Social security benefits, while helpful, can be a lot to manage. The application process alone takes much time and effort. Maintaining those benefits can be even more of a struggle. The fact is this: not everyone can do it on their own. Some people need extra help with managing their social security benefits. Social Security Disability Advocates USA is here to explain what a representative payee is along with how representative payees handle money for beneficiaries.

What is a Representative Payee?

A representative payee is an individual or organization that manages the funds of a beneficiary unable to do so on their own. For instance, maybe the beneficiary is a disabled minor that cannot legally handle their own benefits. Or, maybe the beneficiary is a retired person suffering from dementia or another mental impairment. It could be that the beneficiary is physically unable to manage their money, too.

Who is a Representative Payee?

Representative payees are usually relatives or close friends of the beneficiary, and for good reason. The representative payee needs to be someone who knows well the needs of the beneficiary. This is why the Social Security Administration prefers to appoint people close to the beneficiary as representative payees. Parents, legal guardians, relatives, and close friends are likely to know what the beneficiary needs in their day-to-day life.

However, sometimes, the Social Security Administration will appoint an institution or organization (such as a nursing home) as the representative payee. This isn’t necessarily a bad thing, though. Just because an institution/organization is a representative payee does not necessarily mean the beneficiary’s needs won’t be met. No matter who is responsible for the beneficiary’s funds, though, all representative payees have the same responsibilities.

What are the Responsibilities and Restrictions?

Being a representative payee is no easy task. There are many rules and responsibilities that go with such an important role, and it’s crucial to diligently adhere to them all.

Day-to-Day

How representative payees handle money for beneficiaries is based on the beneficiaries’ essential needs before anything else. Payees should use the beneficiary’s funds primarily for the following:

• Housing/rent
• Utilities
• Food
• Clothing
• Medical/dental expenses
• Quality of life items (e.g. an electric wheelchair)
• Personal care items (e.g. deodorant, shaving cream, etc.)

These are the urgent costs that representative payees must take care of before using the funds for anything else.

If there is leftover money, the representative payee may use it to pay for rehabilitation expenses, overdue bills, education, or entertainment. If there is leftover money after that, it must be saved; a representative payee can never use a beneficiary’s funds for personal gain.

NOTE: A representative payee is authorized to handle only social security funds for the beneficiary; other non-social security funds cannot be handled by a representative payee unless granted separate authorization, e.g. power of attorney. Additionally, social security doesn’t recognize power of attorney as an acceptable way to handle social security funds. Only a representative payee may handle social security funds for a beneficiary.

Financial

Representative payees must hold and save the beneficiaries’ funds in a specific manner. They must store the beneficiaries’ funds in a separate bank account owned by the beneficiary. The title of the bank account should be something like,

“[Representative payee’s name], representative payee for [beneficiary’s name],” or “[Beneficiary’s name] by [your name], representative payee.”

Furthermore, a representative payee should never mix their own funds with those of the beneficiary! Another important thing to keep in mind: The beneficiary must never have access to the account, even though they own it and the funds it contains.

In addition to holding funds a specific way, representative payees must keep records of all purchases done on behalf of the beneficiaries. This is because the Social Security Administration requires annual reports on how representative payees spent the beneficiaries’ funds. If representative payees don’t keep accurate records, they could face penalties.

People that do not need to complete annual financial reports include:

• Parents (natural or adoptive) of a minor child beneficiary who primarily live in the same residence as the child;
• Legal guardians of a minor child beneficiary who primarily live in the same residence as the child;
• Parents (natural or adoptive) of a disabled adult beneficiary who primarily live in the same residence as the beneficiary;
• Spouse of a beneficiary; and
• State mental institutions participating in the SSA’s onsite review program.

Keep in mind, though, that all representative payees must maintain records of how funds are spent. This is true even if you are not filing an annual report to the Social Security Administration.

NOTE: Representative payees cannot, under most circumstances, charge a fee for services. If you have questions about representative payee duties and regulations, contact the Social Security Administration directly or reach out to one of our attorneys at SSDA USA today.

