteran subject to reduction
under both 38 CFR 3.551 and 3.557, the amount payable to the dependent
parent will not exceed the institutional rate. If the dependent parent
is receiving more than the institutional rate, reduce benefits to the
institutional rate on the same date the veteran\'s benefits would
normally be reduced under 38 CFR 3.551.

\(c\) When payment has been discontinued under 38 CFR 3.557(b), the
apportionment, if any, will be made on the basis of need as determined
by the VSO (38 CFR 3.452(c)(2)). See paragraph 18.41.

c\. **Benefits in Suspense.** An initial action suspending payments
pending certification of a fiduciary does not prohibit apportionments
which are otherwise proper and equitable. If an apportionment is made
prior to certification of the fiduciary, furnish the VSO a copy of the
apportionee award with a request for expedited certification. See
paragraph 18.35 concerning expedited action required on discharge from
institutional care.

**18.33 FDIB AND PFOP ACCOUNTS**

a\. **FDIB Accounts.** The only Funds Due Incompetent Beneficiaries
(FDIB) accounts now in existence are those containing compensation or
pension accrued prior to August 8, 1946. Dispose of the money deposited
in these accounts under the precedents in effect prior to that date.
There is authority to dispose of such funds if:

\(1\) There is a guardian;

\(2\) There is request for funds; or

\(3\) There is a rating holding the veteran competent.

**NOTE:** See paragraph 27.30 for disposing of such funds upon the death
of the veteran.

b\. **PFOP Accounts.** On August 31, 1950, all balances in FDIB accounts
which represented compensation or pension accruing on or after August 8,
1946 (date of passage of Pub. L. 662, 79th Cong.), were transferred to
the Directors of the VA medical centers in which the veterans were
hospitalized for credit to PFOP accounts. On April 30, 1951, monies
which accrued on or after August 8, 1946, were transferred from FDIB to
PFOP accounts

**18-VI-4**

**August 2, 2005 M21-1, Part IV**

**Change 221**

under regional office control and are now maintained by the Hines BDC
for cases in which the veteran was confined or committed in a non-VA
institution or the whereabouts of the veteran were unknown. As a
consequence, there are two types of PFOP accounts\--those under the
control of the Hines BDC and those maintained by Directors of VA medical
centers. This requires that a distinction be made in taking award
action, as follows:

\(1\) Awards should never provide for a type 3 withholding in
institutional awards to Directors of VA medical centers. Instead, award
the total amount payable to the Director, VA medical center, for the
account of the veteran. The Director will deposit into the PFOP accounts
under his or her control all money not immediately required for the
veteran\'s needs (paragraph 18.31d).

\(2\) On the other hand, money is not placed in PFOP accounts under the
control of the Hines BDC except by a type 3 withholding unless the award
specifies that a definite sum goes into PFOP. This is done only when a
veteran is institutionalized in a non-VA institution (paragraph 18.31e).

\(3\) Monies properly deposited into PFOP accounts constitute payment as
though awarded to a fiduciary (Adm. Dec. 815).

\(a\) **Monies Properly Deposited.** Money is considered properly
deposited into PFOP when the award actions authorizing the deposits were
proper.

\(b\) **Monies Improperly Deposited.** Money is considered improperly
deposited into PFOP if improperly deposited in FDIB and subsequently
transferred to PFOP, or initially deposited in PFOP after the receipt of
notice in VA that the veteran\'s estate from all sources was in excess
of \$1,500. Return improper deposits to the appropriation, on the basis
of a memorandum signed by the authorizing official, stating that the
deposit into PFOP (or FDIB), over the period shown as \"No Pay Status\"
on the award, should not have been made and that the deposit should be
returned to the appropriation.

\(4\) When service connection is severed, monies in PFOP (Hines BDC) are
for payment. Refer requests for release of such funds to the local
Finance activity for necessary action. Amounts still in FDIB, accrued
prior to August 8, 1946, are not payable (subparagraph a above).

c\. **Funds for Necessary Comforts and Desires\--VA Medical Centers**

\(1\) **PFOP Funds.** The Director of the medical center may use funds
in the PFOP account at his or her station or obtain funds from FDIB for
necessary comforts and desires.

\(2\) **FDIB Funds.** To procure funds from FDIB when funds to PFOP are
inadequate, the Director will certify the need, showing the amount, to
the Adjudication Division having jurisdiction of the claims folder.
Prepare an out-of-system institutional award showing a lump-sum payment
from FDIB. An out-of-system award is prepared on white bond paper in a
format similar to that used by the BDN system. See M21-1, Part V,
paragraph 4.09.

