I 
113TH CONGRESS 
1ST SESSION 
H. R. 894 
To amend title 38, United States Code, to improve the supervision of fidu-
ciaries of veterans under the laws administered by the Secretary of 
Veterans Affairs. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 28, 2013 
Mr. JOHNSON of Ohio (for himself, Mr. STIVERS, Ms. TITUS, and Mr. ROE 
of Tennessee) introduced the following bill; which was referred to the 
Committee on Veterans’ Affairs 
A BILL 
To amend title 38, United States Code, to improve the 
supervision of fiduciaries of veterans under the laws ad-
ministered by the Secretary of Veterans Affairs. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. IMPROVEMENT OF FIDUCIARIES FOR VET-
ERANS. 
(a) APPOINTMENT AND SUPERVISION.— 
(1) Section 5502 of title 38, United States 
Code, is amended to read as follows: 
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‘‘§ 5502. Appointment of fiduciaries 
‘‘(a) APPOINTMENT.—(1) Where it appears to the 
Secretary that the interest of the beneficiary would be 
served thereby, payment of benefits under any law admin-
istered by the Secretary may be made directly to the bene-
ficiary or to a relative or some other fiduciary for the use 
and benefit of the beneficiary, regardless of any legal dis-
ability on the part of the beneficiary. 
‘‘(2) When in the opinion of the Secretary, a tem-
porary fiduciary is needed in order to protect the benefits 
provided to the beneficiary under any law administered by 
the Secretary while a determination of incompetency is 
being made or appealed or a fiduciary is appealing a deter-
mination of misuse, the Secretary may appoint one or 
more temporary fiduciaries for a period not to exceed 120 
days. If a final decision has not been made within 120 
days, the Secretary may not continue the appointment of 
the fiduciary without obtaining a court order for appoint-
ment of a guardian, conservator, or other fiduciary under 
the authority provided in section 5502(b) of this title. 
‘‘(b) APPEALS.—(1) If the Secretary determines a 
beneficiary to be mentally incompetent for purposes of ap-
pointing a fiduciary under this chapter, the Secretary shall 
provide such beneficiary with a written statement detailing 
the reasons for such determination. 
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‘‘(2) A beneficiary whom the Secretary has deter-
mined to be mentally incompetent for purposes of appoint-
ing a fiduciary under this chapter may appeal such deter-
mination. 
‘‘(c) MODIFICATION.—(1) A beneficiary for whom the 
Secretary appoints a fiduciary under this chapter may, at 
any time, request the Secretary to— 
‘‘(A) remove the fiduciary so appointed; and 
‘‘(B) have a new fiduciary appointed. 
‘‘(2) The Secretary shall comply with a request under 
paragraph (1) unless the Secretary determines that the 
request is not made in good faith. 
‘‘(3) The Secretary shall ensure that any removal or 
new appointment of a fiduciary under paragraph (1) does 
not delay or interrupt the beneficiary’s receipt of benefits 
administered by the Secretary. 
‘‘(d) INDEPENDENCE.—A fiduciary appointed by the 
Secretary shall operate independently of the Department 
to determine the actions that are in the interest of the 
beneficiary. 
‘‘(e) PREDESIGNATION.—A veteran may predesignate 
a fiduciary by— 
‘‘(1) submitting written notice to the Secretary 
of the predesignated fiduciary; or 
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‘‘(2) submitting a form provided by the Sec-
retary for such purpose. 
‘‘(f) APPOINTMENT OF NON-PREDESIGNATED FIDU-
CIARY.—If a beneficiary designates an individual to serve 
as a fiduciary under subsection (e) and the Secretary ap-
points an individual not so designated as the fiduciary for 
such beneficiary, the Secretary shall notify such bene-
ficiary of— 
‘‘(1) the reason why such designated individual 
was not appointed; and 
‘‘(2) the ability of the beneficiary to modify the 
appointed fiduciary under subsection (c). 
‘‘(g) PRIORITY OF APPOINTMENT.—In appointing a 
fiduciary under this chapter, if a beneficiary does not des-
ignate a fiduciary pursuant to subsection (e), to the extent 
possible the Secretary shall appoint a person who is— 
‘‘(1) a relative of the beneficiary; 
‘‘(2) appointed as guardian of the beneficiary 
by a court of competent jurisdiction; or 
‘‘(3) authorized to act on behalf of the bene-
ficiary under a durable power of attorney.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 55 of title 38, 
United States Code, is amended by striking the item 
relating to section 5502 and inserting the following: 
‘‘5502. Appointment of fiduciaries.’’. 
