When a veteran, or his/her survivor, has been awarded benefits from the Department of Veterans Affairs (VA) but is unable to manage his/her VA funds as a result of injury, disease, advanced age, or being under age 18, the VA appoints a fiduciary. The purpose of the VA’s 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. A fiduciary is an individual or entity appointed by VA to receive VA funds on behalf of a beneficiary for the use and benefit of the beneficiary and his/her dependents.

A VA fiduciary’s main responsibility is to manage the beneficiary’s VA funds. The primary use for VA funds is to pay expenses that meet the basic needs of the beneficiary and his/her dependents, such as rent or mortgage payments, utilities, or groceries. The fiduciary may use any remaining VA funds to provide the beneficiary and his/her dependents the best possible standard of living that VA funds will reasonably allow, such as new furniture, a new car, or a vacation. Fiduciaries cannot borrow or make loans from the beneficiary’s VA funds.

A VA fiduciary is responsible for keeping accurate records of the beneficiary’s VA funds. Detailed records of all payments must be maintained. Therefore, payments of all beneficiary bills must be made either by check or electronic bill payment from the fiduciary account; ATM withdrawals and checks made payable to cash are not acceptable transactions. A fiduciary may have to submit an accounting to the VA. In an accounting, the fiduciary is required to provide details about the VA funds managed for the beneficiary. Further, if a fiduciary manages more than $20,000 in VA funds for the beneficiary, the VA may require the fiduciary to guard the beneficiary’s funds by purchasing and maintaining a corporate surety bond. The bond replaces the beneficiary’s funds if the fiduciary commits fraud, wastes or misuses the beneficiary’s funds.

All VA fiduciaries must comply with the following rules when managing a beneficiary’s VA funds:

• The fiduciary must keep VA funds in an account in a federally-insured bank or credit union.
• The fiduciary must have VA funds direct-deposited into the account.
• The fiduciary must establish an account in the name of the beneficiary and the fiduciary, and identify the fiduciary relationship. The title of the account must  show the beneficiary has ownership of, but not access to, the VA funds.
• The fiduciary must keep the beneficiary’s VA funds in an account separate from the fiduciary’s funds or funds owned by anyone else.

When investing a beneficiary’s VA funds, all investments must be reasonable, safe, and in the best interests of the beneficiary. A fiduciary is allowed to invest the beneficiary’s VA funds only in interest or dividend-paying accounts that are insured under federal law or in U.S. Savings Bonds. A properly registered savings bond can only be cashed in with written authorization from VA.

In addition to managing the beneficiary’s VA funds, a VA fiduciary has other responsibilities, summarized as follows:

Responsibilities to the Beneficiary

A VA fiduciary must know what the beneficiary’s needs are so that the fiduciary can decide how to use the beneficiary’s funds for his/her personal care and well-being. Thus, the fiduciary must speak with the beneficiary on a regular basis to assess his/her needs. In addition, a fiduciary must maintain open and regular communication with the beneficiary about his/her VA benefits. Fiduciary decisions about expenditures of VA funds must be based on the beneficiary’s unique circumstances, needs, desires, beliefs, and values.

Responsibilities to the VA

A fiduciary must notify VA of any changes in the beneficiary’s circumstances. It is also important that a fiduciary respond to VA in a timely manner, meet with VA personnel when requested, and comply with all VA regulations.

In 2013, the VA published a new guide, entitled “A Guide for VA Fiduciaries.” The blog post above was adapted from the information provided in the VA Guide. The VA Guide can be found here –  A Guide for VA Fiduciaries

For additional information concerning VA compensation and pension benefits, visit:
https://vanarellilaw.com/va-benefits/