A-56637, AUGUST 14, 1934, 14 COMP. GEN. 126

A-56637: Aug 14, 1934

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THE ADMINISTRATOR OF VETERANS-AFFAIRS TAKES THE PLACE OF THE ADMINISTRATOR OF THE ESTATE AND IS AUTHORIZED AND REQUIRED TO MAKE THE SAME DISTRIBUTION UNDER THE LAWS OF THE DOMICILE THAT AN ADMINISTRATOR DULY APPOINTED BY THE PROPER COURT WOULD MAKE UNDER THE SAME STATE LAWS. INCLUDING PAYMENT OF SUCH PREFERRED CLAIMS AGAINST THE ESTATE AS ARE RECOGNIZED BY THE LAWS OF THE DOMICILE OF THE DECEDENT. AS FOLLOWS: I HAVE THE HONOR TO INVITE YOUR ATTENTION TO SECTION 308 OF THE WORLD WAR ADJUSTED COMPENSATION ACT. TO REQUEST YOUR DECISION AS TO WHETHER THE PROPOSED AMENDMENT TO EXISTING REGULATIONS REGARDING PAYMENT OF ADJUSTED COMPENSATION BENEFITS OF LESS THAN $500 TO ESTATES OF DECEDENTS WITHOUT THE NECESSITY OF ADMINISTRATION IS PROPER.

A-56637, AUGUST 14, 1934, 14 COMP. GEN. 126

VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - SETTLEMENT OF ESTATES UNDER THE CONDITIONS STATED IN SECTION 308 (F) OF THE WORLD WAR ADJUSTED COMPENSATION ACT AUTHORIZING THE ADMINISTRATOR OF VETERANS' AFFAIRS TO ADMINISTER ESTATES IF NOT OVER $500, THE ADMINISTRATOR OF VETERANS-AFFAIRS TAKES THE PLACE OF THE ADMINISTRATOR OF THE ESTATE AND IS AUTHORIZED AND REQUIRED TO MAKE THE SAME DISTRIBUTION UNDER THE LAWS OF THE DOMICILE THAT AN ADMINISTRATOR DULY APPOINTED BY THE PROPER COURT WOULD MAKE UNDER THE SAME STATE LAWS, INCLUDING PAYMENT OF SUCH PREFERRED CLAIMS AGAINST THE ESTATE AS ARE RECOGNIZED BY THE LAWS OF THE DOMICILE OF THE DECEDENT.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, AUGUST 14, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF JULY 13, 1934, AS FOLLOWS:

I HAVE THE HONOR TO INVITE YOUR ATTENTION TO SECTION 308 OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, AND TO REQUEST YOUR DECISION AS TO WHETHER THE PROPOSED AMENDMENT TO EXISTING REGULATIONS REGARDING PAYMENT OF ADJUSTED COMPENSATION BENEFITS OF LESS THAN $500 TO ESTATES OF DECEDENTS WITHOUT THE NECESSITY OF ADMINISTRATION IS PROPER.

SECTION 308 OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, PROVIDES:

"/A) NO SUM PAYABLE UNDER THIS ACT TO A VETERAN OR HIS DEPENDENTS, OR TO HIS ESTATE, OR TO ANY BENEFICIARY NAMED UNDER TITLE V, NO ADJUSTED-SERVICE CERTIFICATE, AND NO PROCEEDS OF ANY LOAN MADE ON SUCH CERTIFICATE SHALL BE SUBJECT TO ATTACHMENT, LEVY, OR SEIZURE UNDER ANY LEGAL OR EQUITABLE PROCESS, OR TO NATIONAL OR STATE TAXATION, AND NO DEDUCTIONS ON ACCOUNT OF ANY INDEBTEDNESS OF THE VETERAN TO THE UNITED STATES SHALL BE MADE FROM THE ADJUSTED SERVICE CREDIT OR FROM ANY AMOUNTS DUE UNDER THIS ACT.

"/F) WHEREVER UNDER THIS ACT OR THE WORLD WAR ADJUSTED COMPENSATION ACT IT IS PROVIDED THAT PAYMENT SHALL BE MADE BY THE DIRECTOR OF THE UNITED STATES VETERANS' BUREAU TO THE ESTATE OF ANY DECEDENT, SUCH PAYMENT, IF NOT OVER $500, MAY, UNDER REGULATIONS PRESCRIBED BY THE DIRECTOR, BE MADE TO THE PERSONS FOUND BY HIM TO BE ENTITLED THERETO, WITHOUT THE NECESSITY OF COMPLIANCE WITH THE REQUIREMENTS OF LAW IN REQUEST OF THE ADMINISTRATION OF SUCH ESTATE.'

