What Are Veterans Affairs/Veterans Administration Bonds?

What is a Fiduciary?

If a veteran becomes physically or mentally incapacitated and can’t manage their financial affairs, the VA appoints a fiduciary to make important decisions on their behalf. A veteran’s friend or family member is usually appointed the fiduciary. If a veteran does not have any friends or a family or none of their loved ones are eligible to serve as a fiduciary, a court can appoint one.

A fiduciary can charge a fee of up to 4% of the monetary benefits paid, or less than $1,000 per annum, depending on the circumstance.

The Responsibilities of a Fiduciary

A fiduciary is entrusted with the responsibility of:

• Using the beneficiary’s funds to manage their and their dependents’ living expenses
• Making important healthcare decisions on the behalf of the beneficiary
• Taking steps to protect the beneficiary’s assets from creditor claims
• Submitting accounting reports to the VA
• Keeping detailed records of how the beneficiary’s VA funds are spent

What is a Veterans Administration Fiduciary Bond and Who Needs One?

A fiduciary bond is an agreement between the Principal (the fiduciary), the Obligee (the VA), and the Surety. It guarantees that the fiduciary will act in the best interest of the beneficiary. If the fiduciary acts recklessly or resorts to dishonest practices, and the beneficiary suffers losses due to their actions, the veteran, their dependents, or VA can make a claim against the bond.

In California, fiduciaries who manage more than $25,000 of VA funds are required to obtain a VA fiduciary bond. Spouses, court appointed fiduciaries, trust companies and banks with trust powers and fiduciaries residing in the Commonwealth of Puerto Rico or any other United States territories need not obtain a VA fiduciary bond.

How Does a VA Fiduciary Bond Work?

After a claim is made, the Surety company launches an investigation. If the claim is found to be valid, the Principal is required to compensate the filer for incurred losses. If they fail to do so, the Surety pays on their behalf. The Surety later recovers the compensation amount plus any legal and administration expenses incurred from the Principal.

How Much Does a Veterans Administration Bond Cost?

The cost of a veterans administration bond depends on the value of the estate the fiduciary will be managing. Most VA bonds cost 0.5% or less of the bond amount. An important factor that can affect the cost of a VA bond is the credit history of the Principal. Principals with a bad credit score can qualify for a veterans administration bond, however, they may be required to pay a higher than usual premium.

Are you in need of a VA fiduciary bond? H.M. Vreeland has got you covered. We are one of the most trusted Surety companies in California with over 100 years of experience. Our expertise gives us an edge over the competition. To make an appointment, call (415) 566-3401.