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Updated Oct 15, 2024

In This Section
This section contains the following topics:

1.  Guidelines for Evaluating Competency

Introduction
This topic contains information on the guidelines for evaluating competency, including

Change Date
October 15, 2024

X.ii.6.A.1.a.  Jurisdiction for Competency Determinations
Jurisdiction on competency determinations for Department of Veterans Affairs (VA) purposes is dependent on the stage of the process the decision is in.
Use the table below to determine jurisdiction of the competency determination.
If …
Then …
  • an initial competency determination is needed, and
  • no court decree of incompetency or court appointment of a fiduciary by reason of incompetency has been received
the rating activity at the station of origination (SOO) has sole authority to make the original competency determination.
  • an initial competency determination is needed, and
  • either a court decree of incompetency or court appointment of a fiduciary by reason of incompetency has been received
a proposal of incompetency/due process is not required per 38 CFR 3.353(e).  The SOO completes a final competency determination and the case is then referred directly to the fiduciary hub (hub) for appointment of a fiduciary.
Reference:  For more information on referral of court documents to the hub, see M21-1, Part X, Subpart ii, 6.D.2.g.
a finding of incompetency has been proposed regardless of whether VA received
  • additional medical or non-medical evidence conflicting with the proposal of incompetency, or
  • a request for a hearing
the Fiduciary Service Representative (FSR) has the authority to
  • finalize the competency determination, and
  • conduct a hearing, if requested.
Exception:  As provided in FPM, Part I, 1.A.2.b, the following cases are excluded from fiduciary promulgation team processing due to their unique processing requirements:
  • Integrated Disability Evaluation System cases
  • Restricted Access Claims Center cases
  • foreign cases, and
  • proposed ratings that contain adverse actions in addition to the incompetency issue.
  • a finding of incompetency has been proposed
  • one of the exceptions as referenced in FPM, Part I, 1.A.2.b, applies, and
  • VA has not received a hearing request
the rating activity at the regional office (RO) has the authority to make the final competency determination.
Note:  Routine National Work Queue (NWQ) routing rules will apply unless a specific routing rule for a special status, such as homelessness or a special mission, applies.
  • a finding of incompetency has been proposed
  • one of the exceptions as referenced in FPM, Part I, 1.A.2.b, applies, and
  • VA received a request for a hearing
the rating activity at the RO associated with the beneficiary’s home address has the authority to conduct the hearing and make the final competency determination.
a legacy appeal is received regarding a final competency determination
the Veterans Service Center (VSC) or pension management center (PMC) associated with the beneficiary’s home address has jurisdiction over the legacy appeal.
a supplemental claim is received after a final competency determination
the VSC or PMC rating activity has the authority to make the competency determination.
Note:  Routine NWQ routing rules will apply unless a specific routing rule for a special status, such as homelessness or a special mission, applies.
a higher-level review (HLR) request is received regarding a final competency determination
a decision review operations center conducts the decision review.
a legacy appeal, supplemental claim, or HLR request is received regarding the appointment of a fiduciary
the hub has jurisdiction.
 
Note:  Proposed and final competency determinations are not claims for benefits, although the competency issue may arise in association with a claim for benefits.  A competency request, accompanied by medical or judicial evidence, does not require a prescribed form submission.
References:  For more information on

X.ii.6.A.1.b.  Effect of Judicial Findings on Rating Activity Decisions Related to Competency
Judicial findings of a court, with respect to competency of a beneficiary, are not binding on the rating activity.
However, if a beneficiary is declared by a court to be incompetent, develop all necessary evidence for a rating determination.

X.ii.6.A.1.c.  Presuming Competency
In the absence of clear and convincing evidence to the contrary, presume that a person is competent.
 
