Arizona Veterans: How to Protect Your VA Benefits and Avoid Fiduciary Mistakes

For many Arizona veterans, estate planning is not just about transferring assets. It is about protecting a lifetime of service, safeguarding VA benefits, and ensuring that the people you trust are prepared to step in when needed.

Yet one of the most overlooked risks in estate planning—especially for veterans—is fiduciary exposure.

If you have named a spouse, child, or trusted individual as your agent under a power of attorney, trustee, or personal representative, you have placed significant legal responsibility on that person. Under Arizona law, those roles carry real duties and real liability.

For veterans with service-connected disability benefits, military pensions, or blended family dynamics, the stakes are often even higher.

What Arizona Veterans Need to Know About Fiduciary Duties

A fiduciary is someone legally obligated to act in another person’s best interest. In Arizona, fiduciary duties arise under statutory law governing trusts, probate administration, and powers of attorney.

For example:

• Trustees must administer a trust in good faith and according to its terms.¹

• Personal representatives must settle and distribute an estate consistent with Arizona probate law.²

• Agents under a financial power of attorney must act loyally, avoid conflicts of interest, and maintain detailed records.³

If mistakes are made, even unintentionally, courts may impose personal liability.

For veterans, fiduciary mistakes can also jeopardize eligibility for certain needs-based benefits.

Why Estate Planning Is Different for Veterans

Arizona veterans often have additional planning considerations, including:

• VA disability compensation
• Military retirement pay
• Survivor Benefit Plan (SBP) elections
• Aid and Attendance eligibility
• Special needs planning for disabled dependents
• Blended families from second marriages
• Community property considerations under Arizona law

If fiduciaries are not properly prepared, these benefits can be mishandled or unintentionally affected.

For example, improper asset transfers or undocumented financial assistance may interfere with eligibility for needs-based VA programs. While VA fiduciaries are governed federally, your personal estate fiduciaries are governed by Arizona law and the two systems do not always align neatly.

Common Fiduciary Risks for Arizona Veterans

1. Poor Recordkeeping Under a Power of Attorney

Many veterans name a spouse or adult child as agent under a financial power of attorney.

Under Arizona law, agents must keep records of receipts, disbursements, and transactions conducted on behalf of the principal.³

When records are incomplete, family disputes often arise after death. Questions may include:

• Were VA benefits used appropriately?
• Were reimbursements documented?
• Were gifts authorized?

Without documentation, well-meaning assistance can look like misconduct.

2. Blended Family Conflicts

Second marriages are common among veterans. If you leave assets to a surviving spouse but intend for children from a prior marriage to inherit later, your trustee must carefully follow the trust terms.

Arizona trustees owe duties of loyalty and impartiality to beneficiaries.¹ Misunderstandings orunclear distribution standards can lead to disputes between a surviving spouse and adult children.

These conflicts are among the most common sources of trust litigation.

3. Military Retirement and Beneficiary Coordination

Military retirement benefits and SBP elections pass by beneficiary designation, not through your will or trust.

If your beneficiary designations do not align with your estate plan, your personal representative may have no authority to correct the discrepancy.

Coordinating beneficiary designations with your overall estate plan is essential to avoid unintended outcomes.

4. Trust Administration and Long-Term Management

If you establish a revocable living trust, your successor trustee may manage assets for years, especially if you become incapacitated.

Arizona’s trust code imposes accounting and reporting requirements.⁴ Courts have authority toreview trustee conduct and impose remedies for breach.⁵

Even when families are close, lack of structure can create tension.

When Professional Support Makes Sense

Many veterans prefer to name a family member as fiduciary. In many cases, that works well.

However, professional or co-fiduciary support may be appropriate when:

• There are multiple children from different marriages

• Significant disability benefits are involved

• A family member lives out of state

• There is anticipated conflict

• Complex real estate or business interests exist

Arizona law allows reasonable compensation for trustees and personal representatives.⁶ In some situations, the cost of professional oversight is modest compared to the cost of litigation or prolonged disputes.

A hybrid structure, pairing a family member with a professional, can provide both personal insight and legal compliance.

Five Questions Every Arizona Veteran Should Ask

Before finalizing or updating your estate plan, consider:

1. Does my power of attorney clearly authorize the management of my VA and retirement benefits?³

2. Are my beneficiary designations consistent with my trust and will?

3. Does my trustee understand their reporting obligations under Arizona law?⁴

4. Have I addressed potential conflicts in a blended family?

5. Have I informed my fiduciaries where my records and military documentation are stored?

If you cannot confidently answer these questions, your fiduciaries may face unnecessary exposure.

Practical Steps to Protect Your Family

Estate planning for veterans should include:

• Coordinated beneficiary designation review

• Clear incapacity planning

• Updated powers of attorney

• Trust provisions tailored to blended families

• Organized benefit documentation

• A fiduciary orientation meeting before incapacity occurs

Planning is not just about asset distribution. It is about protecting the people who will carry responsibility when you no longer can.

Honoring Service by Planning Well

Arizona veterans understand responsibility. The fiduciaries you name—your spouse, your

children, your trusted advisors—deserve the same protection you once provided to others.

Proper estate planning:

• Preserves VA and retirement benefits

• Reduces the risk of family conflict

• Protects fiduciaries from personal liability

• Ensures your wishes are carried out clearly

The greatest gift you can leave your family is not simply assets—it is clarity.

If you are an Arizona veteran and would like to ensure your estate plan properly protects your benefits, your family, and the people you have named as fiduciaries, we invite you to schedule a complimentary 15-minute phone call.

During this call, we can discuss:

• Whether your current documents coordinate properly

• Whether your fiduciaries face avoidable risk

• Whether updates may better protect your family

1. A.R.S. § 14-10801 (Trustee duty to administer trust in good faith and according to its terms).

2. A.R.S. § 14-3703 (General duties of personal representative).

3. A.R.S. § 14-5506 (Duties and responsibilities of agent under power of attorney).

4. A.R.S. § 14-10813 (Trustee duty to inform and report).

5. A.R.S. § 14-11001 (Remedies for breach of trust).

6. A.R.S. § 14-10708 (Compensation of trustee); A.R.S. § 14-3719 (Compensation of personal representative).