## Section A. General Information on Incompetency and Fiduciary Cases

#### Overview

+------------+---------------------------------------------------------+
| #          | > This section contains the following topics:           |
| #### In th |                                                         |
| is Section |                                                         |
+------------+---------------------------------------------------------+

  ---------- ----------------------------------------------- ------------
  Topic      Topic Name                                      See Page

  1          Requesting the Appointment (Certification) of a 9-A-2
             Fiduciary                                       

  2          Suspending Beneficiary Payments                 9-A-11

  3          Notifying the Insurance Center of Changes in    9-A-13
             the Beneficiary's Competency Status and/or the  
             Fiduciary Relationship                          
  ---------- ----------------------------------------------- ------------

#### 1. Requesting the Appointment (Certification) of a Fiduciary

+------------+---------------------------------------------------------+
| ##### In   | > In some cases involving incompetent and minor         |
| troduction | > beneficiaries, the authorization activity is          |
|            | > responsible for requesting the appointment of a       |
|            | > fiduciary.                                            |
|            | >                                                       |
|            | > This topic contains information on                    |
|            |                                                         |
|            | -   requesting the appointment (certification) of a     |
|            |     fiduciary                                           |
|            |                                                         |
|            | -   requesting appointment of a fiduciary for insurance |
|            |     proceeds                                            |
|            |                                                         |
|            | -   preparing *VA Form 21-592* to request the           |
|            |     appointment of a fiduciary                          |
|            |                                                         |
|            | -   sending, filing, and controlling *VA Form 21-592*   |
|            |                                                         |
|            | -   referring status inquiries after sending *VA Form   |
|            |     21-592*                                             |
|            |                                                         |
|            | -   requesting a temporary fiduciary in limited         |
|            |     situations while a determination of incompetence is |
|            |     being made or appealed                              |
|            |                                                         |
|            | -   award adjustment and control of a temporary         |
|            |     fiduciary appointment                               |
|            |                                                         |
|            | -   action to take following payment to a temporary     |
|            |     fiduciary                                           |
|            |                                                         |
|            | -   example of processing an award for appointment of a |
|            |     temporary fiduciary                                 |
|            |                                                         |
|            | -   restricting notification to anyone outside the      |
|            |     Department of Veterans Affairs (VA) of a pending    |
|            |     request, and                                        |
|            |                                                         |
|            | -   referring correspondence after appointment of a     |
|            |     fiduciary.                                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > July 26, 2007                                         |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

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1\. Requesting the Appointment (Certification) of a Fiduciary, Continued

+------------+---------------------------------------------------------+
| #####      | > Request the appointment (certification) of a          |
| a. Request | > fiduciary when payments are to be made on behalf of a |
| ing the Ap | > beneficiary who is                                    |
| pointment  |                                                         |
| (Certifica | -   rated incompetent by VA                             |
| tion) of a |                                                         |
|  Fiduciary | -   under legal disability, or                          |
|            |                                                         |
|            | -   a minor.                                            |
|            |                                                         |
|            |     This includes veterans rated incompetent who are    |
|            |     receiving hospital, nursing home or domiciliary     |
|            |     care by VA.                                         |
|            |                                                         |
|            | > ***Exception***: Do *not* request the appointment of  |
|            | > a fiduciary when a child is in the custody of a       |
|            | > natural or adoptive parent or stepparent. In this     |
|            | > case, recognize the parent as the custodian, per [38  |
|            | > CFR                                                   |
|            | > 3.850(c)](http://                                     |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_850.DOC) |
|            | > by following the procedures in M21-1MR, Part III,     |
|            | > Subpart v, 9.C.13.                                    |
|            | >                                                       |
|            | > ***References***: For more information on terms       |
|            | > associated with incompetency and fiduciary cases, see |
|            |                                                         |
|            | -   M21-1MR, Part XI, 1.A.4, and                        |
|            |                                                         |
|            | -   [38 CFR                                             |
|            |     3.353(a)](http://w                                  |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_353.DOC). |
|            |                                                         |
|            | > ***Note:*** The terms appointment and certification   |
|            | > mean essentially the same thing. The "certification"  |
|            | > is the signature on the VA Form 21-555.               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b.   | > Request the appointment of a fiduciary for VA         |
| Requesting | > insurance proceeds purposes despite the existence of  |
|  Appointme | > a payee or potential payee *not* otherwise requiring  |
| nt of a Fi | > fiduciary and field examination (F&FE) activity       |
| duciary fo | > certification.                                        |
| r Insuranc | >                                                       |
| e Proceeds | > ***Example:*** A fiduciary must be certified for a    |
|            | > minor child entitled to insurance payments,           |
|            | > regardless of any payment of pension or DIC benefits  |
|            | > under [38 CFR                                         |
|            | > 3.850c](http://w                                      |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_850.DOC). |
|            | >                                                       |
|            | > ***Reference***: For more information on VA insurance |
|            | > proceeds, see M21-1MR, Part III, Subpart vi, 8.5.f    |
|            | > (TBD) or [M21-1, Part IV,                             |
|            | > 23.11](htt                                            |
|            | p://www.warms.vba.va.gov/admin21/m21_1/part4/ch23.doc). |
+------------+---------------------------------------------------------+