References:  For more information on

X.ii.6.A.1.d.  Making a Finding of Incompetency
A finding of incompetency cannot be made without a definite expression by a responsible medical authority unless the medical evidence of record is
  • clear
  • convincing, and
  • leaves no doubt as to the beneficiary’s incompetency.
Note:  If competency of a VA beneficiary is raised without relevant medical evidence or statement from a responsible medical authority, development must be undertaken for medical evidence before the case can be forwarded to the rating activity.
References:  For more information on

X.ii.6.A.1.e.  Considering the VSCM’s or FHM’s Opinion Regarding Competency
After development of information with regard to social, economic, and industrial adjustment, the Veterans Service Center Manager (VSCM) or Fiduciary Hub Manager (FHM) may be of the opinion that a beneficiary rated, or proposed to be rated, incompetent is actually capable of handling, without limitation, the funds payable.  In this case, they will refer the evidence and finding to the rating activity.
The rating activity should consider the VSCM’s or FHM’s finding as new evidence and, after any necessary additional development, prepare a rating based on the evidence of record.
References:  For more information on

X.ii.6.A.1.f.  Handling Requests for Incompetency Determinations Without Medical or Judicial Evidence
Use the table below for proper procedures for handling requests for a finding of incompetency from a Veteran or beneficiary or from a third-party source.
If the request or evidence showing a change in competency status is …
Then follow the steps in the table below to handle the request for a determination concerning competency status …
a request from a Veteran or other beneficiary to be rated incompetent or have a fiduciary appointed without associated medical or court evidence
Step
Action
1
If a rating EP is
  • not currently pending, establish the appropriate compensation or pension rating EP, or
  • currently pending, control the competency issue under the rating EP.
2
Establish competency as a contention in the Veterans Benefits Management System (VBMS).
3
Complete any necessary development for the competency or other pending issues.
  • Review VA treatment records and associate all relevant treatment records with the Veteran’s claims folder.
  • In developing the claimed issues, assess whether the request for a competency determination may raise other issues, such as entitlement to an increased evaluation for a service-connected mental disability, as within the scope of the request for the competency determination.
    • This is a determination dependent on the facts of the case.
    • Do not routinely consider a request for a competency determination to necessarily be a claim for a related mental disability.
  • Request a VA examination to assess competency status when warranted based on review of the Veteran’s or beneficiary’s statement and/or the other evidence of record.
Reference:  For more information on examinations for non-Veteran claimants and beneficiaries, see M21-1, Part IV, Subpart i, 2.E.2.a.
4
a request from a third party to have a Veteran or other beneficiary rated incompetent without associated medical or court evidence
Step
Action
1
Establish EP 400.
2
Review VA treatment records for any evidence of incompetency.
3
  • If VA treatment records do include medical evidence showing incompetency,
    • associate the records with the Veteran’s claims folder
    • change EP 400 to EP 020 or 120, as appropriate, and
    • treat the request as receipt of medical records.  Follow the procedures at M21-1, Part X, Subpart ii, 6.A.3.a.
  • If VA treatment records do not include medical evidence pertaining to competency status, go to Step 4.
4
  • If the address for the third party individual who submitted the request is available, send a letter acknowledging receipt of the request using the Competency Request—Third Party Reply letter, as applicable.  The letter to the third-party requestor must not include any personally identifiable information for the Veteran or beneficiary.  Go to Step 5.
  • If the address for the third-party individual who submitted the request is not available, go to Step 5.
5
Clear EP 400.
Note:  When unusual circumstances are present, such as an extraordinary situation presented by the third party but without associated medical or legal evidence, the request may be referred to Central Office for an advisory opinion in accordance with M21-1, Part X, Subpart v, 1.A.2 before EP 400 is cleared.

2.  Considering Competency While Evaluating Evidence

Introduction
This topic contains information about considering competency while evaluating the evidence, including

Change Date
October 15, 2024

X.ii.6.A.2.a.  Considering Whether to Address Competency of a Veteran
If the claimant is a Veteran, address competency in a decision whenever
  • there is
    • entitlement to benefits, or
    • the potential for the competency decision to impact the outcome of a determination about insurance entitlement under 38 U.S.C. 1922, and
  • qualifying evidence raises a question as to the mental capacity to contract or to manage their own affairs, including disbursement of funds without limitation.
Address competency as a separate issue in the rating decision when
  • incompetency is proposed, or
  • a previous rating of incompetency is being reconsidered.
Use the table below for guidance on what action, if any, to take within a rating decision on the matter of competency.
If the evidence …
Then …
suggests but does not clearly and convincingly show that the person is incapable of managing the VA benefit payment without limitation
  • do not develop
  • do not propose incompetency, and
  • state in the narrative of the rating decision issue that there was no clear and convincing evidence of incompetency.
clearly and convincingly shows that the person is incapable of managing the VA benefit payment without limitation
propose incompetency.
 
