Citation Nr: 21008191 Decision Date: 02/11/21 Archive Date: 02/11/21 DOCKET NO. 16-03 828A DATE: February 11, 2021 ORDER The appellant, having been the person who bore responsibility for expenses associated with the Veteran's surviving spouse’s last illness, reimbursement of funds paid by the appellant on the surviving spouse’s behalf is granted. REMANDED Entitlement to payment of accrued benefits as reimbursement of actual funds paid for expenses associated with the Veteran's surviving spouse’s last illness. FINDINGS OF FACT 1. The Veteran served on active duty from November 1942 to October 1945, also in a state National Guard from June 1949 to January 1950, on active duty in the Air Force reserves from June 1953 to June 1955 and in December 1956, and on active duty in the Air Force from June 1958 to January 1974. 2. The Veteran's spouse is deceased; the appellant is an adult child of the Veteran, is incapable of self-support, and is over the age of 23. 3. At the time of the Veteran's spouse’s death, Dependency and Indemnity Compensation (DIC) under 38 U.S.C. § 1318 was due and unpaid. 4. The appellant used funds from a trust designated solely for his and other beneficiaries' use and benefit to pay the portion of the surviving spouse’s last illness expenses. CONCLUSION OF LAW The criteria are met for payment of accrued benefits to the appellant as reimbursement for payment of expenses associated with the Veteran's surviving spouse’s last illness. 38 U.S.C. §§ 5107, 5121 (2012); 38 C.F.R. § 3.1000 (2019). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran, who died in July 2012, was a World War II Veteran and beyond and former prisoner of war (POW) who served honorably in the U. S. Air Force, Air Force Reserves, and state National Guard over the course of many years. He received several Purple Heart Medals for injuries sustained in combat. In support of this claim, a “virtual” hearing was held in December 2020 before the undersigned Veterans Law Judge (VLJ) of the Board. A transcript of the proceeding is of record. This appeal also has been advanced on the docket pursuant to 38 C.F.R. § 20.900(c). 38 U.S.C. § 7107(a)(2). This appeal originates from a March 2014 rating decision that denied the appellant entitlement to accrued benefits related to the cost of caring for his mother, who was the Veteran’s surviving spouse. The appellant is their adult son, who as evidence shows, served as his mother’s fiduciary until her death in October 2013. The appellant asserts that an accrued DIC benefit amount should be paid to his mother's estate since his mother was entitled to receive these benefits prior to her death but had not received the funds owing to VA's failure to timely appoint a fiduciary and establish a fiduciary account on behalf of the Veteran's surviving spouse, who had been found incompetent to manage her funds in an October 28, 2013 rating decision. Prior to the disbursement of her accrued benefits to a fiduciary account, the Veteran's surviving spouse died in October 2013. By way of history, the record indicates the Veteran’s spouse was awarded DIC with a retroactive effective date of August 1, 2012. The spouse was also in receipt of a Survivor Benefit Plan (SBP) annuity from the Veteran’s military retired pay account. An annuitant is prohibited from receiving the full amount from both an SBP and DIC. Instead, an annuitant is entitled to either the amount of the SBP that exceeds the DIC payable or the DIC only (if the DIC is greater than the SBP). Here, the spouse’s monthly DIC award of $1,215 was greater than her SBP annuity of $800; therefore, her SBP annuity was suspended. As a result of the retroactive award, it was determined that she was overpaid in the amount of $8,748 (in other words, payments from August 1, 2012 through June 30, 2013). Taken together with an SBP premium cost refund less the SBP overpayment and Federal Income Tax, it was determined that the SBP overpayment had been satisfied and the remaining balance of $10,174.68 deposited into her account. This information is set forth in an August 23, 2013 Defense Finance and Accounting Service (DFAS) Congressional correspondence with Representative Gus Bilirakis. Additional correspondence from this office indicates Representative Bilirakis had been working with the family to resolve this issue since November 2012, so since just a few months after the Veteran’s unfortunate death in July 2012. In the same August 2013 letter, DFAS also indicated the spouse was entitled to receive a Special Survivor Indemnity Allowance (SSIA) of $90.00 per month and retroactive SSIA payment of $970, which was also deposited into her account. DFAS advised that it had notified VA (The Department of Veterans Affairs) in a June 25, 2013 correspondence that the spouse’s overpayment balance had been satisfied by her SBP premium cost refund – meaning DVA (The Department of Veterans Affairs) was now permitted to issue any retroactive DIC funds to the spouse. However, as will be discussed, that retroactive pay was never issued, meaning the spouse’s SBP payment was stopped but was never replaced with retroactive DIC payments. In a September 30, 2013 notification, VA indicated it had granted the spouse’s claim for