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1\. Requesting the Appointment (Certification) of a Fiduciary, Continued

+------------+---------------------------------------------------------+
| ###        | > Prepare *VA Form 21-592, Request for Appointment of a |
| ## c. Prep | > Fiduciary, Custodian, or Guardian,* in duplicate to   |
| aring VA F | > request the appointment of a fiduciary.               |
| orm 21-592 | >                                                       |
|  to Reques | > When preparing *VA Form 21-592*, furnish all          |
| t the Appo | > available and pertinent information as to the type of |
| intment of | > benefits payable and accrued, including the           |
|  Fiduciary |                                                         |
|            | -   full name and address of beneficiary; include       |
|            |     street number, not just PO box                      |
|            |                                                         |
|            | -   amounts in Personal Funds of Patients (PFOP), if    |
|            |     known                                               |
|            |                                                         |
|            | -   period of service of the veteran (for example,      |
|            |     World War II)                                       |
|            |                                                         |
|            | -   name, address, and telephone number of the          |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   nearest relative, and                               |
|            |                                                         |
|            | -   person or institution having custody of the         |
|            |     beneficiary                                         |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   full name, address, and relationship of a           |
|            |     stepparent or adoptive parent, if involved in the   |
|            |     case                                                |
|            |                                                         |
|            | -   monthly rate, including the effective date, which   |
|            |     will be payable on behalf of the beneficiary        |
|            |                                                         |
|            | -   dollar amount of any anticipated retroactive        |
|            |     payment, and                                        |
|            |                                                         |
|            | -   name and address of the financial institution and   |
|            |     account number, if a direct deposit account exists. |
|            |                                                         |
|            | > ***Note***: If there are two or more children         |
|            | > entitled to equal shares, show only the total monthly |
|            | > payment for all children and the effective date.      |
|            | > When, as in awards of Dependency and Indemnity        |
|            | > Compensation (DIC), the total amount payable for all  |
|            | > the children will not be equally divided among them,  |
|            | > show the individual entitlements.                     |
|            | >                                                       |
|            | > ***Reference***: A *VA Form 21-592* template may be   |
|            | > obtained from *VA Forms.*                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d.   | > After preparing *VA Form 21-592* in duplicate         |
|  Sending,  |                                                         |
| Filing, an | -   send the original to the F&FE activity at the       |
| d Controll |     regional office (RO) with the appropriate           |
| ing *VA Fo |     jurisdiction                                        |
| rm 21-592* |                                                         |
|            | -   reverse-file the copy in the claims folder until    |
|            |     the F&FE activity designates a fiduciary            |
|            |                                                         |
|            | -   control with EP 290 with date of *VA Form 21-592*   |
|            |     as date of claim, and                               |
|            |                                                         |
|            | -   follow up on the request according to local         |
|            |     guidelines.                                         |
+------------+---------------------------------------------------------+

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1\. Requesting the Appointment (Certification) of a Fiduciary, Continued

