This is a complicated post. You may want to review my earlier posts on guardians, conservators and professional fiduciaries if you aren't comfortable with those concepts..
In my practice I run into three types of fiduciaries. There are social security rep payees. There are state court appointed conservators and there are fiduciaries appointed by the US Department of Veterans Affairs (USDVA).
Social Security doesn’t present much of a problem. Social Security will normally honor an appointment of a fiduciary by a state court by making the fiduciary the rep payee for Social Security. That puts the state and federal money in the same hands. Then, when I do an annual accounting to the state court, with a wink and a nod, I include the social security, as if it were subject to state court administration. It is a courtesy to the state court so that judges have a full picture of the protected person's finances.
The problem arises when state appointed fiduciaries and those appointed by the USDVA clash. The USDVA has its own system, and unlike Social Security, the USDVA and the state courts do not always play well together..
In addition to the tension inherent in having two parallel systems, there is often an atmosphere of distrust between those who work primarily in one system or the other. Partisans on the state court side allege that USDVA appointed fiduciaries are untrained, overworked, and unresponsive. Partisans on the federal side allege that state court fiduciaries are arrogant, overpaid and rapacious. I try to stay out of the crossfire, but the partisans are easy to find and can make these cases more difficult than they already are.
The problem for the elders arises when a state court conservator is appointed for a protected person who already has a USDVA rep payee. The USDVA will not normally make the state appointed conservator the rep payee for USDVA funds, so the protected person ends up with two fiduciaries. Two fiduciaries are not better than one, particularly when the two money managers don’t believe the other one truly deserves to be there. It gets even worse if the state court also appoints a professional guardian who wants to be paid by somebody, but isn’t quite sure who. In these cases, every expense has to be negotiated by the two fiduciaries.
Some lawyers believe they can avoid the two-fiduciary problem by having a state court appoint the Oregon Department of Veterans affairs as the state court fiduciary. The theory may be that the two agencies have similar names so they will cooperate with each other. That isn’t necessarily true. The lawyer hopes that the USDVA will make the ODVA the rep payee for federal VA benefits thereby putting a state agency in charge of the federal money. That might happen, or it might not. The USDVA, it seems to me, is particularly reluctant to appoint the ODVA as rep payee for federal benefits if it looks like the appointment of the ODVA was instigated primarily as a strategy to get state control of USDVA payments. In such cases, the USDVA often leaves its own fiduciary in place to manage the federal money. The protected person ends up paying both the ODVA and the USDVA fiduciary.
The situation is complicated by the fact that when amounts over $10,000 accumulate in a USDVA account, the USDVA may (or may not) ask the local USDVA fiduciary to apply for conservatorship under state law. If the fiduciary is appointed he will thereafter be paid according to state law rather than federal law. For the fiduciary, this usually means a raise. If, however, the USDVA fiduciary is not appointed--say for example the court finds that the protected person is competent or that a different person is more appropriate to serve--then the USDVA fiduciary will continue to administer the USDVA money. Even when the USDVA initiates the proceeding in state court, the state doesn’t get to choose who will manage VA money.
I had one case where the USDVA fiduciary applied to be a successor state law conservator after a family member resigned. After reviewing a visitors report, the court found that that protected person no longer needed a conservator. The USDVA makes its own capacity determinations and ignored the state court ruling. Thereafter the USDVA left the rep payee in place and cut the monthly budget of the veteran because he could now pay his living expenses out of the funds freed up by the termination of the state court conservatorship.
If you have the USDVA involved in your case you have to remember that the USDVA is not bound by state court determinations and regularly ignores them. You cannot subpoena USDVA medical providers as witnesses in state court. The USDVA makes its own competency determinations. The USDVA fiduciaries do their own accounting's each year to the USDVA, accountings which are often disapproved (for sometimes serious and sometimes trivial reasons). USDVA fiduciaries are contractors who cannot voluntarily turn over federal money to family or state authorities and cannot, if they want to keep their contracts, resign as the fiduciary for a particular veteran. All the important decisions and expenditures are made by the USDVA field examiners and the people at the fiduciary hub.
The moral is--I think--that when I get involved with someone who has a USDVA fiduciary, I have to look ahead. I can’t adopt a legal strategy that will create dueling fiduciaries. If all the money in the case comes from Social Security and USDVA, there is no money for the state courts to manage. In those cases I have to be very circumspect about asking for a state law conservator. If I want to change the USDVA fiduciary in charge, I have to tread lightly and use charm instead of bluster. The only way to force the USDVA to do anything is in federal court where the law is stacked against me. The USDVA folks know this. They know I don’t like federal court and my clients can’t afford to go there. The people at the USDVA will, however, listen to respectful and well presented plans that enhance the life of the veteran. And, supposedly, that is what we all want.
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