THE PRESENT REGULATION FOR THE PURPOSE OF CARRYING INTO EFFECT THE PROVISIONS OF SECTION 308 (F), SUPRA, PROVIDES:

"WHEREVER THE FACE VALUE OF AN ADJUSTED SERVICE CERTIFICATE, ISSUED PURSUANT TO THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, BECOMES PAYABLE TO THE ESTATE OF ANY DECEDENT AND THE AMOUNT THEREOF IS NOT OVER $500 AND AN ADMINISTRATOR HAS NOT BEEN APPOINTED, SUCH AMOUNT WILL BE PAID TO SUCH PERSON OR PERSONS AS WOULD, UNDER THE LAWS OF THE STATE OF RESIDENCE OF THE DECEDENT, BE ENTITLED TO HIS PERSONAL PROPERTY IN CASE OF INTESTACY, PROVIDED, THAT IN CASE THERE ARE OUTSTANDING BILLS COVERING THE LAST ILLNESS AND DEATH OR BURIAL AND FUNERAL EXPENSES OF THE DECEASED, SO MUCH OF THE ACCRUED AMOUNT DUE THE ESTATE OF THE DECEASED AS IS NECESSARY MAY BE USED TOWARD THE LIQUIDATION OF THE BILLS IN QUESTION, AND ANY BALANCE OF SUCH ACCRUED AMOUNT WILL THEN BE PAID AS ABOVE PROVIDED.'

THE GENERAL ACCOUNTING OFFICE HAS QUESTIONED AWARDS MADE PURSUANT TO THE ABOVE-QUOTED REGULATION AND HAS TAKEN THE POSITION THAT THE REGULATION SHOULD BE INTERPRETED IN THE LIGHT OF THE INTESTACY LAWS OF THE STATE OF THE VETERAN'S LAST RESIDENCE, THAT IS, CLAIMS FOR REIMBURSEMENT FOR EXPENSES INCURRED IN THE LAST ILLNESS AND BURIAL OF THE DECEDENT SHOULD BE ALLOWED TO THE EXTENT THAT SUCH EXPENSES CONSTITUTE A PREFERRED CLAIM UNDER SUCH INTESTACY LAWS AND THAT THE REMAINDER SHOULD BE DISTRIBUTED AMONG THE HEIRS OF THE DECEDENT. THE SOLICITOR'S OFFICE OF THIS ADMINISTRATION HAS CONCURRED IN THIS VIEW.

ACCORDINGLY, A PROPOSED AMENDMENT TO THE REGULATION HAS BEEN SUBMITTED FOR MY APPROVAL, WHICH READS AS FOLLOWS:

"WHEREVER THE FACE VALUE OF AN ADJUSTED SERVICE CERTIFICATE, ISSUED PURSUANT TO THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, BECOMES PAYABLE TO THE ESTATE OF ANY DECEDENT AND THE AMOUNT THEREOF IS NOT OVER $500 AND AN ADMINISTRATOR HAS NOT BEEN OR IS NOT TO BE APPOINTED, SUCH AMOUNT WILL BE PAID TO SUCH PERSON OR PERSONS AS WOULD, UNDER THE LAWS OF THE STATE OF RESIDENCE OF THE DECEDENT, BE ENTITLED TO HIS PERSONAL PROPERTY IN CASE OF INTESTACY, * * *.'

UNDER THE PROPOSED AMENDMENT REIMBURSEMENT OF EXPENSES, INCURRED IN THE LAST ILLNESS AND BURIAL OF THE DECEDENT, IS AUTHORIZED ONLY IN THE EVENT SUCH EXPENSES ARE GIVEN A PREFERRED STATUS UNDER THE INTESTACY LAWS OF THE STATE OF DECEDENT'S LAST RESIDENCE.

IN THE COORDINATION OF THE PROPOSED AMENDMENT THE QUESTION WAS RAISED AS TO WHETHER I HAVE THE AUTHORITY TO PROMULGATE A REGULATION AUTHORIZING REIMBURSEMENT TO THE UNDERTAKER OR ANY OTHER CREDITOR IN VIEW OF THE EXEMPTION CONTAINED IN PARAGRAPH (A) OF SECTION 308, WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED.

IT HAS BEEN SUGGESTED THAT IN VIEW OF THE EXEMPTION CONTAINED IN SECTION 308 (A), SUPRA, THE VETERANS' ADMINISTRATION HAS NO LEGAL RIGHT TO PROMULGATE A REGULATION WHICH WOULD AUTHORIZE THE PAYMENT OF CLAIMS OF CREDITORS OUT OF THE PROCEEDS OF ADJUSTED COMPENSATION BENEFITS, EVEN THOUGH UNDER THE STATE LAW AS INTERPRETED BY THE COURTS OF THAT STATE SUCH CLAIMS ARE ENTITLED TO PREFERENCE AGAINST THE ESTATE OF THE VETERAN, AND EVEN THOUGH THE ADMINISTRATOR OF THE ESTATE, IF ONE WERE APPOINTED AND PAYMENT WERE MADE TO HIM, WOULD BE LEGALLY BOUND TO PAY SUCH CLAIMS. OTHER WORDS, IT HAS BEEN SUGGESTED THAT IN VIEW OF THE PROVISIONS OF SECTION 308 (A) THE ADJUSTED COMPENSATION BENEFITS ARE EXEMPT FROM CLAIMS OF CREDITORS OF THE VETERAN, HIS ESTATE OR THE BENEFICIARY, AND THAT IF REIMBURSEMENT OF EXPENSES INCURRED IN THE LAST ILLNESS AND BURIAL OF THE DECEDENT WERE AUTHORIZED BY THE REGULATION, IT WOULD BE PERMITTING SOMETHING TO BE DONE INDIRECTLY WHICH CANNOT BE DONE DIRECTLY.