Important:
  • Competency must be addressed in cases where a mental condition is initially evaluated as totally disabling or when the total evaluation is continued in a rating decision. This includes
    • when individual employability is awarded or continued on the basis of a single mental health disability, and
    • when assigning or continuing a temporary total evaluation for a mental disorder under 38 CFR 4.29.
  • The mere existence of a mental condition with a total evaluation does not automatically correlate to a Veteran’s inability to manage their benefits, but many of the symptoms warranting a total disability evaluation could render the Veteran unable to manage benefits.
  • Carefully consider the facts in these cases to determine whether the regulatory standard warrants a proposal of incompetency.  When the evidence shows the Veteran is competent, address the competency determination as part of the narrative within the mental condition issue.
  • Include the following text in the rating narrative, either generated based on decision points or added using the VA COMPETENT glossary selection within VBMS – Rating for these cases:
There is no evidence of record that shows that you are unable to manage your financial affairs.   (38 CFR 3.353)
References:  For more information on

X.ii.6.A.2.b.  Reviewing Competency Information Received on VA Form 21-2680
VA Form 21-2680, Examination for Housebound Status or Permanent Need for Regular Aid and Attendance, solicits medical information regarding a Veteran’s or other beneficiary’s competency status.  The examining physician may indicate whether the individual has the mental capacity to manage benefit payments or direct someone to do so.  When incompetency is indicated, the form solicits for examples and rationale.
When reviewing the competency information on VA Form 21-2680, ensure that the requirements of 38 CFR 3.353(c) have been satisfied.  Particularly, determinations of incompetency must be based on
  • clear, convincing evidence that leaves no doubt as to the person’s incompetency
  • all evidence of record, and
  • a consistent relationship between
    • the percentage of disability, and/or
    • facts relating to commitment or hospitalization.
Where reasonable doubt arises as to competency status, follow the regulatory guidance at 38 CFR 3.353(d) to resolve doubt in favor of competency.

X.ii.6.A.2.c.  Competency of a Child Permanently Incapable of Self-Support
If the claimant is a child over the age of 18 and permanently incapable of self-support, the rating activity must resolve the issue of competency for the child because entitlement depends upon permanent incapacity for self-support due to physical or mental disability.
If incapacity is due to mental disability
  • consider competency a factor in determining whether the child is permanently incapable of self-support
  • determine competency under the same criteria applicable to Veterans, and
  • record the determination in a rating.
Note:  Since the incompetency procedures referred to in M21-1, Part X, Subpart ii, 6.D.3 are for payment purposes, do not apply those procedures except in cases where the child would receive direct payment in their own right.
References:  For more information on

X.ii.6.A.2.d.  Competency of Other Beneficiaries
If there is evidence of incompetency and the claimant is a non-Veteran, such as a surviving spouse, parent, or VA insurance beneficiary
  • consider competency a rating issue under 38 CFR 3.353 when there is entitlement to benefits, and
  • propose a rating on the issue or undertake any required development.
Exception:  A proposed rating decision for competency is not necessary when there is a judicial determination of incompetency; however, a final rating is required.
References:  For more information on processing

