July 9, 1976 M29-1,Part VI

Change 1

CHAPTER 18. ASSIGNMENTS

CONTENTS

PARAGRAPH PAGE

18.01 General 18-1\
18.02 Provisions for Assignment-NSLI 18-1\
18.03 Provisions for Assignment-USGLI 18-2\
18.04 Method of Payment to the Assignee-NSLI 18-2\
18.05 Method of Payment to the Assignee-USGLI 18-3\
18.06 Comparison of Assigment Laws and How Paid to the Assignee-NSLI
18-3\
18.07 Claim by Assignee-Assignment of Assignor 18-4\
18.08 Assignment of Attorney\'s Fees 18-4\
18.09 Notes of Decisions Relating to Assignments 18-4

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July 9,1976 M29-1,Part VI\
Change 1

CHAPTER 18. ASSIGNMENTS

18.01 GENERAL

a\. The proceeds of a Government Life Insurance policy are not
assignable, except that any person to whom such insurance is payable may
assign his or her interest within a restricted class.

b\. An assignment of a Government Life Insurance policy is not binding
on the United States unless in writing and until filed with the VA. The
United States assumes no responsibility for the validity of an
assignment.

c\. An assignment will not be accepted if the assignor lacked
testamentary capacity, or was not otherwise legally competent to assign,
or was subjected to fraud, duress or undue influence. The designated
principal beneficiary may not assign nor may the designated contingent
beneficiary join the principal beneficiary in the assignment if the
beneficiary is a minor. The fact that a beneficiary is or was in
military service does not constitute emancipation for assignment
purposes.

d\. The assignment may be partial in the sense that the designated
beneficiary may assign only a portion of the insurance; it may not be
limited or qualified in the sense that restrictions as to time or other
factors may be placed on the assignment. For example, if the beneficiary
is the father, he may not assign to the widow so long as she remains
unremarried.

e\. When the beneficiary executes or joins in an assignment, he or she
relinquishes the right and title to that part of the insurance which he
or she would otherwise have been entitled to as beneficiary. However,
such beneficiary does not relinquish the right and title to any benefits
payable by devolution, or as an heir or distributee.

f\. After the assignment is made and the initial payment thereunder to
the assignee is effected, the assignment cannot be revoked. If the
assignee dies before any payment is made, the assignment will be
disregarded.

18.02 PROVISIONS FOR ASSIGNMENT-NSLI

a\. The NSLI Act, as originally enacted, prohibited the assignment of an
NSLI policy by a beneficiary. Public Law 79-589, effective August l,
1946, removed this prohibition and provided for assignments as follows:

\(1\) A designated beneficiary of an NSLI policy may assign all or any
part of his or her interest in such insurance. The designated contingent
beneficiary, if any, must join the principal beneficiary in the
assignment except when the insurance is payable in one sum. The right to
make an assignment is restricted to a designated beneficiary, principal
or contingent. The preferred beneficiaries entitled to NSLI by
devolution or operation of law may not assign their right and title in
such insurance.

\(2\) The assignees under such assignment are restricted to the classes
of relatives enumerated in the law-widow, widower, child, father,
mother, grandfather, grandmother, brother or sister of the insured.

\(3\) Assignees of NSLI benefits will be required to submit proof of
relationship.

\(4\) The assignment is valid only if received in the VA before any
payments of the insurance have been made to the designated beneficiary.
An assignment cannot be made after a check has been negotiated by the
beneficiary.

\(5\) In cases in which an interest in an annuity is assigned, payment
must be made to the assignee in equal monthly installments under option
2, in such multiples of 12 as most nearly equal the number of
installments certain under such an annuity, or in 240 installments,
whichever is the lesser. An interest in an annuity includes all modes of
payment except payment in one sum. The number of installments certain
under such an annuity is the number of installments in which payment
would have been made to the designated beneficiary (assignor).

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M29-1, Part VI July 9,1976\
Change 1

NOTE: The above provisions apply only to NSLI policies maturing on
August 1, 1946 through July 25, 1962.

b\. Public Law 87-557, effective July 27, 1962, amended the provisions
of the prior law and provided for assignment of NSLI policies maturing
after July 26, 1962, as follows:

\(I\) An assignment is permissible whether delivered to the VA before or
after monthly payments of the insurance have commenced to the assignor.