ON THE OTHER HAND, IT HAS BEEN STATED THAT BY VIRTUE OF SECTION 308 (F) THE VETERANS' ADMINISTRATION STANDS IN THE PLACE OF THE ADMINISTRATOR OF THE DECEDENT'S ESTATE AND MUST MAKE DISTRIBUTION AS PROVIDED BY THE INTESTACY LAWS OF THE STATE OF THE DECEDENT'S LAST RESIDENCE. IN SUPPORT OF THIS VIEW THERE HAS BEEN CITED THE ACTION OF THE GENERAL ACCOUNTING OFFICE ABOVE REFERRED TO AND YOUR DECISION OF OCTOBER 10, 1928, A-24197, 8 COMP. GEN. 172, UNDER WHICH PAYMENT TO THE REPRESENTATIVE OF THE ESTATE OF A DECEDENT IS AUTHORIZED TO THE AMOUNT OF THE PROVEN DEBTS WHERE THE ADJUSTED COMPENSATION BENEFITS WOULD OTHERWISE ESCHEAT. THERE IS ALSO CITED IN SUPPORT OF THIS VIEW THE FACT THAT SECTION 308 (A) DOES NOT SPECIFICALLY EXEMPT THE BENEFITS PAYABLE UNDER THAT ACT FROM CLAIMS OF CREDITORS, BUT EXEMPTS THEM FROM:

"ATTACHMENT, LEVY, OR SEIZURE UNDER ANY LEGAL OR EQUITABLE PROCESS, OR TO NATIONAL OR STATE TAXATION, * * *.'

YOUR DECISION AS TO THIS MATTER IS RESPECTFULLY REQUESTED.

THE VIEWS LAST ABOVE EXPRESSED ARE CORRECT. UNDER THE CONDITIONS STATED IN SECTION 308 (F) OF THE WORLD WAR ADJUSTED COMPENSATION ACT, THE ADMINISTRATOR OF VETERANS' AFFAIRS TAKES THE PLACE OF THE ADMINISTRATOR OF THE ESTATE AND IS AUTHORIZED AND REQUIRED TO MAKE THE SAME DISTRIBUTION UNDER THE LAWS OF THE DOMICILE OF THE DECEASED THAT AN ADMINISTRATOR DULY APPOINTED BY THE PROPER COURT WOULD MAKE UNDER THE SAME STATE LAWS. WHILE THERE IS SOME AUTHORITY TO THE CONTRARY, BY THE WEIGHT OF JUDICIAL AUTHORITY IT HAS BEEN HELD THAT A STATUTORY EXEMPTION FROM EXECUTION OF PAYMENTS FROM FEDERAL OR STATE FUNDS IN THE FORM OF PENSIONS, INSURANCE, OR SALARIES OF PUBLIC OFFICIALS, MAINTAINS ONLY UNTIL THE MONEY IS ACTUALLY PAID TO AND RECEIVED BY THE BENEFICIARY OR PAYEE. 25 CORPUS JURIS 75, 77.

LIKEWISE, IN THE MATTER OF PAYMENT UNDER THE WORLD WAR ADJUSTED COMPENSATION ACT, THE STATUTORY EXEMPTION FROM EXECUTION IN FAVOR OF THE ESTATE OF THE VETERAN, WOULD EXIST ONLY UNTIL PAYMENT TO AND RECEIPT BY THE PERSONAL REPRESENTATIVE OF THE ESTATE, AND THEREAFTER THE FUNDS WOULD BE MINGLED WITH THE OTHER ASSETS OF THE ESTATE AND BECOME SUBJECT TO CLAIMS, ETC. AS THE ADMINISTRATOR OF VETERANS' AFFAIRS TAKES THE PLACE OF THE PERSONAL REPRESENTATIVE UNDER THE CONDITIONS STATED IN SECTION 308 (F) OF THE ACT, HE IS AUTHORIZED AND REQUIRED TO PAY SUCH CLAIMS AGAINST THE ESTATE AS ARE RECOGNIZED BY THE LAWS OF THE DOMICILE OF THE VETERAN.

ACCORDINGLY, THIS OFFICE HAS NO OBJECTION TO OFFER TO THE PROPOSED REGULATION.