In Youngman v. Shinseki, docket no. 2011-7139 (Fed. Cir. Nov. 9, 2012), the U.S. Court of Appeals for the Federal Circuit held that a veteran’s fiduciary does not have the authority to receive accrued benefits that were awarded but unpaid at the time of the veteran’s death. The only beneficiaries who can receive accrued benefits are designated family members (surviving spouse, children, dependent parents) as provided in 38 U.S.C. § 5121(a). The only other payments allowed by that statute are for reimbursement of expenses for the veteran’s last illness and burial.
In Youngman, the veteran was awarded 100% disability in May 2005, effective March 1986. This resulted in a back award of approximately $350,000. At the time of the award, the veteran had a VA-appointed fiduciary. Proceedings had commenced in state court to appoint this fiduciary as the veteran’s “curator” under Kansas law. The VA regional office acknowledged that the funds could be released to the fiduciary, but later informed the fiduciary that they would not release funds until the state-court appointment was completed. The veteran died before the state proceedings were completed, and the award remain unpaid.
VA refused to pay the award to the fiduciary because neither she nor the veteran’s heirs (his cousins) were eligible accrued beneficiaries under VA law. 38 U.S.C. § 5121(a). The Federal Circuit held that § 5121(a) applied to the distribution of accrued benefits in all cases, and that there was no exception for fiduciaries.