+------------+---------------------------------------------------------+
| d\.        | > Use the following table to determine the RO           |
| Sending,   | > jurisdiction for specific cases.                      |
| Filing,    |                                                         |
| and        |                                                         |
| C          |                                                         |
| ontrolling |                                                         |
| *VA Form   |                                                         |
| 21-592*    |                                                         |
| (          |                                                         |
| continued) |                                                         |
+------------+---------------------------------------------------------+

+----------------------------+-----------------------------------------+
| If the minor or            | Then send *VA Form 21-592* to the F&FE  |
| incompetent beneficiary    | activity at the ...                     |
| resides in ...             |                                         |
+----------------------------+-----------------------------------------+
| the continental United     | RO having jurisdiction over the area in |
| States or Alaska           | which the beneficiary resides.          |
|                            |                                         |
|                            | ***Exception***: If the minor or        |
|                            | incompetent beneficiary *has* a         |
|                            | court-appointed fiduciary, then send    |
|                            | *VA Form 21-592* to the F&FE activity   |
|                            | at the RO having jurisdiction over the  |
|                            | area in which the court of appointment  |
|                            | is located.                             |
+----------------------------+-----------------------------------------+
| -   Canal Zone             | Department of Veterans Affairs Regional |
|                            | Office (VARO), Pittsburgh               |
| -   any foreign country    |                                         |
|     other than those       |                                         |
|     listed below, or       |                                         |
|                            |                                         |
| -   any insular or         |                                         |
|     territorial possession |                                         |
|     of the United States,  |                                         |
|     other than those       |                                         |
|     listed below           |                                         |
+----------------------------+-----------------------------------------+
| Canada                     | VARO, White River Junction              |
+----------------------------+-----------------------------------------+
| -   Hawaii                 | Department of Veterans Affairs Medical  |
|                            | and Regional Office Center (VAM&ROC),   |
| -   America Samoa          | Honolulu                                |
|                            |                                         |
| -   Mariana Islands        |                                         |
|                            |                                         |
| -   Midway Islands, or     |                                         |
|                            |                                         |
| -   Wake Island            |                                         |
+----------------------------+-----------------------------------------+
| -   Puerto Rico, or        | VAM&ROC, San Juan                       |
|                            |                                         |
| -   Virgin Islands         |                                         |
+----------------------------+-----------------------------------------+
| Philippine Republic        | VARO, Manila                            |
+----------------------------+-----------------------------------------+
| Mexico                     | VARO, Houston                           |
+----------------------------+-----------------------------------------+

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1\. Requesting the Appointment (Certification) of a Fiduciary, Continued

+------------+---------------------------------------------------------+
| #####      | > After sending *VA Form 21-592*, refer inquiries       |
| e. Referri | > regarding the status of the case to the F&FE activity |
| ng Status  | > to which *VA Form 21-592* was forwarded. It is the    |
| Inquiries  | > responsibility of the F&FE activity or designee to    |
| After Send | > respond to the inquiry.                               |
| ing *VA Fo |                                                         |
| rm 21-592* |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### f    | > The F&FE activity may appoint a temporary fiduciary   |
| . Requesti | > to protect the VA benefit payments of a beneficiary   |
| ng a Tempo | > while a determination of competency is being made or  |
| rary Fiduc | > appealed, under [38 U.S.C.                            |
| iary in Li | > 5507(d)](http://assembler.law.cornell.edu/            |
| mited Situ | uscode/html/uscode38/usc_sec_38_00005507----000-.html). |
| ations Whi | > VA may appoint a temporary fiduciary only when there  |
| le a Deter | > is clear evidence that                                |
| mination o |                                                         |
| f Incompet | -   the beneficiary's VA funds are being misused, or    |
| ence Is Be |                                                         |
| ing Made o | -   the beneficiary is unable or unwilling to use the   |
| r Appealed |     funds for urgent needs.                             |
|            |                                                         |
|            | > ***Reference***: For more information about the       |
|            | > appointment of temporary fiduciaries, see M21-1MR,    |
|            | > Part XI, Chapter 2, E.28.r.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > A temporary fiduciary appointment may not exceed 120  |
| # g. Award | > days. The following table describes a procedure for   |
|  Adjustmen | > preparation and control of the payment to a temporary |
| t and Cont | > fiduciary that will limit payment to no more than     |
| rol of a T | > four months.                                          |
| emporary F |                                                         |
| iduciary A |                                                         |
| ppointment |                                                         |
+------------+---------------------------------------------------------+

