(1) In case of mental incapacity, to the guardian or committee, if any, of the veteran, or in case of a veteran who is hospitalized in a State, county or Federal institution for mental or nervous diseases upon order of the Adjutant General, without regard to the residence of the veteran, to the person or persons who would be entitled thereto under the provisions of this act, if the veteran were deceased and in the absence of any such claimant, to the superintendent, manager or person in charge of such State, county or Federal institution to be expended for the clothing and incidental needs of said veteran. No part of the compensation shall be paid to any county or State institution for the maintenance of the veterans. A statement from the manager, superintendent or person in charge of any State, county or Federal institution, wherein the veteran is a patient, shall be admitted in evidence to determine the mental condition of the veteran. The statement shall set forth that the veteran due to his weakness of mind is likely to dissipate such funds as may be due him under the provisions of this act and is apt to become the victim of designing persons.

(2) In the case of death or those missing in action, who have not been declared dead or captured, to the following persons in the order named: surviving wife or unremarried widow if the wife or widow was living with the veteran at the time of his death or departure, or if not living with the veteran at the time of his death or departure or if she establish to the satisfaction of the Adjutant General that the living apart was not due to her wilful act and that she was actually dependent upon the veteran at the time of his death or departure or at any time thereafter and before the final payment is made by the designated authorities, or surviving minor child or surviving minor children, share, and share alike or surviving mother and/or surviving father. The term “child” shall include an adopted child. The terms “mother” and “father” include mothers and fathers through adoption and persons who have for a period of not less than one year acted in the capacity of a foster parent to the veteran immediately prior to his or her having attained the age of eighteen years.