Custodian (Veterans Affairs Fiduciary) Bonds
Veterans Affairs Fiduciary (Custodian) Bond Information
The Veterans Affairs Fiduciary Bond (aka Bond of Legal Custodian Veterans Administration or VA Custodian Bond) is a type of corporate surety bond required by the Veteran’s Administration to protect against misuse of funds by the federal fiduciary serving as legal custodian. This individual or legal entity acts as a payee on behalf of a VA benefit entitled incompetent beneficiary.
Veterans Affairs Fiduciary Corporate Surety Bond Requirements
A corporate surety bond (Veterans Affairs Fiduciary Bond) provides secure protection of the beneficiary’s assets and funds. As long as you are the fiduciary and continue to pay the bond premiums, the beneficiary’s funds are protected up to the face value. Fiduciaries are authorized to deduct the cost of a surety bond from the beneficiary’s VA funds and VA personnel will periodically contact the bonding company to ensure the surety bond is in effect and the information is current.
The surety bond will be made payable to: The Secretary of Veterans Affairs for the use and benefit of (Beneficiary’s Name) and include the following information: amount of the bond; names of the fiduciary and beneficiary; name of the surety bond company; and Affirmation from the surety bond company that they will pay the bond.
The general rule about obtaining a corporate surety bond does not apply to the following fiduciaries: Spouses, fiduciaries also appointed by a court, fiduciaries that are trust companies or a banks with trust powers organized under the laws of the U.S. or a state, fiduciaries in Puerto Rico, Guam, or any other U.S. territory, or in the Republic of the Philippines, which precludes bonding and has a restricted withdrawal agreement in lieu of a corporate surety bond.
General Information about the Department of Veterans Affairs (VA) Fiduciary Program
The purpose of the Department of Veterans Affairs (VA) fiduciary program is to ensure VA benefit payments made to a fiduciary on behalf of a beneficiary are used for the well-being of the beneficiary and the beneficiary’s dependents. The VA mission is to protect Veterans and beneficiaries who are unable to manage their own financial affairs.
Key VA Fiduciary Definitions & Terms
Beneficiary – A Veteran, or his/her survivor, who has been awarded VA benefits but who is unable to manage his/her VA funds as a result of injury, disease, the infirmities of advanced age, or being less than 18 years of age.
Fiduciary – An individual or entity that has been appointed by VA to receive VA funds on behalf of a beneficiary for the use and benefit of the beneficiary and his/her dependents.
Dependent – The beneficiary’s spouse, child, or parent who does not have enough income to meet his/her needs for personal care and well-being and who obtains support for such needs from the beneficiary.
Responsibilities to the Fiduciary to the Beneficiary
Fiduciaries must understand the beneficiary’s needs and determine how to use the beneficiary’s funds for the beneficiary's personal care and well being. The fiduciary's decision must be based on the beneficiary’s unique circumstances, needs, desires, beliefs, and values. Beneficiary assets are to be managed to provide the same standard of living as any other individual with similar financial resources. Regular contact must also be maintained with the beneficiary and his or her health care providers, including social workers and mental health professionals as necessary, to ensure the beneficiary receives proper medical care.
Managing Beneficiary Funds
Fiduciaries are required to ensure all of the beneficiary’s bills are managed appropriately and paid in a timely manner. Additionally, the fiduciary is responsible for paying the beneficiary’s income taxes, when applicable, collecting any rent or unpaid debts on behalf of the beneficiary, and getting insurance if needed. The fiduciary must manage and place beneficiary funds in reasonable, safe investments, protect the funds from creditors and any loss, and provide additional protection when required by VA. All funds must be kept in separate financial accounts on behalf of a beneficiary.
Rights of the Beneficiary
Beneficiaries in VA’s fiduciary program have certain rights including but not limited to; notification when VA appoints a fiduciary and to appeal that appointment to the Board of Veterans’ Appeals. The beneficiary may also request that VA replace his or her fiduciary. The beneficiary has a right to the fiduciary’s name and current contact information and to contact the fiduciary to request funds, account balance information, a copies the fiduciary’s VA-approved accounting, and other information or assistance consistent with the responsibilities of a fiduciary. Lastly, the beneficiary has a right to request removal from the fiduciary program and direct payment of VA funds.