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1\. Requesting the Appointment (Certification) of a Fiduciary, Continued

  -----------------------------------------------------------------------
  g\. Award Adjustment and Control of a Temporary Fiduciary Appointment
  (continued)

  -----------------------------------------------------------------------

+-----------------------+----------------------------------------------+
| Situation             | Action                                       |
+-----------------------+----------------------------------------------+
| *VA Form 21-555*,     | The authorization activity requests the      |
| appointing temporary  | finance activity to input a deduction code   |
| fiduciary, is         | 63C.                                         |
| received by the       |                                              |
| authorization         | After the finance activity inputs deduction  |
| activity. The F&FE    | code 63C, as described in the next segment   |
| activity identifies   | of this table, the authorization activity    |
| the                   | prepares an amended award under the EP 290   |
|                       |                                              |
| -   name of the       | -   reflecting the claimant's (*not the      |
|     temporary         |     fiduciary's*) name and address           |
|     fiduciary         |                                              |
|                       | -   withholding all benefits, except the     |
| -   address of the    |     amount payable to the temporary          |
|     temporary         |     fiduciary, as a type 1 withholding,      |
|     fiduciary         |     effective from DLP to avoid creating an  |
|                       |     overpayment, and                         |
| -   duration of       |                                              |
|     appointment, if   | -   removing the withholding and restoring   |
|     less than 120     |     full benefits as direct payment to the   |
|     days, and         |     claimant effective from the first day of |
|                       |     the month following the fourth month of  |
| -   the monthly       |     withholding.                             |
|     amount to be      |                                              |
|     paid.             | ***Important***: The award action should be  |
|                       | authorized no later than the last processing |
| ***Note***: The       | cycle of the month in which the award is     |
| Veterans Service      | effective, using a FISA code 2.              |
| Center Manager (VSCM) |                                              |
| or higher-level       | The authorization activity                   |
| official must sign    |                                              |
| *VA Form 21-555*,     | -   furnishes a copy of the award action to  |
| appointing temporary  |     the F&FE activity                        |
| fiduciary.            |                                              |
|                       | -   establishes a future EP291 for 90 days   |
|                       |     to                                       |
|                       |                                              |
|                       | ```{=html}                                   |
|                       | <!-- -->                                     |
|                       | ```                                          |
|                       | -   review for receipt of a new *VA Form     |
|                       |     21-555*, and                             |
|                       |                                              |
|                       | -   pay withheld benefits to either the      |
|                       |     claimant or the new fiduciary.           |
|                       |                                              |
|                       | ***Reference***: For more information on     |
|                       | fiscal authorization transactions, see       |
|                       | M21-1MR, Part III, Subpart vi, 2.B.          |
+-----------------------+----------------------------------------------+

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1\. Requesting the Appointment (Certification) of a Fiduciary, Continued

  -----------------------------------------------------------------------
  g\. Award Adjustment and Control of a Temporary Fiduciary Appointment
  (continued)

