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M21-1, Part III, Subpart v, Chapter 3, Section C – Special Issues in Apportionment Cases

Overview


In This Section

This section contains the following topics:
Topic
Topic Name
1
2
3
4

1.  Apportioning Awards in Survivors Cases


Introduction

This topic discusses special procedures that apply when apportioning awards in survivors cases, including

Change Date

February 16, 2018

III.v.3.C.1.a.  Determining the Proper Amount to Apportion in Survivors Cases

The amount of benefits the Department of Veterans Affairs (VA) may apportion to a surviving spouse’s child is dictated by regulation and varies based on the type of benefit the surviving spouse is receiving, as shown in the table below.
Survivors Benefit
Governing Regulation(s)
Dependency and Indemnity Compensation (DIC)
Section 306 Pension
Note:  The “apportionment . . . rates approved by the Under Secretary of Benefits” that are referenced in 38 CFR 3.460(b) are viewable in the historic M21-1, Part I, Appendix B, Section I.
Old-Law Pension
Note:  The “apportionment . . . rates approved by the Under Secretary of Benefits” that are referenced in 38 CFR 3.460(b) are viewable on Page II-3 of the historic M21-1, Part I, Appendix B, Section II.
current-law pension

III.v.3.C.1.b.  Additional Amounts Payable for a Child/Children

The additional amount of DIC, Section 306 Survivors Pension, and Old-Law Pension payable for any child or children in custody of a surviving spouse should be included in the surviving spouse’s share.
  • A surviving spouse’s award of
    • current-law pension does not provide for separate entitlement for the children in the surviving spouse’s custody, and
    • DIC includes minor children not in actual or constructive custody.
  • The additional amount may be apportioned per 38 CFR 3.450(e) if
    • a child is in the surviving spouse’s custody but living with someone else, and
    • the surviving spouse is not reasonably contributing to the child’s support.
  • To make such apportionments, the award should
    • deduct any amounts payable for these children from the surviving spouse’s award, and
    • show this as an apportionment on the surviving spouse’s award.
Notes:
  • Since there is no separate amount payable for children under current-law Survivors Pension, the apportionable rate is determined under
  • The additional amount awarded because of the surviving spouse’s housebound status or need for aid and attendance is not apportionable per
Reference:  For more information on managing apportionments in the

III.v.3.C.1.c.  Processing Notice That a Child Is No Longer in the Surviving Spouse’s Custody

The following table provides the procedures to follow when VA receives notification that a child is no longer in the custody of the surviving spouse who is receiving current-law survivors pension.
If VA received the notification from …
Then …
the surviving spouse
  • reduce the surviving spouse’s award effective theearlier of the following two dates, per 38 CFR 3.400(e)(2):
    • the first of the following month, or
    • the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share
  • apportion the amount payable to the child, and
  • pay the child from the same effective date as the date the surviving spouse’s award is reduced.
a third-party source
issue a notice of proposed adverse action (according to the instructions in M21-1, Part I, 2.B) before withholding any benefits from the surviving spouse’s award that are payable for the child that is no longer in the surviving spouse’s custody.
Reference:  For more information on managing apportionments in

III.v.3.C.1.d.  Discontinuing Apportionments in Survivors Cases

Apportionments in survivors cases may be discontinued from a future effective date in anticipation of the
  • 18th birthday of a child not enrolled in or attending school
  • discontinuation of a child’s school attendance, or
  • 23rd birthday of a child still enrolled in school.
The following table describes additional situations that require
  • discontinuation of a child’s apportionment, or
  • adjustment and/or discontinuation of the surviving spouse’s award.
When a child’s entitlement ends, take action based on the following references.
If entitlement ends due to the …
Then …
child returning to the surviving spouse’s custody
discontinue the child’s apportionment effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share, per 38 CFR 3.500(d)(1).
death of the child
marriage of the child
child’s unanticipated discontination of school attendance
see
child’s election of Dependents’ Educational Assistance
child’s election to receive benefits in a two-parent case
imprisonment of a child in receipt of pension
child’s election of current-law pension in lieu of 306 Pension
remarriage of the surviving spouse
death of the surviving spouse
surviving spouse’s excessive income or net worth
see
imprisonment of a surviving spouse in receipt of current-law pension

