Custom Federal Regulations Service™

**This is supplemental material**

**for Book F of your set of**

**Federal Regulations**

Title 38, Part 13

*Fiduciary Activities*

**Veterans Benefits Administration**

Supplement No. 11

Covering period of *Federal Register* issues

through June 22, 2003

Copyright © 2003 Jonathan Publishing

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> **GENERAL INSTRUCTIONS**

Custom Federal Regulations Service™

**Supplemental Materials for *Book F***

**Code of Federal Regulations**

**Title 38, Part 13**

***Fiduciary Activities***

**Veterans Benefits Administration**

**Supplement No. 11**

25 June 2003

Covering the period of Federal Register issues

through June 22, 2003

When **Book F** was originally prepared, it was current through final
regulations published in the *Federal Register* of 20 March 1992. These
supple­mental materials are designed to keep your regulations up to date.
You should file the attached pages immediately, and record the fact that
you did so on the *Supplement Filing Record* which is at page F-8 of
Book F, *Fiduciary Activities*.

> **To ensure accuracy and timeliness of your materials,**
>
> **it is important that you follow these simple procedures:**
>
> 1\. Always file your supplemental materials immediately upon receipt.
>
> 2\. Before filing, always check the Supplement Filing Record (page
> F-8) to be sure that all prior supplements have been filed. If you are
> missing any supple­ments, contact the Veterans Benefits Administration
> at the address listed on page F-2.
>
> 3\. After filing, enter the relevant information on the Supplement
> Filing Record sheet (page F-8)---the date filed, name/initials of
> filer, and date through which the *Federal Register* is covered.
>
> 4\. If as a result of a failure to file, or an undelivered supplement,
> you have more than one supplement to file at a time, be certain to
> file them in chronological order, lower number first.
>
> 5\. Always retain the filing instructions (simply insert them at the
> back of the book) as a backup record of filing and for reference in
> case of a filing error.
>
> 6\. Be certain that you *permanently discard* any pages indicated for
> removal in the filing instructions in order to avoid confusion later.

To execute the filing instructions, simply remove *and throw away* the
pages listed under *Remove These Old Pages,* and replace them in each
case with the corres­pond­ing pages from this supplement listed under *Add
These New Pages*. Occasionally new pages will be added without removal
of any old material (reflecting new regulations), and occasionally old
pages will be removed with­out addition of any new material (reflecting
rescinded regulations)---in these cases the word *None* will appear in
the appropriate column.

> **FILING INSTRUCTIONS**

**Book F, Supplement No. 11**

**June 25, 2003**

*Remove these Add these Section(s)*

*[old pages]{.underline} [new pages]{.underline} [Affected]{.underline}*

**Do not file this supplement until you confirm that all prior
supplements have been filed**

F-9 to F-14 F-9 to [F-12]{.underline} Index to Book F

13.69-1 to 13.100-1 13.69-1 to 13.100-1 §§13.70--13.71 and

13.74--13.77

13.106-1 to 13.109-2 13.106-1 to 13.109-2 §§13.108--13.109

**Be sure to complete the**

***Supplement Filing Record* (page F-8)**

**when you have finished filing this material.**

> **HIGHLIGHTS**

**Book F, Supplement No. 11**

**June 25, 2003**

***Supplement* Highlights *references***: Where substantive changes are
made in the text of regulations, the paragraphs of *Highlights* sections
are cited at the end of the relevant section of text. Thus, if you are
reading §3.263, you will see a note at the end of that section which
reads: "Supplement *Highlights* references---6(2)." This means that
paragraph 2 of the *Highlights* section in Supplement No. 6 contains
information about the changes made in §3.263. By keeping and filing the
*Highlights* sections, you will have a reference source explaining all
substantive changes in the text of the regulations.

***Supplement frequency***: This Book F (*Fiduciary Activities*) was
originally supplemented twice a year, in March and September. Beginning
1 August 1995, supplements will be issued *every month* during which a
final rule addition or modification is made to the parts of Title 38
covered by this book. Supplements will be numbered consecutively as
issued.

**Modifications in this supplement include the following:**

1\. On 10 June 2003, the VA published a final rule, effective that same
date, to reflect statutory provisions of the Veterans Education and
Benefits Expansion Act of 2001, including the presumption of service
connection for respiratory cancers based on herbicide exposure in
Vietnam; benefits for Gulf War veterans' chronic disabilities; repeal of
the limitation of benefits for incompetent institutionalized veterans;
non-service-connected pension eligibility; the limitation on pension for
certain recipients of Medicaid-covered nursing home care; the
prohibition on certain benefits to fugitive felons; and the limitation
on the payment of compensation for veterans remaining incarcerated since
October 7, 1980. Changes:

> In §13.70, redesignated paragraph (a)(1) as paragraph (a), and removed
> paragraph (a)(2);
>
> Revised §13.71; and
>
> Removed and reserved §§13.74--13.77 and 13.108--13.109.