  -----------------------------------------------------------------------

+-----------------------+----------------------------------------------+
| Situation             | Action                                       |
+-----------------------+----------------------------------------------+
| The finance activity  | The finance activity                         |
| receives the          |                                              |
| authorization         | -   inputs a transaction to establish the    |
| activity's request to |     deduction code 63C, and                  |
| input a 63C deduction |                                              |
| code.                 | -   issues a monthly payment to the          |
|                       |     temporary fiduciary identified on the    |
|                       |     *VA Form 21-555*                         |
|                       |                                              |
|                       | ```{=html}                                   |
|                       | <!-- -->                                     |
|                       | ```                                          |
|                       | -   using funds available from the amended   |
|                       |     award, and                               |
|                       |                                              |
|                       | -   offsetting the 63C deduction balance,    |
|                       |     and                                      |
|                       |                                              |
|                       | ```{=html}                                   |
|                       | <!-- -->                                     |
|                       | ```                                          |
|                       | -   notifies the authorization activity of   |
|                       |     the completed transaction so that award  |
|                       |     action may be taken.                     |
|                       |                                              |
|                       | ***Note***: The deduction code 63C is input  |
|                       | reflecting the gross amount payable to the   |
|                       | temporary fiduciary for the entire period of |
|                       | that temporary appointment. The amount       |
|                       | payable on the amended award each month is   |
|                       | captured by the deduction, reducing the      |
|                       | gross amount of the deduction until the      |
|                       | balance is recovered. Then the deduction     |
|                       | code 63C is automatically eliminated and the |
|                       | award resumes payment to the designated      |
|                       | payee.                                       |
|                       |                                              |
|                       | ***References***:                            |
|                       |                                              |
|                       | For more information about establishing or   |
|                       | reviewing fiduciary information, see the     |
|                       |                                              |
|                       | -   *VETSNET Awards User Guide*              |
|                       |                                              |
|                       | ```{=html}                                   |
|                       | <!-- -->                                     |
|                       | ```                                          |
|                       | -   Fiduciary tab of Participant Profile     |
|                       |                                              |
|                       | -   Other Adjustment tab of Award            |
|                       |     Adjustments, and                         |
|                       |                                              |
|                       | ```{=html}                                   |
|                       | <!-- -->                                     |
|                       | ```                                          |
|                       | -   *Share User's Guide*                     |
|                       |                                              |
|                       | ```{=html}                                   |
|                       | <!-- -->                                     |
|                       | ```                                          |
|                       | -   change of fiduciary instructions.        |
|                       |                                              |
|                       | For more information about diaries and       |
|                       | pending issues, see the *Share User's        |
|                       | Guide*.                                      |
+-----------------------+----------------------------------------------+

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1\. Requesting the Appointment (Certification) of a Fiduciary, Continued

+------------+---------------------------------------------------------+
| #####      | > The authorization activity should notify the F&FE     |
| h. Action  | > activity with a copy of the award action when a       |
| to Take Fo | > temporary fiduciary is paid. The F&FE activity should |
| llowing Pa | > determine the disposition of the claimant's benefits  |
| yment to a | > following payment to a temporary fiduciary.           |
|  Temporary |                                                         |
|  Fiduciary |                                                         |
+------------+---------------------------------------------------------+

+----------------------+-----------------------------------------------+
| If the F&FE activity | Then the authorization activity should . . .  |
| . . .                |                                               |
+----------------------+-----------------------------------------------+
| appoints a new       | -   notify the finance activity to terminate  |
| permanent fiduciary  |     the 63C deduction                         |
| or determines direct |                                               |
| payment should be    | -   amend the claimant's award to             |
| made **before** the  |                                               |
| expiration of the    | ```{=html}                                    |
| temporary fiduciary  | <!-- -->                                      |
| appointment          | ```                                           |
|                      | -   pay the new fiduciary or the beneficiary, |
|                      |     and                                       |
|                      |                                               |
|                      | -   restore the full rate and any withheld    |
|                      |     payments (except the amount paid to the   |
|                      |     temporary fiduciary).                     |
+----------------------+-----------------------------------------------+
| appoints a new       | amend the claimant's award to restore the     |
| permanent fiduciary  | previously withheld benefits (except the      |
| or determines direct | amount paid to the temporary fiduciary).      |
| payment should be    |                                               |
| made **after** the   |                                               |
| expiration of the    |                                               |
| temporary fiduciary  |                                               |
| appointment          |                                               |
+----------------------+-----------------------------------------------+

+------------+---------------------------------------------------------+
| ##### i. E | > The following example describes a procedure that      |
| xample of  | > provides for                                          |
| Processing |                                                         |
|  an Award  | -   payment to a temporary fiduciary, and               |
| for Appoin |                                                         |
| tment of a | -   control for adjustment of the award after           |
|  Temporary |     appointment of the temporary fiduciary expires.     |
|  Fiduciary |                                                         |
|            | > A running award to a fiduciary was paying a gross     |
|            | > monthly rate of \$900. *VA Form 21-555* is received   |
|            | > March 25, appointing a temporary fiduciary and        |
|            | > requesting payment of \$200 per month, pending        |
|            | > appointment of a new permanent fiduciary. The claims  |
|            | > folder is referred to the finance activity,           |
|            | > requesting a 63C deduction code with a balance of     |
|            | > \$800 *(\$200 per month not to exceed four months*).  |
|            | > Then the VSR prepares an amended award on April 5,    |
|            | > reflecting the veteran's name and address in the      |
|            | > payee field and a payment status of supervised direct |
|            | > pay.                                                  |
+------------+---------------------------------------------------------+