\(a\) Prepare the out-of-system award as for routine processing in BDN,
except that in the \"Award Data\" columns, enter the amount of the
lump-sum payment from FDIB under \"Monthly Payment\" and enter \"(one
sum)\" under \"Effective Date.\" No other entries are required under
\"Award Data.\"

\(b\) Refer the claims folder and out-of-system award to the Finance
activity for review. If it is proper for payment, the Finance activity
will annotate the award: \"Reviewed by ([signature]{.underline}),
Station No. , Date .\" The Finance activity will prepare an 06D
transaction to pay the desired amount of FDIB for routine transmittal to
Hines BDC with other fiscal transactions.

d\. **Funds for Necessary Comforts and Desires\--Non-VA Hospitals**

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**M21-1, Part IV August 2, 2005**

**Change 221**

\(1\) **PFOP Funds.** When payments from PFOP accounts are needed for
the comfort of the veteran, they will be released on the basis of a
memorandum from the VSO authorizing partial or full release of monies on
deposit. Take award action as provided in paragraph 18.36d. Computer
processing of the amended award will result in a notice to the Hines BDC
Accounting Section. On request of the Accounting Section, the Finance
activity at the regional office will authorize the release or transfer
of the monies on deposit in the PFOP account.

\(2\) **FDIB Funds.** If payment from FDIB accounts is necessary for the
comfort of the veteran, the VSO will certify the need to Adjudication.
Authorization will prepare an award as described in subparagraph c(2)
above.

e\. **Payment As Accrued on Veteran\'s Death.** See M21-1, Part IV,
Chapter 27.

**18.34 ADJUSTMENT OF INSTITUTIONAL AWARDS DURING NON-BED CARE**

a\. **Non-Bed Care.** Non-bed care is a temporary release from a
hospital to determine the veteran\'s ability to make a satisfactory
adjustment outside the hospital and, accordingly, whether the patient
should be discharged from or returned to the hospital. Release on
furlough by non-VA institutions is synonymous with release to non-bed
care status.

b\. **Notice of Non-Bed Care.** If Adjudication requested a discharge
report, the hospital will notify the regional office of the veteran\'s
departure on, or return from, non-bed care of 30 days or more. Forward a
copy of this report to the VSO having jurisdiction over the veteran\'s
fiduciary or, if there is no fiduciary and the veteran has a spouse or
child, to the VSO having jurisdiction over the area in which the
hospital is located.

c\. **Continuance of Awards.** Since a veteran for whom no guardian has
been appointed is considered to be in the constructive custody of the
chief officer of the institution while on non-bed care, continue the
institutional award on his or her behalf and special apportionments to
his or her dependents.

\(1\) When considered advisable, the chief officer is authorized to
provide a veteran for whom no guardian or other fiduciary has been
appointed with funds while on non-bed care or may pay such funds to the
person into whose custody the veteran is released.

\(2\) The application of this procedure to non-VA hospitals is
contingent on arrangements being made by a VSO with officials of the
non-VA hospital to conform to the same rules which bind Directors of VA
medical centers.

d\. **Adjustment for Absences of 30 Days or More.** On receipt of notice
showing release to non-bed care or authorized absence of 30 days or
more, adjust awards that were reduced due to hospitalization to pay the
full amount on the basis of the last valid rating effective the date of
departure and, subject to the prior approval of the VSO when required,
to discontinue any withholding for PFOP (paragraph 18.36d).

\(1\) If the total amount is being paid either to the Director of a VA
medical center or by special apportionment between the institution and
dependents, no action is necessary unless the facts show that the
special apportionment should be changed.

\(2\) When funds in excess of the veteran\'s monthly entitlement are
required and entitlement has been terminated, funds may be provided from
PFOP or FDIB accounts in accordance with paragraphs 18.33c and d.

e\. **Extension of Non-Bed Care.** If the original period of non-bed
care or authorized absence is extended, make no further adjustment of a
special apportionment or the institutional award pending the expiration
of the extension. The Director or chief officer of the institution will
carefully review each case in which there is an extension to ascertain
if any special circumstances exist with respect to safeguarding the
interests of the veteran and his or her dependents or which may indicate
that continuance of the existing payments is not justifiable. If the
facts warrant, appropriate recommendations will be submitted to
Adjudication as to any action or adjustment considered advisable.

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f\. **Rating Action Required.** See M21-1, Part VI, paragraph 11.01h.

**18.35 ACTION WHEN DISCHARGE FROM INSTITUTION IS PLANNED**

a\. **Prevention of Payment Interruption.** On discharge from an
institution, terminate institutional awards effective date of last
payment (38 CFR 3.501(j)). See paragraph 18.31f concerning transfer to
nursing home. Exercise care to prevent interruption of payments when an
incompetent veteran in receipt of an institutional award is finally
discharged from the hospital. This requires close coordination among the
institution, the Veterans Services Division, and the Adjudication
Division.

b\. **Hospital Report Showing Change in Competency Status.** When a
hospital report is received indicating a medical opinion of regained
competency, refer it to the rating board for consideration.