Other Duties

Representative payees must report to the Social Security Administration whenever certain changes occur that could affect benefits. Contact the SSA right away if any of the following happen with the beneficiary:

• Change of residence
• The beneficiary gains or loses a roommate (even if that roommate is a child)
• The beneficiary no longer needs a payee or dies
• Custody of a child beneficiary changes/a child is adopted
• The beneficiary enters a marriage
• The beneficiary starts or stops working
• Parents of a stepchild beneficiary divorce
• The beneficiary is imprisoned for a crime with a sentence of more than one month
• The beneficiary becomes institutionalized by a court order as a result of mental impairment
• Additional government benefits are received by the beneficiary, or the benefit amount changes
• Medical improvement occurs for the beneficiary
• The beneficiary leaves the United States for a time period of no less than 30 days

Also, contact the SSA if any of the following happen with you, the representative payee:

• You move/change residences
• You become no longer responsible for the beneficiary
• An outstanding warrant for a felony or for a crime that is punishable by death or no less than one year in prison in the state where you/the beneficiary live is issued to you
• Violation of a condition of your parole or probation
• You are convicted of a felony
• You wish to stop representing the beneficiary

For beneficiaries receiving SSI, representative payees must also disclose the following:

• A married beneficiary separates, or if a beneficiary starts living with their spouse again after a separation
• The beneficiary begins staying at or moves out of a hospital, nursing home, correctional facility, or other institution
• Someone begins living in or moves out of the beneficiary’s residence
• The beneficiary or their spouse sees a change in their income/resources
• Countable resources are worth or are expected to become worth over $2,000 ($3,000 for couples)

Failure to report any of the above events could mean that the SSA would send a greater amount of benefits than is usual. If this happens, the funds must be paid back to the Social Security Administration as soon as possible.

If the representative payee intentionally withholds information to continue receiving benefits, they could face criminal prosecution. Fines/imprisonment await those who lie to or withhold information from the Social Security Administration. Additionally, if representative payees misuse their beneficiaries’ funds, they could face equally devastating consequences.

Restrictions

There are plenty of things representative payees cannot do. Here are just a few examples:

• Sign legal documents not related to social security benefits on behalf of the beneficiary
• Have legal authority over income not from social security benefits
• Use beneficiary’s funds for personal expenses
• Spend funds that would leave the beneficiary without basic necessities
• Keep leftover/saved funds after ceasing to be the representative payee

If you have questions about representative payee restrictions, contact an attorney from SSDA USA for a free consultation.

How Do I Become a Representative Payee?

Becoming a representative payee usually requires an in-person interview at your local social security office. You must show proof of identification and present your social security number. Furthermore, you’ll be asked questions about the beneficiary’s needs and why you think you are a qualified, responsible individual capable of handling all the duties associated with being a representative payee.

Additionally, you’ll have to explain why the beneficiary cannot handle their money on their own. If you’re truly up to the task, the SSA requires that you fill out form SSA 11-BK. If you become the payee, you’ll receive the beneficiary’s funds instead of them, and you will be responsible for the beneficiary from that point forward.

Need More Representative Payee Information?

If you need more information regarding how representative payees handle money for beneficiaries, contact Social Security Disability Advocates USA right away! We are always standing by to address all your social security questions and concerns. Contact us today for a free consultation. You can call us at 602-952-3200, or you can fill out an online contact form or take advantage of our LiveChat feature. Don’t keep your questions to yourself; let an SSDA USA attorney help you today!

This is attorney advertising. SSDA, LLC is a group of attorneys that pursues claims for Social Security Disability benefits on behalf of its clients against the Social Security Administration. SSDA, LLC is in no way a part of the Social Security Administration. Further, the information on this blog is for general information purposes only. Nothing herein should be taken as legal advice. This information is not intended to create, and receipt or viewing does not constitute, a representative-client relationship.