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(b) SUPERVISION.— 
(1) IN
GENERAL.—Chapter 55 of title 38, 
United States Code, is amended by inserting after 
section 5502, as amended by subsection (a)(1), the 
following new section: 
‘‘§ 5502A. Supervision of fiduciaries 
‘‘(a) COMMISSION.—(1)(A) In a case in which the 
Secretary determines that a commission is necessary in 
order to obtain the services of a fiduciary in the best inter-
ests of a beneficiary, the Secretary may authorize a fidu-
ciary appointed by the Secretary to obtain from the 
monthly benefits provided to the beneficiary a reasonable 
commission for fiduciary services rendered, but the com-
mission for any month may not exceed the lesser of the 
following amounts: 
‘‘(i) The amount that equals three percent 
of the monthly monetary benefits under laws 
administered by the Secretary paid on behalf of 
the beneficiary to the fiduciary. 
‘‘(ii) $35. 
‘‘(B) A commission paid under this paragraph may 
not be derived from any award to a beneficiary regarding 
back pay or retroactive benefits payments. 
‘‘(C) A commission may not be authorized for a fidu-
ciary who receives any other form of remuneration or pay-
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ment in connection with rendering fiduciary services for 
benefits under this title on behalf of the beneficiary. 
‘‘(D) In accordance with section 6106 of this title, 
a commission may not be paid to a fiduciary if the Sec-
retary determines that the fiduciary misused any benefit 
payments of a beneficiary. 
‘‘(E) If the Secretary determines that the fiduciary 
has misused any benefit or payments of a beneficiary, the 
Secretary may revoke the fiduciary status of the fiduciary. 
‘‘(2) Where, in the opinion of the Secretary, any fidu-
ciary receiving funds on behalf of a Department bene-
ficiary is acting in such a number of cases as to make 
it impracticable to conserve properly the estates or to su-
pervise the persons of the beneficiaries, the Secretary may 
refuse to make future payments in such cases as the Sec-
retary may deem proper. 
‘‘(b) COURT.—Whenever it appears that any fidu-
ciary, in the opinion of the Secretary, is not properly exe-
cuting or has not properly executed the duties of the trust 
of such fiduciary or has collected or paid, or is attempting 
to collect or pay, fees, commissions, or allowances that are 
inequitable or in excess of those allowed by law for the 
duties performed or expenses incurred, or has failed to 
make such payments as may be necessary for the benefit 
of the ward or the dependents of the ward, then the Sec-
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retary may appear, by the Secretary’s authorized attorney, 
in the court which has appointed such fiduciary, or in any 
court having original, concurrent, or appellate jurisdiction 
over said cause, and make proper presentation of such 
matters. The Secretary, in the Secretary’s discretion, may 
suspend payments to any such fiduciary who shall neglect 
or refuse, after reasonable notice, to render an account 
to the Secretary from time to time showing the application 
of such payments for the benefit of such incompetent or 
minor beneficiary, or who shall neglect or refuse to admin-
ister the estate according to law. The Secretary may re-
quire the fiduciary, as part of such account, to disclose 
any additional financial information concerning the bene-
ficiary (except for information that is not available to the 
fiduciary). The Secretary may appear or intervene by the 
Secretary’s duly authorized attorney in any court as an 
interested party in any litigation instituted by the Sec-
retary or otherwise, directly affecting money paid to such 
fiduciary under this section. 
‘‘(c) PAYMENT OF CERTAIN EXPENSES.—Authority 
is hereby granted for the payment of any court or other 
expenses incident to any investigation or court proceeding 
for the appointment of any fiduciary or other person for 
the purpose of payment of benefits payable under laws ad-
ministered by the Secretary or the removal of such fidu-
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ciary and appointment of another, and of expenses in con-
nection with the administration of such benefits by such 
fiduciaries, or in connection with any other court pro-
ceeding hereby authorized, when such payment is author-
ized by the Secretary. 