2.  Apportioning Awards Involving Incompetent Veterans


Introduction

This topic contains information on apportioning an incompetent Veteran’s benefits, including

Change Date

February 16, 2018

III.v.3.C.2.a.  Apportioning Awards for an Incompetent Veteran’s Dependents

Apportion an incompetent Veteran’s award to his/her dependents as warranted by the facts of the individual case, unless a fiduciary is providing for the dependents.
Note:  The fiduciary may be the Veteran’s spouse with the benefit payment going to the spouse under

III.v.3.C.2.b.  Awarding Benefits to an Incompetent Veteran’s Spouse

38 CFR 3.850(a)(2) and 38 CFR 13.57, authorize VA to pay the full benefit due to the incompetent Veteran to his or her spouse, for the use of the Veteran and dependents.
Such an award is not an apportionment, but an award to a spouse in a fiduciary capacity.  As such, this award is subject to apportionment for other dependents of the Veteran not being provided for by the spouse.

III.v.3.C.2.c.  Handling an Apportioned Award for an Incompetent Veteran Not Hospitalized

When the rating activity makes a formal rating of incompetency in accordance withM21-1, Part III, Subpart iv, 8.A.3.a, in the case of a Veteran who is nothospitalized, notify the fiduciary hub as provided in M21-1, Part III, Subpart v, 9.A.1.
Use the following table for guidance on handling an apportioned award of an incompetent Veteran if the Veteran lives with the dependents, or if some of the dependents do not live with the Veteran.
If …
Then …
the Veteran is living with a spouse
take action to pay the spouse.
the Veteran is living with minor children and there is no spouse
continue the award to the incompetent Veteran until a fiduciary is appointed.
a fiduciary hub appoints a separate fiduciary for minor children
make an apportionment for the dependents upon receipt of VA Form 21-555, Certificate of Legal Capacity to Receive and Disburse Benefits, in accordance with M21-1, Part III, Subpart v, 9.C.2.b.

III.v.3.C.2.d.  References for Handling an Apportioned Award for a Hospitalized Incompetent
Veteran

Use the table below to locate the procedures for handling an apportioned award for a hospitalized Veteran.
If …
Then follow the procedures in …
VA receives notice of
  • a judicial decree of incompetency of a Veteran, or
  • the appointment of a guardian
VA receives notice of a Veteran’s hospitalization that does not constitute a judicial determination of incompetency
a regional office (RO) must route VA Form 21-592, Request for Appointment of a Fiduciary, Custodian, or Guardian, to the fiduciary hub of jurisdiction for theappointment of a fiduciary in conjunction with the
  • preparation of an institutional award, or
  • authorization of an apportionment

3.  Apportioning Awards Involving Foreign Residents


Introduction

This topic contains information about the payment of benefits to Veterans and/or dependents residing in a foreign country, including

Change Date

February 16, 2018

III.v.3.C.3.a.  Jurisdiction of the Claims Folder in Foreign Resident Beneficiary  Cases

When a Veteran is a foreign resident, jurisdiction over his/her claims folder is permanently transferred in accordance with M21-1, Part III, Subpart vi, 3.A.2.
When a Veteran who is not a foreign resident has a dependent who is a foreign resident, the RO having jurisdiction over the Veteran’s claims folder is responsible for
  • adjudicating a claim for an apportionment that the dependent (or someone acting on behalf of the dependent) submits, and
  • preparing and processing  an apportionment, if the RO decides one is in order.
Note:  All checks identified by a foreign mail code are automatically referred for special handling in accordance with

III.v.3.C.3.b.  Countries to Which the Treasury Department Will Not Send Checks

The Treasury Department maintains a list of countries to which it will not send Treasury checks because there is no reasonable assurance the payee will receive and be able to negotiate the check at full value.
References:  For more information on the principle expressed in the preceding paragraph, see M21-1, Part III, Subpart vi, 3.B.1.