\(1\) On rating board determination of competency, discontinue any
institutional award the date of last payment and pay benefits directly
to the veteran.

\(2\) If a guardian has been appointed or the veteran has been adjudged
incompetent by a court, do not make direct payments to the veteran until
competency has been restored by the court unless the VSO certifies
direct payment.

\(3\) Do not make direct payments to a veteran who has not regained
competency by VA rating unless the VSO has certified the case as a
supervised direct pay case or the court has adjudicated the veteran as
competent (38 CFR 3.850(a)).

\(4\) When payments are made directly to the veteran under supervised
direct pay (38 CFR 13.56) or based on regained competency or to a
fiduciary, notify the VSO if a VA Form 27-555 has been furnished. Also
notify the hospital Director when an institutional award is
discontinued.

c\. **Hospital Report Prior to Discharge.** Due to the indefinite period
during which non-bed care status may continue and the possibility that
competency may be regained, do not request a fiduciary until a
contemplated date of discharge has been determined. At that time the
medical center will concurrently advise Adjudication of an impending
discharge and furnish an interim summary. Following submission of this
report, the chief officer will retain the patient on non-bed care status
until the necessary rating and guardianship procedures have been
concluded.

d\. **Notification of Veterans Services Officer.** On receipt of the
hospital summary and a rating of continued incompetency, inform the VSO
of the rating and impending discharge and request the appointment of a
fiduciary. If not previously submitted, use VA Form 21-592 to request
appointment of a fiduciary. If a VA Form 21-592 was previously
submitted, make the request by memorandum. The VSO will proceed with a
field investigation to determine the need for appointment of a fiduciary
and, if needed, the type of fiduciary.

\(1\) If the VSO concludes the veteran is sufficiently competent to
administer the funds payable, he or she will refer the facts supporting
that opinion to Adjudication for further rating board consideration.

\(2\) In the exercise of its authority to determine this issue, the
rating board may consider the facts in the VSO\'s submission sufficient
to support a finding of competency, may request further development,
including an \"at once\" examination or period of examination and
observation, or confirm the prior finding.

\(3\) Fully inform the VSO and chief officer of the hospital of the
action taken.

e\. **Supervised Direct Pay\--Appointment of Fiduciary.** If the rating
board determines on reconsideration that the veteran remains
incompetent, authorize supervised direct pay as provided in paragraph
17.17 or as otherwise

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**Change 221**

certified by the VSO. Notify the VSO, the spouse or fiduciary and the
chief officer of the hospital concerned of the award.

**18.36 DISCONTINUANCE OF INSTITUTIONAL AWARDS**

a\. **On Appointment of a Guardian.** Discontinue the institutional
award as of date of last payment by amended award to a guardian pursuant
to 38 CFR 3.501(j) and 3.852. Make payment of all funds due the
incompetent person, including monies on deposit in FDIB and PFOP, to the
fiduciary, if otherwise in order, as provided in paragraphs 18.33c and
d.

b\. **On Discharge from Hospital Treatment to Domiciliary Care.** When a
veteran without a guardian for whom an institutional award has been
authorized is discharged from hospital treatment to domiciliary care,
the medical facility will include a competency statement and hospital
summary with the notice of discharge.

\(1\) If there is a medical opinion that the veteran is competent to
handle his or her own funds and a rating of competency is made,
discontinue the institutional award and award payment directly to the
veteran.

\(2\) Accomplish this by a CFID transaction unless award action is
otherwise required (e.g., to terminate withholding for PFOP).

c\. **On Determination of Competency to Handle Own Funds.** On a rating
board determination of competency when there is a court-appointed
fiduciary, do not award benefits directly to the veteran until the VSO
furnishes certification to that effect.

\(1\) Once certification is received, award the veteran the full amount
of compensation, pension or retirement pay, effective date of last
payment, pursuant to 38 CFR 3.501(j). If award action is not required,
process a CFID transaction to award payments directly to the veteran.

\(2\) Establish a control for expiration of the 6-month period following
the finding of competency by VA or the removal of legal disability,
whichever is the later. At the end of this period, restore payment of
withheld amounts under 38 CFR 3.556 as provided in subparagraph d below.

\(3\) Release all monies deposited in FDIB prior to August 8, 1946, if
otherwise in order, by a one-time payment. See paragraph 18.33d.

d\. **Termination of PFOP Withholding.** Discontinue a withholding for
PFOP for release of accumulated funds or to provide for direct payment
of current benefits, when in order, under the provisions of paragraphs
18.33d and subparagraphs a, b and c above.

\(1\) Authorize payments to the veteran, guardian, Director of a VA
installation or, when required, to provide funds to the chief officer of
a non-VA institution.

\(2\) Zero out the type 3 withholding effective as of the date first
effected when full release is in order or from the date of last payment
when only release of current benefits is in order.

**18-VI-8**