DIC with an effective date of July 1, 2012, along with additional allowances for aid and attendance (A&A) also effective July 1, 2012. The claim for accrued benefits and a death pension benefit was denied. The claim for the Veteran’s accrued benefits was denied because there were no benefits owed but unpaid at the time of the Veteran’s death. The death pension was not awarded because individuals may not receive both DIC and death pension benefits at the same time and the DIC award was determined to be the greater benefit. In addition, the September 2013 notification indicated that payments were being withheld pending a proposed incompetency finding. Specifically, in a September 30, 2013 notification, VA indicated it had received a medical report dated March 5, 2013 diagnosing the surviving spouse (the appellant’s mother) with vascular dementia. The spouse then signed a due process waiver on October 7, 2013 so that a guardian could be appointed. The spouse was determined by VA to be incompetent effective October 28, 2013. Unfortunately, however, the spouse had passed away in the meantime on October 18, 2013. In other words, the spouse passed away while awaiting the appointment of a VA fiduciary. The appellant, however, has submitted evidence indicating his status as his mother’s fiduciary since August 2012, so before all of that transpired. Indeed, the record reflects that his adult son had been a trustee of the Veteran’s and surviving spouse’s trust account since August 2012. In other words, the appellant had, under the language of the Trust Agreement, unlimited investment powers, including the right to withdraw from any bank account, not specific to the spouse’s maintenance. In February 2014, VA sent a notification that the spouse’s benefits had been terminated upon her death in October 2013. In July 2014, VA sent additional notification that the son’s claim for accrued benefits had been denied because funds from the spouse’s revocable trust, of which the appellant had been appointed a fiduciary, had been used for caregiver fees rather than paid out of the appellant’s “pocket.” In an August 6, 2014 written correspondence, the appellant clarified that they were not seeking entitlement to accrued benefits but rather the DIC benefits that had been awarded to the widow in a May 8, 2013 rating decision. In a December 8, 2015 informal Decision Review Officer (DRO) conference, it was noted that the issue, as identified by the appellant, was the release of payment owed to the surviving spouse prior to her death. As previously mentioned, the DRO also noted the fact that the widow’s United States Air Force (USAF) pension had been reduced to offset the DIC award, but that, as of the hearing, no VA money had been paid to offset the difference. As of October 29, 2013, the amount of unpaid DIC benefits was calculated to be $24,720. In December 2015, a Statement of the Case (SOC) was issued denying the Veteran’s claim for accrued benefits. Again, the Veteran submitted written correspondence along with his Substantive Appeal to the Board (on VA Form 9) in February 2016 clarifying that he was requesting retroactive DIC payments rather than accrued benefits. To date, the appellant indicates that the spouse’s DIC payments have not been paid and is requesting they be released to his mother’s estate. This fact is evidenced in both his multiple written correspondence with VA as well as his credible testimony, provided on December 2, 2020 to the undersigned Veterans Law Judge (VLJ) during the “virtual” hearing. A transcript of the hearing has been associated with the claims file, so is now of record, thus, the oral testimony during the hearing has been documented in writing. Entitlement to Accrued Benefits With regards to the appellant’s claim that his mother’s estate is entitled to receive her retroactive benefits (in other words, the accrued benefits in question), the Board seeks to provide some clarification.   Applicable law does not include fiduciaries, estates, or executors of estates among the persons eligible to receive accrued benefits. The United States Court of Appeals for Veterans Claims (Veterans Court/CAVC) and the United States Court of Appeals for the Federal Circuit (Federal Circuit Court) have repeatedly affirmed that accrued-benefits claims by persons other than those listed in section 5121(a) are not viable as a matter of law. See, e.g., Morris v. Shinseki, 26 Vet. App. 494, 499-500 (2014) (holding, in the context of accrued benefits, that Veteran’s brother and fiduciary was not an eligible claimant); Youngman v. Shinseki, 699 F.3d 1301, 1303-04 (Fed. Cir. 2012) (denying accrued benefits to a deceased Veteran’s fiduciary for distribution to the Veteran’s “heirs”); Pelea v. Nicholson, 497 F.3d 1290, 1291-92 (Fed. Cir. 2007) (denying accrued benefits to deceased claimant’s “estate”); Richard v. West, 161 F.3d 719, 721-23 (Fed. Cir. 1998) (denying accrued benefits to a deceased Veteran’s brother); Wilkes v. Principi, 16 Vet. App. 237, 242 (2002) (denying accrued benefits to a deceased Veteran’s nephew); Caranto v. Brown, 4 Vet. App. 516, 518 (1993) (holding it was necessary to determine whether a Veteran’s daughter was a “child” for purposes of accrued benefits as she was otherwise ineligible to pursue an accrued benefits claim). Therefore, in this case, the threshold question is whether status as an eligible claimant has been established. See Hayes v. Brown, 7 Vet. App. 420 (1995). Periodic monetary benefits under laws administered by VA, to which a payee (here, the surviving spouse) was entitled at his or her death under existing ratings or decisions or those based on evidence in the file at the date of death and due and unpaid, will, upon the death of such person, be paid to the Veteran's spouse, children, or dependent parents. Where no such person exists, only so much of the accrued benefits may be paid as may be necessary to reimburse the person who bore the expense of last sickness and burial. 