What is Incompetency?
The VA has the authority to determine whether a veteran should be considered competent to handle their own finances. If the VA determines that a veteran is not competent to handle their own finances, they make a finding of incompetency. Someone who is considered incompetent is one who “because of injury or disease lacks the mental capacity to contract or to manage their own affairs, including the disbursement of funds.” In order for the VA to make a finding of incompetency, there must be medical evidence that is clear and convincing, and leaves no doubt that the person is incompetent. Without that high level of evidence, the VA will not look into incompetency.
The issue of incompetency is another area in VA law where the veteran gets the benefit of the doubt. If reasonable doubt arises about whether a veteran is competent, doubt is resolved in favor of the veteran being competent. In order for this presumption of competency to apply, there must be an approximate balance of both positive and negative evidence as to the veteran’s mental capacity. Incompetency is found ONLY when the evidence is clear and convincing that the veteran doesn’t have the mental capacity to manage his own finances.
What happens if the VA finds a veteran is incompetent?
If the VA decides to make an incompetency determination, they are required to notify the veteran of their proposed action. This notification must tell the veteran that they have a right to a hearing on the issue of incompetency. If a veteran requests a hearing on the issue of incompetency, the VA cannot make a decision about incompetency until the hearing is held.
Generally, someone called a fiduciary will be appointed. The fiduciary’s role is to manage the veteran’s compensation received from their VA disability benefits. This means that a fiduciary will receive the disability payments and decides how the money should be used. A fiduciary is supposed to do this “for the best interests of the beneficiary (the veteran).” A finding of incompetency does not affect the veteran’s ability to participate in the VA claims process. Also, a finding of incompetency by the VA does not affect the veteran’s ability to hand other finances or assets they might have.
How does the VA go about selecting a fiduciary?
The VA asks the veteran to provide information about things such as monthly bills, assets, medications they need, contact information for their primary care physician, and the information for who should be contacted in case of an emergency. VA regulations state that a veteran is allowed to select their own fiduciary. For example, a veteran might have a family member or close friend that they trust to handle their money and would prefer to have that person act as their fiduciary (rather than a fiduciary selected by the VA). If that is the case, the person selected by the veteran must pass a background check, and must apply to the VA fiduciary program.
Although the veteran is allowed to select who they want appointed as fiduciary, sometimes the VA declines this selected person and instead appoints a paid fiduciary. However, the VA is supposed to give preference to the veteran’s selection. Remember, if at any time a veteran becomes concerned with how their fiduciary is managing their money, they can request that a new fiduciary be assigned at any time. Additionally, a veteran can appeal the appointment of a fiduciary to the Board of Veterans Appeals, or to the Court of Appeals for Veterans Claims (CAVC).
What If You Disagree with a Finding of Incompetency?
If the VA makes a finding of incompetency, a veteran can appeal that finding to the Regional Office that issued the finding. To appeal, the veteran must provide new medical evidence. If the Regional Office does not reverse their finding of incompetency, the veteran can appeal to the Board of Veterans Appeals. If the Board does not reverse the finding, the veteran can then appeal to CAVC.
Another option is to ask the VA to re-evaluate the veteran’s ability to manage their funds. This is done by submitting a reevaluation request in writing to the veteran’s Regional Office.
How Can You Avoid an Incompetency Issue?
Sometimes a fiduciary is truly needed to help a veteran, but oftentimes this is a complex and unnecessary process. If a veteran is able to manage their own finances, they need to make this very clear when attending any compensation & pension exams (C&P exams). The C&P examiner will ask about whether the veteran feels they can handle money, and the veteran should clearly state that they are able to manage their own finances if that is how they feel. The C&P report will be provided to the VA, and if the examiner notes that the veteran needs help with things such as paying bills and managing a budget, the VA might then look into whether the veteran is competent or not. Always be honest with the examiner, but just be sure to make your answers clear to the examiner.