\(2\) Except as provided below, any person entitled to NSLI may assign
all or part of his or her interest in such insurance benefits provided
the contingent beneficiary, if any, joins in the assignment. The act
precludes assignment of gratuitous insurance issued under 38 U.S.C.
722(b).

\(3\) The requirement that the designated contingent beneficiary, if
any, join the beneficiary in the assignment is eliminated when the
insurance is payable to the assignor in a lump sum.

\(4\) Any person to whom insurance is payable, which matured after July
26, 1962, may assign all or any portion of his or her interest in such
insurance. Therefore, following the death of a principal beneficiary,
the contingent beneficiary can make an assignment of the unpaid
installments certain.

\(5\) The assignees under such an assignment are restricted as outlined
in subparagraph a(l) and (2) above.

18.03 PROVISIONS FOR ASSIGNMENT-USGLI

USGLI policies, as originally issued, permit the assignment of proceeds
of the policy by a person to whom it is payable as follows:

a\. Any person to whom USGLI is payable may assign all or any part of
his or her interest in such insurance. A contingent beneficiary if any,
must join the principal beneficiary in the assignment(except when the
insurance is payable in one sum).

b\. The assignee under such assignments are restricted to spouse, child,
grandchild, parent, brother, sister, uncle, aunt, nephew, niece,
brother-in-law, or sister-in-law of the insured.

c\. Assignments are effective when received in the VA, and may be
accepted after receipt of monthly installments by the assignor.

d\. If the assignor has been receiving monthly installments under one of
the lifetime annuity options, only the remainder of the installments
certain may be assigned.

18.04 METHOD OF PAYMENT TO THE ASSIGNEE-NSLI

. When an assignment is received in the VA before any payments have been
made to the principal beneficiary, settlement to the assignee will be
made under the option selected by the insured. If the insured did not
select an option, or selected option 2 without designating the number of
monthly installments, settlement wffl be made in 36 equal monthly
installments. If settlement is being made as a life annuity under option
3 or 4**,** the monthly installments will be based on the age of the
assignee.

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May 27, 1980 M29-1,Part VI\
Change 3

b\. when 1 or more monthly installments of the insurance have been paid
prior to receipt of an assignment in the VA, the following will apply:

\(l\) If the insured elected settlement in one sum but the assignor
elected an option providing monthly installments, the assignee can elect
to receive the remaining unpaid installments certain, or the commuted
value of the unpaid installments certain in one sum.

\(2\) If the assignor not entitled to elect settlement in one sum
elected a specific number of installments under option 2, the unpaid
installments certain would be awarded to the assignee.

\(3\) If the assignor not entitled to elect settlement in one sum
elected settlement under either option 3 or 4, only the unpaid
installments certain will be awarded to the assignee.

c\. When a contingent beneficiary entitled to elect settlement in one
sum assigns his or her interest in the insurance following death of the
principal beneficiary, the assignee will be permitted to elect the
commuted value of the remaining unpaid installments certain in one sum,
or to continue to receive the remaining unpaid installments certain.

d\. If an assignee dies prior to payment of all guaranteed installments,
the commuted value of the remaining installments certain will be paid to
the estate of the insured unless the assignor had the right to elect
settlement in one sum. In that event, the commuted value of remaining
unpaid installments certain would be paid in one sum to the assignee\'s
estate.

e\. When an assignment is executed by a principal beneficiary and
settlement of the unpaid installment certain under option 3 or 4 is to
be made, an appropriate letter will be released to the assignor at the
time of settlement. The letter will inform the assignor that the
assignment is acceptable only to dispose of the unpaid installments
certain and the date that the guaranteed monthly payments will end. The
assignor will also be advised as to his or her eligibility to receive
the monthly installments in the same amount, which will continue for
life, in the event that he or she survives the period certain. The
assignor will be further advised that a request for such payments over
his or her written signature is necessary at the \[end of the period
certain or at the time of the assignee\'s death\] before resumption of
the monthly installments can be made.

18.05 METHOD OF PAYMENT TO THE ASSIGNEE-USGLI

a\. When an assignment is received and no payments have been made, the
assignee has the same rights as the assignor with respect to the
selection of optional settlement.

b\. After payments have commenced, the assignee of a USGLI policy is
entitled only to the remainder of installments certain.