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1\. Requesting the Appointment (Certification) of a Fiduciary, Continued

+------------+---------------------------------------------------------+
| i\.        | > The award withholds \$700 using a withholding code 1  |
| Example of | > and pays \$200 effective from April 1. The award      |
| Processing | > includes a future rate line eliminating the           |
| an Award   | > withholding and paying the full \$900 effective from  |
| for        | > August 1. Each month the deduction code 63C causes    |
| A          | > the \$200 payment to be captured and applied toward   |
| ppointment | > reducing the 63C balance. The finance activity mails  |
| of a       | > a payment of \$200 to the temporary fiduciary         |
| Temporary  | > designated on the *VA Form 21-555*.                   |
| Fiduciary  | >                                                       |
| (          | > ***Note***: When a *VA Form 21-555* is received,      |
| continued) | > indicating appointment of a permanent fiduciary, an   |
|            | > amended award should be made effective from the date  |
|            | > benefits were withheld, eliminating the withholding   |
|            | > and reflecting the full rate. This will release the   |
|            | > previously withheld funds to the new fiduciary.       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Do not notify anyone outside the Department of        |
| ### j. Res | > Veterans Affairs (VA) of a pending request for        |
| tricting N | > fiduciary appointment in order to                     |
| otificatio |                                                         |
| n to Anyon | -   avoid unnecessary appointment of guardians or the   |
| e Outside  |     appointment of unsuitable persons as guardians, and |
| the Depart |                                                         |
| ment of Ve | -   enable the F&FE activity to authorize costs         |
| terans Aff |     incident to the appointment of fiduciaries.         |
| airs (VA)  |                                                         |
| of a Pendi |                                                         |
| ng Request |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Refer all correspondence received pertaining to the   |
| k. Referri | > handling and use of fiduciary funds to the            |
| ng Corresp | > appropriate F&FE activity after a(n)                  |
| ondence Af |                                                         |
| ter Appoin | -   court-appointed fiduciary has been appointed or     |
| tment of a |     certified by the F&FE activity                      |
|  Fiduciary |                                                         |
|            | -   spouse payee or a custodian has been designated or  |
|            |     qualified by the F&FE activity, or                  |
|            |                                                         |
|            | -   institutional award has been made.                  |
+------------+---------------------------------------------------------+

#### 2. Suspending Beneficiary Payments

+------------+---------------------------------------------------------+
| ##### In   | > In some cases, the authorization activity may suspend |
| troduction | > beneficiary payments pending the development of an    |
|            | > incompetency issue or the appointment or change of a  |
|            | > fiduciary.                                            |
|            | >                                                       |
|            | > This topic contains information on                    |
|            |                                                         |
|            | -   suspending beneficiary payments pending             |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   development of an incompetency issue or             |
|            |     certification of a fiduciary, or                    |
|            |                                                         |
|            | -   appointment or change of a fiduciary                |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the effect of insurance deductions on suspending a  |
|            |     veteran's benefits                                  |
|            |                                                         |
|            | -   the effect of other deductions on suspending a      |
|            |     veteran's benefits, and                             |
|            |                                                         |
|            | -   resuming suspended payments.                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > July 26, 2007                                         |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Do not routinely suspend direct payments to a         |
| a. Suspend | > beneficiary pending the development of an issue of    |
| ing Benefi | > incompetency or certification of a fiduciary.         |
| ciary Paym | >                                                       |
| ents Pendi | > If evidence indicates that a beneficiary is not       |
| ng Develop | > receiving or is being deprived of the full benefits   |
| ment of In | > being paid, it is possible to                         |
| competency |                                                         |
|  or Certif | -   suspend payment if processing a Benefits Delivery   |
| ication of |     Network (BDN) adjustment, or                        |
|  Fiduciary |                                                         |
|            | -   withhold payment via VETSNET processing, and        |
|            |                                                         |
|            | -   request that the F&FE activity provide an expedited |
|            |     appointment of a fiduciary.                         |
|            |                                                         |
|            | > If the entitlement to benefits has been established   |
|            | > but no payment has been made or if increased benefits |
|            | > are payable, determine whether or not benefits should |
|            | > be paid directly pending F&FE activity                |
|            | > appointment/certification. When making the            |
|            | > determination, consider if delaying the payment of    |
|            | > the benefits would cause undue hardship for the       |
|            | > beneficiary.                                          |
+------------+---------------------------------------------------------+