3.  Process for Making Competency Determinations

Change Date
October 15, 2024

X.ii.6.A.3.a.  Making Initial Competency Determinations Based on Medical Evidence
The RO is responsible for all initial competency determinations based on medical evidence.  The table below describes the actions involved in making initial competency determinations based on receipt of medical evidence.
Stage
Responsible Employee
Description
1
rating activity personnel
  • Prepares a rating decision proposing a finding of incompetency after receiving clear and convincing evidence that a payee is incapable of managing their own affairs, including disbursement of funds without limitation, and
  • ensures that the facts contained in the proposed rating decision are complete so that they do not need to be repeated in the final rating decision.
Note:  If there is a finding of incompetency by a court, follow the guidance in M21-1, Part X, Subpart ii, 6.D.2.f and g.
2
authorization activity personnel
  • Provides the payee notice of
    • the proposed incompetency rating
    • the opportunity for a hearing, and
    • any concurrently rendered decisions
  • closes any tracked items associated with the pending rating EP
  • clears any pending EP that would normally be taken at this point, including release of monthly benefits
  • notifies power of attorney, if applicable, per M21-1, Part I, Subpart i, 2.B.1
  • accomplishes automated (or, in the event of systematic error, manual) establishment of EP 590, Due Process for Incompetency
  • adds any required tracked items to the EP 590, and
  • ensures associated documentation is available in the claims folder.
Note:  The SOO transfers the EP 590 to the hub of jurisdiction.  The SOO is not required to provide oral notification of Brady Handgun Violence Prevention Act (Brady Act) restrictions.
3
hub personnel
Provides the payee oral notification of Brady Act restrictions upon receipt of the EP.
 
References:  For more information on

4.  Changing Competency Status

Introduction
This topic contains information about changing competency status, including

Change Date
June 30, 2020

X.ii.6.A.4.a.  Proposing Incompetency
Issue a rating proposing a change in competency status if the evidence of record will result in a change in competency status from competent to incompetent.
This proposal may be included in a rating addressing other issues, such as evaluation of a mental disorder.
Reference:  For more information on procedures to follow upon receipt of evidence of incompetency, see M21-1, Part X, Subpart ii, 6.A.1.

X.ii.6.A.4.b.  Determining Restored Competency
The determination with respect to restoration of competency rests solely with the
  • rating activity and not with a medical official, or
  • hub, in the case of a Supervised Direct Pay Assessment, submitted by a Field Examiner (FE) (unless one of the exceptions of FPM, Part I, 1.A.2.b, applies).
38 CFR 3.353(d) mandates a presumption in favor of competency when reasonable doubt arises regarding a beneficiary’s mental capacity to manage their own affairs.  Competency may be restored based upon credible medical or other evidence.
In any case in which the beneficiary has previously been rated incompetent, take necessary development and rating action to determine whether competency has been regained if so indicated in a
  • hospital summary
  • Supervised Direct Pay Assessment submitted by an FE, or
  • report of
    • release to or discharge from non-bed care, or
    • other material change in condition.
References:  For more information on
  • the authority of the rating activity in determinations regarding competency, see Sims v. Nicholson, 19 Vet.App. 453 (2006)
  • jurisdiction of evidence received after a final determination of incompetency, see FPM, Part I, 1.A.2.e, and
  • Supervised Direct Pay Assessment, see FPM, Part I, 5.A.3.

X.ii.6.A.4.c.  Limitations After Competency Is Restored
Restored competency does not in and of itself
  • warrant a reduction in the evaluation of a Veteran’s disability, or
  • establish that a parent or surviving spouse is no longer entitled to aid and attendance.

X.ii.6.A.4.d.  Evidence Required to Restore Competency
Any evidence showing the beneficiary may be capable of handling funds should be referred to the rating activity.  The rating activity will consider this evidence, along with all other evidence of record, to determine whether competency should be restored.
Do not routinely request an examination of the beneficiary when evidence indicates that competency has been regained.  Under 38 CFR 3.353(b)(3), a beneficiary is not required to undergo a psychiatric examination and/or field examination before competency may be restored.  However, a current psychiatric examination and/or field examination may be requested if needed to properly evaluate the beneficiary’s mental capacity to handle their own funds.
Note:  When an FE recommends restoration of competency on a Supervised Direct Pay Assessment, and evidence is otherwise consistent with or does not conflict with the recommendation, no additional evidence is required to restore competency.
References:  For more information on

5.  Evaluating Competency in Special Circumstances

Introduction
This topic contains information about evaluating competency in special circumstances, including

Change Date
October 15, 2024

X.ii.6.A.5.a.  Decree by a Court as Notice and Hearing
A payee may be considered to have had notice and hearing under the laws of the State so that additional notice and hearing are not required when
  • the payee has been found by a court of jurisdiction to be incompetent, or
  • a court having jurisdiction has appointed a guardian by reason of incompetency for a payee.