38 U.S.C. § 5121(a); 38 C.F.R. § 3.1000(a).   Most relevant here is the definition of “child.” For purposes of accrued benefits, the term "child" is defined, in pertinent part, as a person who is unmarried and (1) under the age of 18; or (2) became permanently incapable of self-support before the age of 18; or (3) under the age of 23 and pursuing a course of instruction at an approved educational institution. See 38 U.S.C. § 101(4)(A); 38 C.F.R. § 3.57(a). To reiterate, in the case of an adult child, such as the appellant, accrued benefits are payable only as necessary to reimburse the person who bore the expenses of last sickness or burial. 38 C.F.R. § 3.1000(a)(5). Here, the appellant does not contend, and the record does not show, that he is the payee's (surviving spouse’s) "child", as defined for purposes of accrued benefits. Rather, the record reflects that the appellant is greater than 23 years old, and there is no indication in the record that he became permanently incapable of self-support before the age of 18. Accordingly, the criteria for entitlement to accrued benefits under 38 C.F.R. § 3.1000 (a)(1)(ii) and (2), are not met, and accrued benefits may only be awarded to the extent necessary to reimburse the appellant for any expenses he bore for the Veteran's surviving spouse's last sickness and burial under 38 C.F.R. § 3.1000(a)(5). In his recent hearing testimony, however, the appellant affirmatively indicated he has this understanding and that this is not his point of contestation in this appeal. The RO already has acknowledged that the surviving spouse was entitled to burial expenses, as evidenced by the amounts withdrawn from her checking account prior to her death. This is noted in a May 2014 rating decision. Therefore, the question remaining for consideration is whether the appellant is entitled to accrued benefits for the purposes of reimbursement of expenses relating to the surviving spouse’s last sickness. Specifically, the issue is whether he bore the cost of his mother’s last sickness. He explained during the hearing that this is what he is maintaining and the reason he is continuing to pursue this appeal. The Board sees the appellant has indicated multiple times that expenses related to caring for his mother were specifically paid out of the previously mentioned revocable trust, of which he is a fiduciary. Based on the language of the Trust Agreement, the Board finds that the Trust documents hold no provisions specific to payment of funds to benefit the Veteran’s spouse (the grantor). The Board, therefore, concludes that the Trust was not specifically for the benefit of the Veteran’s spouse and that the assets contained therein were therefore “owned” by the appellant upon his appointment as a fiduciary in August 2012, for purposes of calculating reimbursements. Consequently, the Board finds the appellant was the person who bore responsibility for unpaid expenses associated with his mother’s (the Veteran’s surviving spouse’s) last illness and, therefore, is entitled to reimbursement of such funds paid on her behalf. REASONS FOR REMAND Entitlement to payment of accrued benefits as reimbursement of actual funds paid for expenses associated with the Veteran's surviving spouse’s last illness. In light of the determination that the appellant is entitled to accrued benefits as reimbursement for last illness expenses paid on the Veteran's spouse’s behalf, he is also entitled to a determination of the precise amount owed by the Agency of Original Jurisdiction (AOJ) in the first instance. As the AOJ denied the appeal on other grounds, there has been no determination as to the amount of last illness expenses paid by the appellant or the amount of the accrued benefits due to which he is entitled. Accordingly, this matter is REMANDED for the following action: 1. Provide the appellant opportunity to submit supporting documentation, including pertinent financial information, to assist in making the calculation of the amount of actual funds paid for expenses associated with the Veteran’s surviving spouse’s last illness. 2. Review all financial documentation submitted and calculate the amount of expenses associated with the last illness of the surviving spouse paid by funds belonging to the appellant, including those paid by the aforementioned revocable trust. KEITH W. ALLEN Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board C. B. Kucera The Board’s decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.