18.06 COMPARISON OF ASSIGNMENT LAWS AND HOW PAID TO THE ASSIGNEE-NSLI

a\. When insurance is to be paid to assignees regardless of maturity
date, the assignee does not have the right of election nor may the
assignor make an election, but the payments must be authorized to the
assignee as outlined below.

b\. The following shows the comparison of assignment laws for insurance
policies maturing prior to July 27, 1962 and after July 26, 1962 and how
they are paid to the assignee:

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M29-1, Part VI May 27, 1980

Change 3

HOW PAYABLE TO ASSIGNEE

Option Matured Before Matured After

Designation July 27, 1962 July 26, 1962\
By Insured

No Option Option 2-36 Option 2-36**\
**Option 1 One sum One sum

Option 2 Option 2-36 Option 2-36

(not stated)

Option 2 Option 2-as selected by insured Option 2-as selected by insured

(number stated)

Option 3 Option 2-120 -before payments commenced-\
option 3 based on age of assignee\
-after payments commenced-\
remainder of installments certain

18.07 CLAIM BY ASSIGNEE-ASSIGNMENT OF ASSIGNOR

a\. **NSLI.** The assignee, not the beneficiary (assignor), will execute
the claim on the appropriate VA Form in the 29-4125 series in every case
in which there is an assignment. This claim must be supported by VA Form
29-538 Assignment Government Life Insurance Benefits, or any written
instrument which clearly indicates an assignment of right, title and
interest, executed by the person entitled to the insurance and by the
contingent beneficiary, if one has been designated. Mode of settlement
will be determined in accordance with the rules stated in paragraph
18.04. The assignee must submit proof of relationship unless such proof
has been submitted previously for other purposes. Proof of age of the
assignee must also be submltted when life incomes are involved.

b\. **USGLI.** when the insurance is not payable in one sum,
authorization of payment cannot be made unless there is of record a
written document executed by the assignor (any person to whom USGLI is
payable) and by the contingent beneficiary, if there is one, which
clearly indicates an assignment of right, title and interest. The
assignee wffl execute his or her claim on the appropriate VA Form in the
294125 series.

18.08 ASSIGNMENT OF ATTORNEY\'S FEES

a\. An attorney, his or her heirs, or the administrator of his or her
estate, may assign his or her fee to any person, firm or corporation.
After the initial payment is made, the assignment cannot be revoked.

b\. An attorney may waive payment in favor of the beneficiary provided
he or she does not receive a valuable consideration as a result of such
an act. Cases in which the attorney accepts a lump sum as full payment
in lieu of monthly installments will be referred to the General Counsel.

18.09 NOTES OF DECISIONS RELATING TO ASSIGNMENTS

a\. When the insured of a USGLI policy has elected payment under option
3 and the contingent beneficiary(ies) relinquishes all rights and claims
thereunder for the purpose of permitting the principal beneficiary to
elect option 4, the protection of the right for the contingent
beneficiary(ies) is no longer necessary and the principal beneficiary
may be permitted to choose option 4. If the principal beneficiay dies
before

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July 9,1976 M29-1, Part VI\
Change 1

receiving the 120 installments under option 4, the remaining payments
will be made to the contingent beneficiary(ies) under the sarne option.

b\. A trustee (e.g., for the insured\'s minor child) is not within the
class to which assignments of NSLI are restricted by 38 U.S.C. 718 and
such an assignment will not be considered valid.

c\. An assignment of NSLI becomes irrevocable when the VA has put such
an assignment into effect.

d\. If the insured\'s widow or widower has been charged with feloniously
causing his or her death, but has not been brought to trial, the case
may be disposed of on either of two premises; namely, (1) a
determination as to whether he or she has forfeited his or her rights as
beneficiary of NSLI, which is a factual question for deteftninafion; or
(2) it would be appropriate for the administrator of the insured\'s
estate to secure court approval of its execution of assignment of the
proceeds to the widow or widower.

e\. When there is doubt as to whether a designated principal beneficiary
is within the permitted class, or to the insured\'s final designation of
beneficiary(ies), one or more assignments which will provide complete
assurance against duplicate liability and authorize payment to a person
within the class specified in 38 U.S.C. 718, may be-accepted. The case
will be adjudicated without the necessity of a final determination that
the assignor or assignors would have been entitled to receive payments
in the absence of assignment. When rights resulting from designation by
the insured or designation by statute and assignment are merged in the
same person, but there is a reasonable doubt as to the precise source
from which right to receive payments is derived, the case will be
adjudicated without reference to limitation upon method of payment
contained in 38 U.S.C. 718.

**18-5**