Continued on next page

2\. Suspending Beneficiary Payments, Continued

+------------+---------------------------------------------------------+
| ###        | > To suspend benefit payments (through BDN processing)  |
| ## b. Susp | > to an incompetent beneficiary pending the appointment |
| ending Ben | > or change of a fiduciary                              |
| eficiary P |                                                         |
| ayments Pe | -   use reason code 29 (Other (*specify reason in       |
| nding Appo |     remarks*)), and                                     |
| intment or |                                                         |
|  Change of | -   annotate the generated print of the suspense action |
|  Fiduciary |     with the notation "*Beneficiary incompetent -       |
|            |     appointment of fiduciary pending.*"                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > When the authorization activity suspends a veteran's  |
| # c. Effec | > benefits through BDN, if there is an authorized       |
| t of Insur | > deduction for insurance purposes and there are no     |
| ance Deduc | > other deductions on the master record except for a    |
| tions on S | > loan guaranty or income tax lien, the                 |
| uspending  |                                                         |
| a Veteran' | -   award automatically continues in an amount equal to |
| s Benefits |     the insurance deduction only, and                   |
|            |                                                         |
|            | -   deductions automatically cease for a loan guaranty  |
|            |     or income tax lien.                                 |
|            |                                                         |
|            | > The BDN issues a notice to notify the RO of the       |
|            | > action taken.                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d. E | > If there is any other type of deduction, in addition  |
| ffect of O | > to the insurance deduction, take action to suspend    |
| ther Deduc | > all payments.                                         |
| tions on S | >                                                       |
| uspending  | > When suspending benefits through BDN, the system      |
| a Veteran' | > issues *VA Form 20-6560, Notice of Benefit Payment    |
| s Benefits | > Transaction,* to notify the appropriate RO and        |
|            | > insurance center of the                               |
|            |                                                         |
|            | -   termination of the premium deduction, and           |
|            |                                                         |
|            | -   need for direct remittance.                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > If all payments were suspended by routine processing  |
| e. Resumin | > under reason code 29, use the resume                  |
| g Suspende | > ([RESU]{.smallcaps}) command to resume payments.      |
| d Payments | >                                                       |
|            | > When resuming payments in an account continued in the |
|            | > amount of the insurance deduction under reason code   |
|            | > 29, prepare an amended award. Do not enter prior net  |
|            | > award data unless the amended award effects an        |
|            | > adjustment prior to the date last paid (DLP).         |
+------------+---------------------------------------------------------+

#### 3. Notifying the Insurance Center of Changes in the Beneficiary's Competency Status and/or the Fiduciary Relationship

