Most of you probably already know how difficult the application process can be for veterans trying to access VA benefits. When a fiduciary is required as a part of the benefit acquisition process, the situation can become even more frustrating for both veterans and their families.
What is a fiduciary?
The VA assigns fiduciaries to veterans who, according to VA doctors, are unable to manage their own personal finances and assets. Over the past few years, countless individuals have come together online to share stories of fiduciaries who take advantage of clients who are veterans.
Although the VA does ask fiduciaries to offer their services to veterans at no cost, they still have the right to charge veterans for their services. They usually do, and oftentimes family members are left paying monthly bills for seemingly negligible services. Unfortunately, countless veterans currently have fiduciaries who continue to siphon money from them on a monthly basis. To top it all off, once a fiduciary is appointed, it’s incredibly difficult for the action to be reversed.
Fortunately, back in January the VA launched a fiduciary website that provides information to those interested in becoming a veteran’s fiduciary. Although the VA must approve the individual as a legal fiduciary, this means those close to veterans now have the ability to maintain control of their finances, estates and benefits without having to pay the hefty fees charged by fiduciaries working for the government.
So what is a fiduciary bond, anyway?
Although the implementation of personal fiduciaries is a great opportunity for veterans and their families, it also means that individuals who are unfamiliar with surety bonds need to familiarize themselves with the market. The VA established the VA fiduciary bond requirement to give veterans the ability to recollect losses if fiduciaries should misuse funds entrusted to them. Personal fiduciaries must also fulfill the VA’s fiduciary bond requirement.
VA fiduciary bonds work as do other surety bonds. Depending on the jurisdiction, these bonds are also known as custodian bonds or guardianship bonds, but they all function the same way. A basic surety bond definition explains that each fiduciary bond that’s issued acts as a legally binding contract between three entities.
- The principal is the fiduciary required to purchase the bond to protect a veteran’s assets.
- The obligee is the veteran who receives the bond’s protection.
- The surety is the special agency that executes the bond by offering a financial guarantee that the fiduciary will act according to government regulations.
How can I get the surety bond I need to become a fiduciary?
Those interested in becoming a fiduciary for the veteran in their life should contact a surety bond agency that is licensed to execute bonds in their area. When applying for a fiduciary bond, the surety will conduct a thorough financial background check of the applicant, which usually involves a credit check. Before applying for the bond, the applicant should know the amount for which the bond will need to be written.
The VA’s fiduciary website says the necessary bond amount for a fiduciary bond is determined based on the
value of the personal estate derived from Department of Veterans Affairs benefits plus the anticipated net income from Department of Veterans Affairs benefits received during the ensuing accounting period.
Because the bond amount required for fiduciary bonds is equal to the veteran’s total estate, some individuals might not qualify for the surety bond that’s required to become a legal fiduciary.
If a fiduciary does mishandle a veteran’s funds, a claim can be made against the bond to recover financial losses or other damages. If a fiduciary fails to purchase the required fiduciary bond as outlined in §14.709, then the the Regional Counsel would not only notify the Veterans Service Center Manager, but also take the fiduciary to court.
In the end, the surety bond requirement for the VA fiduciary bond has not changed, but the audience to which it applies has. The range of potential fiduciaries has increased exponentially. Although some probate officers who work for the government might lose money from this change, veterans and their families will be able to hold on to more of their money.
Photo thanks to gizzypooh under creative common license on Flickr.