Number Filed Person Filing Fed. Reg. dated

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

**Index**

**Part 13 --- Fiduciary Activities**

Page numbers have three parts: (1) the section number, (2) a hyphen, and
(3) the page number within that section---e.g., 13.71-2.

This looseleaf book has two indices.

• **Index 1** (by section number) begins on this page

• **Index** **2** (alphabetical by section title) begins on page
**F-12**

The first is arranged by *section number* and presents the contents of
Part 13 in the order in which they appear in the *Code of Federal
Regulations*. The second is arranged by *section title*, and presents
the titles of all sections in Part 13 in alphabetical order. The
*section title* index begins on page F-12.

**Index 1 --- by Section Number**

13.1 Authority 13.1-1

13.2 Field examinations 13.2-1

13.3 State legislation 13.3-1

13.55 Veterans Service Center Manager to select and appoint or recommend
for

appointment the person or legal entity to receive Department of

Veterans Affairs benefits in a fiduciary capacity 13.55-1

13.56 Direct payment 13.56-1

13.57 Payment to the wife or husband of incompetent veteran 13.57-1

13.58 Legal custodian 13.58-1

13.59 Court-appointed fiduciary 13.59-1

13.61 Payment to the chief officer of institution 13.61-1

13.62 Payment to bonded officer of Indian reservation 13.62-1

13.63 Payment to custodian-in-fact 13.63-1

13.64 Fiduciary commissions 13.64-1

13.69 Limitation of beneficiaries to individual fiduciary 13.69-1

13.70 Apportionment of benefits to dependents 13.70-1

13.71 Payment of cost of veteran's maintenance in institution 13.71-1

13.72 Release of funds from Personal Funds of Patients 13.72-1

13.73 Transfer of funds from funds due incompetent beneficiaries 13.73-1

13.74 \[Removed and reserved\] 13.74-1

13.75 \[Removed and reserved\] 13.75-1

13.76 \[Removed and reserved\] 13.76-1

13.77 \[Removed and reserved\] 13.77-1

13.100 Supervision of fiduciaries 13.100-1

13.101 Management and use of estates of minors 13.101-1

13.102 Accountability of legal custodians 13.102-1

13.103 Investments by Federal fiduciaries 13.103-1

13.104 Accounts of court-appointed fiduciaries 13.104-1

13.105 Surety bonds 13.105-1

13.106 Investments by court-appointed fiduciaries 13.106-1

13.107 Accounts of chief officers of public or private institutions
13.107-1

13.108 \[Removed and reserved\] 13.108-1

13.109 \[Removed and reserved\] 13.109-1

13.110 Escheat; post fund 13.110-1

13.111 Claims of creditors 13.111-1

*Section Title index begins on next page*

**Index 2 --- Alphabetical by Subject Title**

Accountability of legal custodians 13.102-1

Accounts of chief officers of public or private institutions 13.107-1

Accounts of court-appointed fiduciaries 13.104-1

Apportionment of benefits to dependents 13.70-1

Authority 13.1-1

Claims of creditors 13.111-1

Court-appointed fiduciary 13.59-1

Direct payment 13.56-1

Escheat; post fund 13.110-1

Fiduciary commissions 13.64-1

Field examinations 13.2-1

Investments by court-appointed fiduciaries 13.106-1

Investments by Federal fiduciaries 13.103-1

Legal custodian 13.58-1

Limitation of beneficiaries to individual fiduciary 13.69-1

Management and use of estates of minors 13.101-1

Payment to custodian-in-fact 13.63-1

Payment to the chief officer of institution 13.61-1

Payment of cost of veteran's maintenance in institution 13.71-1

Payment to bonded officer of Indian reservation 13.62-1

Payment to the wife or husband of incompetent veteran 13.57-1

Release of funds from Personal Funds of Patients 13.72-1

State legislation 13.3-1

Supervision of fiduciaries 13.100-1

Surety bonds 13.105-1

Transfer of funds from funds due incompetent beneficiaries 13.73-1

Veterans Service Center Manager to select and appoint or recommend for

appointment the person or legal entity to receive Department of

Veterans Affairs benefits in a fiduciary capacity 13.55-1

**§13.69 Limitation of beneficiaries to individual fiduciary.**

For purposes of payment of Department of Veterans Affairs benefits, the
number of beneficiaries for whom an individual fiduciary may act will be
limited to the number the fiduciary may be reasonably expected to
properly serve. When, in the judgment of the Veterans Service Center
Manager, a fiduciary has been appointed or is seeking appointment in a
case in excess of that number, the Veterans Service Center Manager will
initiate action to obtain a suitable substitute fiduciary.