III.v.3.C.3.c.  Payments to an Apportionee Who Resides in a Treasury Department-Listed Country

Give special consideration to apportionments involving apportionees who reside in a Treasury Department-listed country.
Apportion benefits to a dependent residing in a listed country only if the requirements of 38 CFR 3.653(c) are met.
If the requirements are not met,
  • adjust the beneficiary’s award effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share, and
  • remove the dependent.

III.v.3.C.3.d.  Payments to a U.S. Citizen Veteran Who Resides in a Treasury Department-Listed Country

It is not necessary to discontinue payments to a U.S. citizen Veteran who resides in a Treasury Department-listed country.  These payments are automatically deposited in a special account in the Treasury, per M21-1, Part III, Subpart vi, 3.B.1.d.
If VA is ever unable to confirm the Veteran’s existence, discontinue his/her award effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.
If an RO decides to apportion benefits under 38 CFR 3.451 to a Veteran’s dependent who does not reside with the Veteran in a listed country, maintain an annual control for required information as provided in the Treasury Department list.
If VA is ever unable to confirm the Veteran’s existence, wait until one year has passed since VA last confirmed the Veteran’s existence before discontinuing the apportionment.  The proper effective date for discontinuing the apportionment in this situation is the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.
Note:  It may be necessary to issue a notice of proposed adverse action, as discussed in M21-1, Part I, 2.B, before discontinuing benefits.

III.v.3.C.3.e.  Payments to a Non-U.S. Citizen Veteran Who Resides in a Treasury Department-Listed Country

Discontinue payments to a Veteran effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share when he/she
  • resides in a Treasury Department-listed country, and
  • is not a U.S. citizen.
VA may apportion disability compensation upon receipt of a claim by or on behalf of a dependent of such a Veteran only if the dependent
  • does not reside in one of the Treasury Department-listed countries, and
  • is a U.S. citizen.
The amount of the apportionment should not exceed the amount which would be payable to dependents of the same class if the non-U.S. citizen Veteran were dead.  Payments may not be authorized until the following is established:
  • continued existence of the Veteran, and
  • the Veteran’s continued entitlement to disability compensation, unless the disabling effects of all of the Veteran’s service-connected disabilities are static.
If VA is ever unable to confirm the Veteran’s existence, wait until one year has passed since VA last confirmed the Veteran’s existence before discontinuing the apportionment.  The proper effective date for discontinuing the apportionment in this situation is the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.
Note:  It may be necessary to issue a notice of proposed adverse action, as discussed in M21-1, Part I, 2.B, before discontinuing benefits.

4.  Apportionment Restriction for Adopted Children


Change Date

February 16, 2018

III.v.3.C.4.a.  Apportionment Restriction for Adopted Children

38 CFR 3.458(d) prohibits the apportionment of disability compensation for a child legally adopted by another person.  (Effective September 14, 2015, for the purpose of determining entitlement to benefits provided under 38 U.S.C. 1115 and 38 CFR 3.4(b)(2), a child adopted out of a Veteran’s family is not recognized as a child under 38 CFR 3.57.)
Except as noted in VAOPGCREC 16-9438 CFR 3.458(d) prohibits the apportionment of pension for a child legally adopted by another person.
References:  For more information regarding the effect of the adoption of a Veteran’s child on an award of
Historical_M21-1III_v_3_SecC_9-14-15.doc May 16, 2019 147 KB
2-16-18_Key-Changes_M21-1III_v_3_SecC.docx May 16, 2019 67 KB
9-14-2015_Key-Changes_M21-1III_v_3_SecC.docx May 16, 2019 62 KB
Change-April-14-2015-Transmittal-Sheet-M21-1III_v_3_SecC_TS.docx May 16, 2019 37 KB
Change-April-8-2015-Transmittal-Sheet-M21-1III_v_3_SecC_TS.docx May 16, 2019 43 KB
Transmittal-Sheet-M21-1MRIII_v_3_SecC_TS.docx May 16, 2019 39 KB
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