What is a VA Fiduciary Bond?

In the simplest terms possible, a VA fiduciary bond is a way to ensure that anyone appointed to manage VA benefits acts according to the best interests of the veteran. A surety bond holds the fiduciary financially responsible if he steals or mismanages a veteran’s benefits in any way. The VA requires bonds both as a way to discourage a fiduciary from acting irresponsibly and as a way for veterans to seek justice in the form of compensation for whatever benefits they lost.

How Does a VA Fiduciary Surety Bond Work?

In the event that a fiduciary violates their responsibility to carefully manage a veteran’s benefits, that veteran (or someone acting on their behalf) may file a claim against the VA fiduciary surety bond seeking damages. The company that issues the surety bond (the surety) will then investigate the claim to prove whether or not it has merit. As long as all the details check out, the surety agrees to settle the claim - meaning pay it in full - using its own funds. In that way, bonds guarantee someone compensation for valid claims. However, surety bonds do not relieve a fiduciary of consequences for bad behavior. Just the opposite, in fact. The fiduciary who was required to obtain the surety bond in the first place is also required to settle any claims filed against that bond. If the surety pays instead, the bond holder must pay the surety back with interest and fees included in the debt.

Who Needs a VA Fiduciary Bond?

Anyone who intends to act as a fiduciary for a veteran with benefits larger than $20,000. The VA takes the surety bond requirement seriously and will not compromise under any circumstances. Since the VA won’t release essential benefits to someone without a bond, it’s important for a fiduciary to acquire a surety bond sooner rather than later to prevent unnecessary struggles for the veteran who requires those benefits. Work with Viking Bond Service to get a quote within 48 hours.

Why Do You Need a VA Fiduciary Bond?

Anyone who requires benefits and requires someone to manage those benefits is vulnerable by definition. That person is vulnerable to exploitation by others. They’re also vulnerable to all the consequences that could arise from loss of benefits. Knowing that, the VA created the bond requirement. By agreeing to get a surety bond and take financial responsibility for any claims, a fiduciary demonstrates their trustworthiness. They also commit to accountability - which is important because without a surety bond it might be impossible for a veteran to quickly or completely recover funds from a fraudulent fiduciary.

What Are the Requirements for a VA Fiduciary Bond?

To obtain a VA fiduciary surety bond, someone must go through the application process and find a surety willing to issue them a bond. A fiduciary is also required to keep that surety bond active for as long as that person administers VA benefits. Finally, a fiduciary must pay in full for any valid claims filed against the bond. It’s also important to know who isn’t required to obtain a surety bond to serve a fiduciary: spouses, a fiduciary appointed by the court, a trust company or bank with legal trust powers, or a fiduciary in a location outside the US - like Puerto Rico or Guam - where it’s harder to secure a bond.

How Much Does a VA Fiduciary Surety Bond Cost?

Surety bonds costs can vary since they have a specific value, meaning an amount the surety company is willing to pay out to settle claims. Typically, the amount of the bond corresponds to the amount of a veteran’s benefits so that victims can recoup their losses in full. Someone will pay a small percentage of the total amount to obtain a surety bond. People with a low credit score or history of financial difficulty may pay more, but they won’t necessarily be denied a surety bond outright.

How to Obtain a VA Fiduciary Bond

It’s a relatively straightforward process. Start by filling out an online surety bond application. It will ask for information about your background, business dealings, and financial standing. A surety may also need additional documentation to accurately understand your credit risk. You will then receive a quote for the premium, and after paying you will receive a document for the VA proving you have the required bond.

A trust is a financial vehicle that allows whoever sets up the trust to determine when, where, why, and how funds get dispersed. Some people set up trusts while they are still alive to benefit their children, family members, or causes they care about. Others set up trusts as part of their will so that funds get dispersed as they wish even after their death. The person who sets up the trust has broad freedoms to control the associated funds however they see fit. That’s where trustees come in.

A trustee administers the trust. That involves distributing funds according to the terms of the trust while also applying fiduciary responsibility to the funds still in the trust. Essentially, the trustee manages the money however the trust prescribes. In that role, they have a lot of responsibilities, particularly to the beneficiaries of the trust. They also have a lot of power as the sole person with control over the entire trust. That’s where trustee bonds come in.

Who Needs a Trustee Bond?

Courts may require a trustee to obtain a surety bond, and in some cases the terms of the trust outline the bond requirement. When necessary, the requirement defines the terms and the amount of the surety bond. Someone cannot serve as a trustee without the required surety bond, so it’s important to seek one out as soon as you’re aware of the requirement.

Why Do You Need a Trustee Bond?

Surety bonds help the beneficiaries of a trust feel confident in the character and abilities of the trustee. With so much at stake, it’s not enough to take someone’s word that they will perform their trustee duties exactly as the law requires and the trust intends. Yet without a surety bond in place, it would be difficult if not impossible to hold a trustee accountable and pursue damages resulting from the trustee’s misbehavior. You need a trustee bond because it makes courts and beneficiaries more willing to trust you with large amounts of money, which then improves the impression of trustees as a whole.

What Are the Requirements for a Trustee Bond?

