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Managing a Loved One’s Social Security Benefits

When you are managing the finances for a parent who receives Social Security benefits, you may need to become her “Representative Payee.”

Social Security does not recognize guardianships, conservatorships or powers of attorneys. If you handle your family member’s money with one of these documents and you need to manage her Social Security benefits, you will also need to become her Social Security designated Representative Payee (“Rep Payee”).

A Representative Payee can manage Social Security funds only. When you are appointed an individual’s Rep Payee and you are not that person’s agent by power of attorney or financial guardian, you have no legal authority to manage the person’s other income or assets.

The person entitled to Social Security payments, i.e. your loved one, is the beneficiary.  As a beneficiary’s Representative Payee, you are his fiscal agent and receive his Social Security payments to use exclusively for his benefit. The SSA requires you to first pay for his daily food and shelter, and then for out-of-pocket medical and dental expenses, clothing and other personal needs. Remaining funds can be used to improve the beneficiary’s daily living conditions.

To become an individual’s Rep Payee, you complete an application and submit it to the Social Security Administration. The SSA investigates all people applying to become Representative Payees to protect its beneficiaries.

Social Security recommends you have the monthly benefit direct deposited to an insured bank account. Although the beneficiary can never have direct access to this account, Social Security requires the account to be titled in the beneficiary’s name with you as financial agent. The bank account may not be a joint account. You may not have any ownership of the account. You also may not comingle your own or other funds with your loved one’s money.

The Social Security Administration has several other rules, including:

  • The money must be spent only on the beneficiary.
  • You may not collect a fee from the beneficiary for serving as her Representative Payee unless the SSA has given you permission to do so. Most individual Rep Payees volunteer their services.
  • Every year you need to file a Representative Payee Report on how you have spent the Social Security benefit. To be able to complete the report, you need to keep records on how you used the money.
  • You need to save any funds left over after meeting your loved one’s day-to-day and personal needs. Social Security prefers you to save the funds in U.S. Savings Bonds or in an interest bearing bank account.
  • You must notify the Social Security Administration if certain events (such as marriage, a move, or a change in employment status) happen in your loved one’s life that may affect benefit payments.
  • You must notify the SSA when you will no longer be the payee.

This article provides an overview. There are many details to the Representative Payee program. For more information, visit www.socialsecurity.gov/payee.

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.