Veteran Affairs Bonds are typically required by the Veteran’s Administration to cover the legal custodian of a veteran who is receiving benefits from the VA but has been deemed incompetent or otherwise incapable of properly managing their own financial affairs. The legal custodian, who is usually the ward’s caregiver, is the named principal on the bond. This custodian may be a spouse, a legal custodian appointed by the Court, a custodian-in-fact, or the chief officer of a qualifying legal entity, such as a private institution.
As the custodian will be required to administer benefits from the Veterans Administration to the beneficiary (ward), the Manager of the Veterans Service Center may require the furnishing of a surety bond in an amount determined to be sufficient for the protection of the beneficiary’s interests. Veterans Affairs Bonds are drawn in an amount set by the VA Admin Office and are a guarantee that the custodian isn’t misusing the funds of the ward.
Legal Custodian Qualifications
The Manager of the Vets Service Center has the authority to determine what person or legal entity is qualified to receive VA benefit payments on behalf of an incompetent or otherwise legally disabled beneficiary when it has been decided that the appointment of a legal custodian would be in the best interests of the beneficiary of Veterans Administration benefits. A qualified individual or entity must agree to:
- Apply received financial benefits in the ward’s best interests
- Invest surplus monies in a manner consistent with VA regulations
- Furnish, if requested by the VA, proof of compliance with the above two requirements
- Inform the VA Service Center of any changes that would affect the ward’s entitlements or the way in which financial benefits are disbursed
The Veterans Service Center Manager may, under some circumstances, require a legal custodian to submit an agreement in lieu of getting a surety bond or may require the furnishing of an additional bond in cases where benefit funds are being deposited in interest- or dividend-bearing accounts in an institution that’s state or federally insured. This agreement will state that any funds deposited in an interest- or dividend-bearing account can be withdrawn only with the written permission of the Manager of the Vets Service Center or his/her designee.
Annual accounting is required by the Veterans Administration. Veteran Affairs Bonds are only required in cases where the beneficiary’s estate is valued at more than $20,000.