Every trustee bond is different. The obligee (The party that creates the bond requirement and has the right to file claims for damages) defines the details. Specifically, the obligee sets an amount for the surety bond and outlines behaviors that give the obligee the right to pursue a claim. It’s important to understand the exact specifics of a surety bond agreement before committing to it. If you need help making sense of the details, rely on the expert team at Viking Bond Service for help.

What is the Cost of a Trustee Bond?

That depends on the amount of the trustee bond, which indicates how much the surety commits to paying out to settle claims. The premium costs a small percentage of the surety bond total. How much exactly depends on the applicant's credit score, financial history, and professional standing. People with bad credit may have to pay slightly more to secure the surety bond they need, but with the help of a nationwide surety brokerage like Viking Bond Service, they don’t have to be denied.

How to Obtain a Trustee Bond

You will need to fill in a standard surety bond application with information about your financial history and personal background. You will also need to submit a copy of the trust documents, and the surety may also request a financial statement. Underwriters will use these documents to quote you a premium. The surety bond becomes active once you pay, but it will need to be renewed regularly if you intend to serve as a trustee for an extended amount of time.

Lynn Macci, Author at Surety Bond Blog | Discover Performance Bonds, Court Bonds & More

Comprehensive Guide to VA Fiduciary Bonds

Some veterans require assistance to administer their Veteran’s Administration (VA) benefits. The fiduciary who provides that assistance has an important and sensitive job as the custodian of large sums of money that are critical to the veteran’s care and wellbeing. When VA benefits exceed $20,000, someone must obtain a VA fiduciary bond before they’re allowed to serve as a fiduciary. This is your comprehensive guide to those surety bonds.

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7 Things to Know About Garnishment Bonds

When a creditor takes a borrower to court because of an unpaid debt, the creditor may seek what’s known as a garnishment. A garnishment gives the creditor the right to withhold a portion of the debtor’s wages from their employer or assets from their bank account until the amount of the debt is recouped. However, before granting that garnishment, the courts will usually require the creditor to prove they have a garnishment bond, which is a type of surety bond. This article outlines 7 things you need to know:

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5 Big Upcoming Construction Projects in 2020

Across the country, major construction projects plan to either break ground or enter a major new phase over the course of 2020. The COVID-19 pandemic caught everyone off guard and forced some projects to delay or reconfigure. Nonetheless, there are still projects planning to move forward and working to put all the necessary plans and preparations in place before the end of the year – including securing any construction bonds necessary. Here are a few of the notable projects worth following along with:

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Important Things You Need to Know About a Trustee Bond

If you intend to serve as a trustee, you may need to obtain a trustee bond first. Here are some important things you need to know upfront:

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What is a Trustee Bond?

Before we answer questions about trustee bonds – one particular kind of surety bond – we should explain some of the terms and concepts involved. First, a trust is a financial vehicle set up during a person’s lifetime or after it as part of their will. Trusts contain funds which are distributed to particular persons or organizations based on terms dictated by whoever established and funded the trust. With a few exceptions, trusts can operate however someone intends.

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What is the Purpose of a Conservatorship Bond?

To answer that question, you need to understand how this particular kind of surety bond works, why the courts require one, and how it affects the parties involved. This piece explores the ins and outs.

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How Does a Writ of Attachment Bond Work?

If you’re involved in a civil case between a debtor (the defendant) and a creditor (the plaintiff), there may be a writ of attachment bond involved (sometimes just called an attachment bond or plaintiff bond). This piece outlines how the bond works, how it affects all the parties involved, and why the courts consider it so important. Continue reading “How Does a Writ of Attachment Bond Work?”

5 Things You Need to Know About Conservatorship Bonds

If someone cannot manage their own affairs due to mental or physical limitations, they may become a “ward” of the state, meaning the government takes responsibility for their care and wellbeing. In this instance, the state will appoint a conservator to make decisions on behalf of the ward, including sensitive financial and potentially also medical decisions. The ward’s family typically appoints the conservator, but in some instances the state may appoint someone. In either case, the person nominated must obtain a conservatorship bond before being officially appointed. If you find yourself involved with this process, this blog outlines 5 things you need to know upfront: Continue reading “5 Things You Need to Know About Conservatorship Bonds”

Electronic Bonding: Is a Paperless System Coming?

Every industry is scrambling to adapt to the effects of the COVID-19 pandemic, and the surety bond industry is no different. Officials from two leading professional organizations – The Surety & Fidelity Association of America (SFAA) and the National Association of Surety Bond Producers (NASBP) – are calling on Congress to issue an emergency action altering how bond agreements work. Whether or not these changes will take effect and when remains to be seen. However, in order to keep bond holders and bond applicants alike fully-informed, the experts at Viking Bond Service wanted to keep you informed about the developments thus far. Continue reading “Electronic Bonding: Is a Paperless System Coming?”

What is a Temporary Restraining Order (TRO) Bond?

Before diving into the details of the bond, it helps to understand how a temporary restraining order (TRO) works. If someone feels threatened by another party and worries for their person, property, or business interests, they can appeal the court to issue a TRO. Once issued, the order restricts an individual or organization’s movements and actions depending on the details. TROs usually only last a few days while a judge hears arguments from both sides and deliberates whether to issue a preliminary injunction, which is basically a longer version of the TRO. Continue reading “What is a Temporary Restraining Order (TRO) Bond?”