\[40 FR 54248, Nov. 21, 1975, as amended at 67 FR 46868, July 17, 2002\]

**§13.70 Apportionment of benefits to dependents.**

\(a\) *Incompetent veterans being furnished hospital treatment,
institutional or domiciliary care by United States or political
subdivision thereof.* When compensation, pension or emergency officers'
retirement pay is payable in behalf of a veteran who is incompetent or
under other legal disability by court action, the Veterans Service
Center Manager may recommend such apportionment to or in behalf of the
veteran's spouse, child or dependent parent as may be necessary to
provide for their needs.

\(b\) *Dependent parents.* When the compensation of a veteran paid to
his or her fiduciary includes an additional amount for a dependent
parent or parents and the fiduciary neglects or refuses to make an
equivalent contribution for their support, the Veterans Service Center
Manager may recommend the apportionment to the parent or parents of the
additional amount.

\(c\) *Payments withheld because of fiduciary's failure to properly
administer veteran's estate.* When payments of compensation, pension or
emergency officers' retirement pay in behalf of a veteran have been
stopped because of the fiduciary's failure or inability to properly
account or otherwise administer the estate, the Veterans Service Center
Manager may recommend the apportionment to the veteran's spouse, child
or dependent parent of any benefit not paid under an institutional award
or to a custodian-in-fact. (Authority: 38 U.S.C. 501, 512, 5502, 5503)

\[40 FR 54248, Nov. 21, 1975, as amended at 51 FR 26158, July 21, 1986;
66 FR 48561, Sept. 21, 2001; 67 FR 46868, July 17, 2002; 68 FR 34543,
June 10, 2003\]

**Supplement *Highlights* references**: 9(1), 11(1).

**§13.71 Payment of cost of veteran's maintenance in institution.**

\(a\) The payment of part of compensation, pension or emergency
officers' retirement pay for the cost of a veteran's hospital treatment,
institutional or domiciliary care in an institution operated by a
political subdivision of the United States may be authorized as provided
in paragraph (b) of this section when:

> \(1\) The veteran is rated incompetent by the Department of Veterans
> Affairs,
>
> \(2\) It has been determined the veteran is legally liable for the
> cost of his or her maintenance, and
>
> \(3\) The institution's representative has asserted or probably will
> assert a claim for full maintenance costs.

\(b\) Subject to these conditions and the further condition that the
responsible official of the institution or political subdivision will
agree not to assert against Department of Veterans Affairs benefits any
further claim for maintenance during the veteran's lifetime, the
Veterans Service Center Manager may agree with such official to the
payment of the veteran's benefits through an institutional award to be
applied to:

\(1\) A monthly amount determined by the Veterans Service Center Manager
to be needed for the veteran's personal use,

\(2\) An amount to be agreed upon to be accumulated to provide for the
veteran's rehabilitation upon release from the institution, and

\(3\) So much of the amount of the benefit as remains not exceeding the
amount the Veterans Service Center Manager determines to be the proper
charge as fixed by statute or administrative regulation, to the cost of
the veteran's maintenance.

\(c\) Upon execution of an agreement as provided in paragraph (b) of
this section, the Veterans Service Center Manager will certify the total
amount to be released to the chief officer of the institution.
(Authority: 38 U.S.C. 501, 512, 5502, 5503)

\[40 FR 54248, Nov. 21, 1975, as amended at 51 FR 26158, July 21, 1986;
66 FR 48561, Sept. 21, 2001; 67 FR 46868, July 17, 2002; 68 FR 34543,
June 10, 2003\]

**Supplement *Highlights* references**: 9(1), 11(1).

**§13.72 Release of funds from Personal Funds of Patients.**

Veterans Service Center Managers may authorize release of funds from
Personal Funds of Patients for the needs of veterans and their
dependents, including amounts fixed by statute or administrative
regulations as the cost of current maintenance of veterans in
institutions of the United States or a political subdivision thereof
other than Department of Veterans Affairs institutions.

