by Timothy L. Takacs, CELA
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 beneficiary’s dependents. [1]
Fiduciary
A fiduciary is defined as 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.
Responsibilities to the Beneficiary
As a fiduciary, you must know what the beneficiary’s needs are so that you can decide how to use the beneficiary’s funds for his/her personal care and well being. Your decision must be based on the beneficiary’s unique circumstances, needs, desires, beliefs, and values.
Responsibilities to the VA
As a fiduciary, you must notify VA of any changes in the beneficiary’s circumstances including but not limited to:
Address or phone number
Income
Medical condition
Marriage or divorce
Hospitalization or death
It is also important that you respond to VA in a timely manner, meet with VA personnel when requested and comply with regulations. To view regulations visit http://benefits.va.gov/fiduciary/references.asp.
You are responsible for keeping accurate records of the beneficiary’s VA funds. You should keep detailed records of all payments. Keep the following types of records:
Bills
Receipts
Financial statements
Correspondence from VA and VA forms
Managing Beneficiary Funds
As fiduciary you are required to keep separate financial accounts on behalf of a beneficiary. The law requires a fiduciary to manage and place beneficiary funds in reasonable, safe investments, protect funds from creditors and loss.
You must establish the account in the beneficiary’s name and your name, and identify the fiduciary relationship. You must keep the beneficiary’s VA funds in an account separate from your funds or anyone else’s funds. The general rule about keeping a separate account does not apply if the spouse is the fiduciary.
Retroactive VA payment
Approval of VA claims may take some time or VA may approve an effective date of payment prior to the actual date of receipt of a claim for benefits. This creates a retroactive payment of funds which is paid in a lump sum.
Retroactive funds may be used to pay expenses that meet the basic needs of the beneficiary and his/her dependents.
Pre-need Burial Plans
A VA fiduciary may use a beneficiary’s VA funds to make deposits into or purchase a pre-need burial plan or burial insurance.
Death of the Beneficiary
The beneficiary is not entitled to VA benefits for the month in which he/she dies even if the individual dies on the last day of the month. Therefore, unless you are the beneficiaries spouse, you must return these funds immediately to VA.
Any saved VA benefits belong to the beneficiary’s estate and must generally be given to the legal representative of the beneficiary’s estate. If the beneficiary dies without a will or heirs, any remaining VA funds should be returned to the VA.
Frequently Asked Questions
How can I use the Beneficiary’s VA funds?
First use the VA funds to pay the expenses that meet the basic needs of the beneficiary and his/her dependents, such as rent or mortgage payments, utilities or groceries. Use check or electronic bill payment methods to aid in accounting for fund usage. Second, you may use remaining funds to provide the beneficiary and his/her dependent with improved standard of living.
A fiduciary may pay a creditor if the beneficiary has VA funds to pay the creditor, but VA funds should first go to pay for the beneficiary’s basic needs.
What is an Accounting?
An accounting is your written report about the funds you manage for the beneficiary. Accountings may be required at any time so it is important for you to keep good records.
For more information about the VA Fiduciary role, view A Guide for VA Fiduciaries at http://benefits.va.gov/fiduciary/Fid_Guide.pdf.
NOTE: Information contained herein may contain general explanations of laws. It should not be considered as legal advice. Please seek counsel from an attorney regarding legal planning.
[1] This document is based on the 2013 Version 1.0 A Guide for VA Fiduciaries published by the Department of Veterans Affairs.