X.ii.6.A.5.b.  Evaluating Competency When the Beneficiary is Found Incompetent by Court Decree
Judicial findings of a court with respect to the competency of a beneficiary are not binding on the rating activity.  In such cases
  • develop all necessary evidence for a rating activity determination, such as
    • an examination
    • hospital observation, or
    • a field examination
  • give great weight to a
    • court decree of incompetency, and
    • the inability to manage financial affairs, and
  • do not make a rating of incompetency unless there is clear and convincing evidence of that fact.
Notes:
  • Examinations, hospital observations, or field examinations are not routinely required to evaluate competency where there is a judicial finding already of record.  Conduct additional development only when the evidence of record raises doubt as to the beneficiary’s competency status.
  • If the beneficiary continues to be rated competent, mention whether the court made a parallel determination or whether the court made a different determination.
  • Follow guidance in M21-1, Part X, Subpart ii, 6.D.2.h if a child over the age of 18 does not have a determination of permanent incapacity for self-support by rating decision.  M21-1, Part X, Subpart ii, 6.B.2.c provides that the question of permanent incapacity is one of fact for determination by the rating activity based on competent evidence of record.
  • If a temporary court appointment is received and additional appropriate information is available to propose a rating, but there is no judicial determination of record, then the RO should issue due process proposing a rating of incompetency.
  • If a temporary court appointment is received, but there is not sufficient information to propose a rating, the RO will provide notice to the sender which identifies what additional information would be necessary to do so.
References:  For more information on

X.ii.6.A.5.c.  Procedures Following Receipt of Court Decree Restoring Competency
Follow the guidance in M21-1, Part X, Subpart ii, 6.D.2.i to process a court decree of competency for a beneficiary previously held incompetent.

X.ii.6.A.5.d.  Authorization Actions When Reinstating Benefits for a Beneficiary Previously Rated Incompetent
Use the table below to determine the appropriate actions following receipt of a request to reinstate benefits for a beneficiary previously rated incompetent, whose benefits were terminated due to
If new medical or other evidence …
Then the authorization activity will …
is not received with the request to reinstate benefits
reinstate benefits, as warranted, with continuation of the prior incompetency determination without rating action.
is received with the request to reinstate benefits
refer the newly-received medical evidence to the rating activity for review for competency determination.

X.ii.6.A.5.e.  Rating Actions When Reinstating Benefits for a Beneficiary Previously Rated Incompetent
Use the table below to determine the appropriate actions after a claims folder is referred to the rating activity for review due to the receipt of new medical or other evidence from a beneficiary previously rated incompetent who is now requesting reinstatement of benefits.
If the medical or other evidence received …
Then …
  • shows the beneficiary continues to be incompetent, or
  • does not address the beneficiary’s competency
no rating action is necessary.
The rating activity should prepare a deferral, instructing resumption of benefits (as warranted) with the continuation of the prior finding of incompetency.
indicates that the beneficiary is now competent
the rating activity should issue a rating decision addressing the issue of competency.
Reference:  For more information on determining restored competency, refer to M21-1, Part X, Subpart ii, 6.A.4.b.

X.ii.6.A.5.f.  Referral to a Hub After Reinstating Benefits for a Beneficiary With a Continued Finding of Incompetency
When an incompetent beneficiary’s benefits are reinstated with a continued finding of incompetency, as directed in M21-1 Part X, Subpart ii, 6.A.5.d and e, notify the hub of jurisdiction via the appropriate hub mailbox as indicated in FPM, Part I, 1.A.2.a .
Note:  The hub will consider whether the prior failure to submit necessary information for continuance of benefits indicates the need for appointment of a different fiduciary.