‘‘(d) TEMPORARY PAYMENT OF BENEFITS.—All or 
any part of any benefits the payment of which is sus-
pended or withheld under this section may, in the discre-
tion of the Secretary, be paid temporarily to the person 
having custody and control of the incompetent or minor 
beneficiary, to be used solely for the benefit of such bene-
ficiary, or, in the case of an incompetent veteran, may be 
apportioned to the dependent or dependents, if any, of 
such veteran. Any part not so paid and any funds of a 
mentally incompetent or insane veteran not paid to the 
chief officer of the institution in which such veteran is a 
patient nor apportioned to the veteran’s dependent or de-
pendents may be ordered held in the Treasury to the credit 
of such beneficiary. All funds so held shall be disbursed 
under the order and in the discretion of the Secretary for 
the benefit of such beneficiary or the beneficiary’s depend-
ents. Any balance remaining in such fund to the credit 
of any beneficiary may be paid to the beneficiary if the 
beneficiary recovers and is found competent, or if a minor, 
attains majority, or otherwise to the beneficiary’s fidu-
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ciary, or, in the event of the beneficiary’s death, to the 
beneficiary’s personal representative, except as otherwise 
provided by law; however, payment will not be made to 
the beneficiary’s personal representative if, under the law 
of the beneficiary’s last legal residence, the beneficiary’s 
estate would escheat to the State. In the event of the death 
of a mentally incompetent or insane veteran, all gratuitous 
benefits under laws administered by the Secretary depos-
ited before or after August 7, 1959, in the personal funds 
of patients trust fund on account of such veteran shall 
not be paid to the personal representative of such veteran, 
but shall be paid to the following persons living at the 
time of settlement, and in the order named: The surviving 
spouse, the children (without regard to age or marital sta-
tus) in equal parts, and the dependent parents of such 
veteran, in equal parts. If any balance remains, such bal-
ance shall be deposited to the credit of the applicable cur-
rent appropriation; except that there may be paid only so 
much of such balance as may be necessary to reimburse 
a person (other than a political subdivision of the United 
States) who bore the expenses of last sickness or burial 
of the veteran for such expenses. No payment shall be 
made under the two preceding sentences of this subsection 
unless claim therefor is filed with the Secretary within five 
years after the death of the veteran, except that, if any 
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person so entitled under said two sentences is under legal 
disability at the time of death of the veteran, such five- 
year period of limitation shall run from the termination 
or removal of the legal disability. 
‘‘(e) ESCHEATMENT.—Any funds in the hands of a 
fiduciary appointed by a State court or the Secretary de-
rived from benefits payable under laws administered by 
the Secretary, which under the law of the State wherein 
the beneficiary had last legal residence would escheat to 
the State, shall escheat to the United States and shall be 
returned by such fiduciary, or by the personal representa-
tive of the deceased beneficiary, less legal expenses of any 
administration necessary to determine that an escheat is 
in order, to the Department, and shall be deposited to the 
credit of the applicable revolving fund, trust fund, or ap-
propriation.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 55 of title 38, 
United States Code, is amended by inserting after 
the item relating to section 5502 the following new 
item: 
‘‘5502A. Supervision of fiduciaries.’’. 
(c) DEFINITION OF FIDUCIARY.—Section 5506 of 
title 38, United States Code is amended— 
(1) by striking ‘‘For purposes’’ and inserting 
‘‘(a) For purposes’’; and 
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(2) by adding at the end the following new sub-
section: 
‘‘(b)(1) For purposes of subsection (a), the term ‘per-
son’ includes any— 
‘‘(A) State or local government agency whose 
mission is to carry out income maintenance, social 
service, or health care-related activities; 
‘‘(B) any State or local government agency with 
fiduciary responsibilities; or 
‘‘(C) any nonprofit social service agency that 
the Secretary determines— 
‘‘(i) regularly provides services as a fidu-
ciary concurrently to five or more individuals; 
and 
‘‘(ii) is not a creditor of any such indi-
vidual. 
‘‘(2) The Secretary shall maintain a list of State or 
local agencies and nonprofit social service agencies under 
paragraph (1) that are qualified to act as a fiduciary 
under this chapter. In maintaining such list, the Secretary 
may consult the lists maintained under section 807(h) of 
the Social Security Act (42 U.S.C. 1007(h)).’’. 
(d) QUALIFICATIONS.—Section 5507 of title 38, 
United States Code, is amended to read as follows: 
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‘‘§ 5507. Inquiry, investigations, and qualification of 
fiduciaries 
‘‘(a) INVESTIGATION.—Any certification of a person 
for payment of benefits of a beneficiary to that person as 
such beneficiary’s fiduciary under section 5502 of this title 
shall be made on the basis of— 
‘‘(1) an inquiry or investigation by the Sec-
retary of the fitness of that person to serve as fidu-
ciary for that beneficiary to be conducted in advance 
of such certification and in accordance with sub-
section (b); 
‘‘(2) adequate evidence that certification of that 
person as fiduciary for that beneficiary is in the in-
terest of such beneficiary (as determined by the Sec-
retary under regulations); 
‘‘(3) adequate evidence that the person to serve 
as fiduciary protects the private information of a 
beneficiary in accordance with subsection (d)(1); and 
‘‘(4) the furnishing of any bond that may be re-
quired by the Secretary, in accordance with sub-
section (f). 
