What can you do if your mother or father has become incapacitated and no longer able to handle his or her own affairs. You may have already obtained a power of attorney in order to be able to handle your parent’s affairs. Unfortunately, if your mother or father receives Social Security benefits, Social Security will not recognize a power of attorney for the purpose of negotiating its benefit payments. This means, a person with power of attorney for an incapable or incompetent beneficiary will be required to apply to SSA to become “representative payee.”
What is a Representative Payee?
A representative payee is either an individual or organization appointed to receive and manage Social Security or SSI benefits on behalf of someone else. A representative payee, of course, is required to use the funds they receive for the use and benefit of the beneficiary only. They must be used for that person’s best interest. Individual representative payees are typically relatives, guardians, or friends. An Organizational payee can include a social service agency, institution, State or local government agency, or financial institution.
What is the role of the representative payee
As a representative payee, you will decide how to spend the benefits, in order to maintain a stable living environment for the beneficiary, while ensuring that your loved one’s basic needs of food, shelter, clothing, and medical care are met. Once current needs have been met, you should save any remaining funds for the beneficiary’s future needs. Once a year, you will be required to report on how you used or saved the benefits you received. So, you must keep records of deposits and expenses.
How to become a representative payee
The first step to becoming a representative payee is to contact your local Social Security office and file an application. Typically this is done during a face-to-face interview. During the interview, you will discuss your relationship with the beneficiary, and your ability to carry out the responsibilities of a payee. The duties you are expected to carry out will be explained to you, as well as the potential liability for failing to report to the Social Security Administration as required.
Fiduciary Duties of a Representative Payee
As a representative payee, you are required to return any overpayment promptly. It is also important that you keep all records and accounts for your beneficiary separate from any others. Those records must be maintained for at least two years, and should include all payments received from SSA, all bank statements, and receipts or cancelled checks for rent, utilities, and any major purchases made for the beneficiary. Be careful when converting any assets to cash, as that income may impact the beneficiary’s social security payments or eligibility for SSI.
If you have questions regarding Social Security there are multiple online resources, including the official website. For information regarding powers of attorney, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.