+------------+---------------------------------------------------------+
| ##### In   | > In some cases, the authorization activity is required |
| troduction | > to prepare and send *VA Form 29-4347, Notification of |
|            | > Rating of Competency or Incompetency of Veteran, or   |
|            | > of Appointment, Recognition, Change, or Discharge of  |
|            | > Fiduciary* to an insurance center in order to notify  |
|            | > the insurance activity of changes in competency       |
|            | > and/or fiduciary.                                     |
|            | >                                                       |
|            | > This topic contains information on                    |
|            |                                                         |
|            | -   forwarding *VA Form 21-555* from the F&FE activity  |
|            |     to the insurance center                             |
|            |                                                         |
|            | -   forwarding *VA Form 29-4347* from authorization to  |
|            |     the insurance center in lieu of *VA Form 21-555*    |
|            |                                                         |
|            | -   preparing and sending *VA Form 29-4347*, and        |
|            |                                                         |
|            | -   handling requests initiated by the insurance        |
|            |     center.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > July 26, 2007                                         |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > The F&FE activity of the Veterans Service Center      |
| ### a. For | > (VSC) ascertains for each incompetent or legally      |
| warding of | > disabled veteran whether or not there is VA insurance |
|  *VA Form  | > in effect.                                            |
| 21-555* Fr | >                                                       |
| om the F&F | > In most cases, the F&FE activity                      |
| E Unit to  |                                                         |
| the Insura | -   sends *VA Form 21-555, Certificate of Legal         |
| nce Center |     Capacity to Receive and Disburse Benefits* to the   |
|            |     authorization activity, and                         |
|            |                                                         |
|            | -   forwards a copy of that completed form to the       |
|            |     proper insurance center to use to update the        |
|            |     insurance records.                                  |
+------------+---------------------------------------------------------+

Continued on next page

3\. Notifying the Insurance Center of Changes in the Beneficiary's
Competency Status and/or the Fiduciary Relationship, Continued

+------------+---------------------------------------------------------+
| ##### b.   | > The F&FE activity does *not* send *VA Form 21-555* to |
|  Forwardin | > the insurance center when the veteran does not have   |
| g *VA Form | > an insurance file or has an inactive insurance file.  |
|  29-4347*  | >                                                       |
| From Autho | > When *VA Form 21-555* is *not* sent by the F&FE Unit, |
| rization t | > the authorization activity must prepare and send *VA  |
| o the Insu | > Form 29-4347, Notification of Rating of Competency or |
| rance Cent | > Incompetency of Veteran, or of Appointment,           |
| er in Lieu | > Recognition, Change, or Discharge of Fiduciary* to    |
|  of *VA Fo | > the insurance center.                                 |
| rm 21-555* |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

3\. Notifying the Insurance Center of Changes in the Beneficiary's
Competency Status and/or the Fiduciary Relationship, Continued

+------------+---------------------------------------------------------+
| ##### c.   | > If it is determined that the F&FE activity will not   |
|  Preparing | > be sending *VA Form 21-555* to the insurance center,  |
|  and Sendi | > obtain insurance numbers by processing a Beneficiary  |
| ng *VA For | > Identification and Records Locator Subsystem Inquiry  |
| m 29-4347* | > ([BINQ]{.smallcaps}) command.                         |
|            | >                                                       |
|            | > If the BIRLS records shows                            |
|            |                                                         |
|            | -   insurance numbers other than *T* or *N*             |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   prepare *VA Form 29-4347* in duplicate, over the    |
|            |     signature of the Veterans Service Representative    |
|            |     (VSR)                                               |
|            |                                                         |
|            | -   route the signed original *VA Form 29-4347* to the  |
|            |     insurance center of jurisdiction, and               |
|            |                                                         |
|            | -   file the duplicate *VA Form 29-4347* in the claims  |
|            |     folder, or                                          |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   insurance numbers *T* or *N* or no insurance record |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   do *not* prepare a *VA Form 29-4347*, because in    |
|            |     these cases it is not required to notify the        |
|            |     insurance activity of changes in competency status  |
|            |     and fiduciaries                                     |
|            |                                                         |
|            | -   annotate a copy of the BIRLS print with one of the  |
|            |     following notations: "*T and N number only*" or     |
|            |     "*No Record of Insurance*," and                     |
|            |                                                         |
|            | -   file the BIRLS print in the claims folder.          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > For information on requests from the insurance center |
| d. Handlin | > to provide information regarding changes in           |
| g Requests | > competency status and/or fiduciaries, see M21-1MR,    |
|  Initiated | > Part III, Subpart vi, 8.5 (TBD) or [M21-1, Part IV,   |
|  by Insura | > 23.11](htt                                            |
| nce Center | p://www.warms.vba.va.gov/admin21/m21_1/part4/ch23.doc). |
+------------+---------------------------------------------------------+