\[40 FR 54248, Nov. 21, 1975, as amended at 67 FR 46868, July 17, 2002\]

**§13.73 Transfer of funds from funds due incompetent beneficiaries.**

Veterans Service Center Managers may, when required for the benefit of
the veteran and/or the veteran's dependents, authorize the transfer of
amounts credited to veterans in Funds Due Incompetent Beneficiaries to
Department of Veterans Affairs Personal Funds of Patients accounts or to
chief officers of non-Department of Veterans Affairs institutions for
the accounts of institutionalized veterans.

\[40 FR 54248, Nov. 21, 1975, as amended at 67 FR 46868, July 17, 2002\]

**§13.74** \[Removed and reserved\]

**§13.75** \[Removed and reserved\]

**§13.76** \[Removed and reserved\]

**§13.77** \[Removed and reserved\]

*Next Section is §13.100*

**§13.100 Supervision of fiduciaries.**

\(a\) *Federal fiduciaries.* In Federal fiduciary cases, the Veterans
Service Center Manager may, when he or she deems it necessary for the
protection of the beneficiary's interests:

\(1\) Require an accounting, formal or informal, of Department of
Veterans Affairs benefits paid.

\(2\) Terminate the appointment of a Federal fiduciary and appoint a
successor Federal fiduciary. (Authority: 38 U.S.C. 5502)

\(b\) *Court-appointed fiduciaries.* In court-appointed fiduciary cases,
the Veterans Service Center Manager will take such informal action as
may be necessary to assure that the needs of the beneficiary are
provided for and Department of Veterans Affairs benefits are prudently
administered and adequately protected. (Authority: 38 U.S.C. 501)

\(c\) *Unsatisfactory conditions.* In any case where a fiduciary fails
to render a satisfactory account or has collected or paid, or is
attempting to collect or pay, fees, commissions, or allowances that are
illegal or inequitable or in excess of those allowed by law, or has
failed to use Department of Veterans Affairs funds for the benefit of
the beneficiary or the beneficiary's dependents, or has otherwise failed
or neglected to properly execute the duties of his or her trust, and
informal efforts by the Veterans Service Center Manager to correct the
situation prove unsuccessful, the case will be referred to the Regional
Counsel. In such cases the Veterans Service Center Manager may have all
Department of Veterans Affairs benefits suspended. (Authority: 38 U.S.C.
5502)

\(d\) *Misappropriation, embezzlement or violation of Federal statutes.*
When the evidence indicates a prima facie case of misappropriation,
embezzlement or violation of the Federal statutes, the matter will be
submitted to the Regional Counsel for review and, if appropriate, the
Regional Counsel's referral to the U.S. Attorney. (Authority: 38 U.S.C.
6101)

\[40 FR 54249, Nov. 21, 1975, as amended at 61 FR 7216, Feb. 27, 1996;
67 FR 46868, July 17, 2002\]

**§13.106 Investments by court-appointed fiduciaries.**

The Veterans Service Center Manager will review and to the extent
possible determine the legality and prudence of investments involving
Department of Veterans Affairs income or estate. It is Department of
Veterans Affairs policy to invest income or estate derived from
Department of Veterans Affairs benefits only in legal investments which
have safety, assured income, stability of principal and ready
convertibility for the requirements of the beneficiary and his or her
dependents. When notice of a contemplated or actual illegal or imprudent
investment comes to the attention of the Veterans Service Center
Manager, he or she will take remedial action to protect the
beneficiary's estate. Cases in which it becomes necessary to institute
court action will be referred to the Regional Counsel. (Authority: 38
U.S.C. 501)

\[40 FR 54250, Nov. 21, 1975, as amended at 61 FR 7216, Feb. 27, 1996;
67 FR 46868, July 17, 2002\]

**§13.107 Accounts of chief officers of public or private
institutions.**

\(a\) *Department of Veterans Affairs benefits.* The chief officer of an
institution, other than a Federal institution, shall, when requested,
render an account to the Department of Veterans Affairs for funds
received from the Department of Veterans Affairs on account of an
incompetent veteran.

\(b\) *All income and assets.* The chief officer of the aforementioned
institutions shall, when requested, furnish a statement of all income
received in behalf of a Department of Veterans Affairs beneficiary under
legal disability and the total assets held for the beneficiary.
(Authority: 38 U.S.C. 5502)

\[36 FR 19025, Sept. 25, 1971, as amended at 68 FR 34543, June 10,
2003\]

**§13.108** \[Removed and reserved\]

**§13.109** \[Removed and reserved\]

Reserved