‘‘(b) ELEMENTS OF INVESTIGATION.—(1) In con-
ducting an inquiry or investigation of a proposed fiduciary 
under subsection (a)(1), the Secretary shall conduct— 
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‘‘(A) a face-to-face interview with the proposed 
fiduciary by not later than 30 days after the date on 
which such inquiry or investigation begins; and 
‘‘(B) a background check of the proposed fidu-
ciary to— 
‘‘(i) in accordance with paragraph (2), de-
termine whether the proposed fiduciary has 
been convicted of a crime; and 
‘‘(ii) determine whether the proposed fidu-
ciary will serve the best interest of the bene-
ficiary, including by conducting a credit check 
of the proposed fiduciary and checking the 
records under paragraph (5). 
‘‘(2) The Secretary shall request information con-
cerning whether that person has been convicted of any of-
fense under Federal or State law. If that person has been 
convicted of such an offense, the Secretary may certify the 
person as a fiduciary only if the Secretary finds that the 
person is an appropriate person to act as fiduciary for the 
beneficiary concerned under the circumstances. 
‘‘(3) The Secretary shall conduct the background 
check described in paragraph (1)(B)— 
‘‘(A) each time a person is proposed to be a fi-
duciary, regardless of whether the person is serving 
or has served as a fiduciary; and 
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‘‘(B) at no expense to the beneficiary. 
‘‘(4) Each proposed fiduciary shall disclose to the 
Secretary the number of beneficiaries that the fiduciary 
acts on behalf of. 
‘‘(5) The Secretary shall maintain records of any per-
son who has— 
‘‘(A) previously served as a fiduciary; and 
‘‘(B) had such fiduciary status revoked by the 
Secretary. 
‘‘(6)(A) If a fiduciary appointed by the Secretary is 
convicted of a crime described in subparagraph (B), the 
Secretary shall notify the beneficiary of such conviction 
by not later than 14 days after the date on which the Sec-
retary learns of such conviction. 
‘‘(B) A crime described in this subparagraph is a 
crime— 
‘‘(i) for which the fiduciary is convicted while 
serving as a fiduciary for any person; 
‘‘(ii) that is not included in a report submitted 
by the fiduciary under section 5509(a) of this title; 
and 
‘‘(iii) that the Secretary determines could affect 
the ability of the fiduciary to act on behalf of the 
beneficiary. 
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‘‘(c) INVESTIGATION OF CERTAIN PERSONS.—(1) In 
the case of a proposed fiduciary described in paragraph 
(2), the Secretary, in conducting an inquiry or investiga-
tion under subsection (a)(1), may carry out such inquiry 
or investigation on an expedited basis that may include 
giving priority to conducting such inquiry or investigation. 
Any such inquiry or investigation carried out on such an 
expedited basis shall be carried out under regulations pre-
scribed for purposes of this section. 
‘‘(2) Paragraph (1) applies with respect to a proposed 
fiduciary who is— 
‘‘(A) the parent (natural, adopted, or step-
parent) of a beneficiary who is a minor; 
‘‘(B) the spouse or parent of an incompetent 
beneficiary; 
‘‘(C) a person who has been appointed a fidu-
ciary of the beneficiary by a court of competent ju-
risdiction; 
‘‘(D) being appointed to manage an estate 
where the annual amount of veterans benefits to be 
managed by the proposed fiduciary does not exceed 
$3,600, as adjusted pursuant to section 5312 of this 
title; or 
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‘‘(E) a person who is authorized to act on be-
half of the beneficiary under a durable power of at-
torney. 
‘‘(d) PROTECTION OF PRIVATE INFORMATION.—(1) 
A fiduciary shall take all reasonable precautions to— 
‘‘(A) protect the private information of a bene-
ficiary, including personally identifiable information; 
and 
‘‘(B) securely conducts financial transactions. 
‘‘(2) A fiduciary shall notify the Secretary of any ac-
tion of the fiduciary that compromises or potentially com-
promises the private information of a beneficiary. 
‘‘(e) POTENTIAL MISUSE OF FUNDS.—(1) If the Sec-
retary has reason to believe that a fiduciary may be mis-
using all or part of the benefit of a beneficiary, the Sec-
retary shall— 
‘‘(A) conduct a thorough investigation to deter-
mine the veracity of such belief; and 
‘‘(B) if such veracity is established, transmit to 
the officials described in paragraph (2) a report of 
such investigation. 
‘‘(2) The officials described in this paragraph are the 
following: 
‘‘(A) The Attorney General. 
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