There often comes a time in a older adult's life when he or she cannot handle his or her finances any longer.  The usual solution is to already have a general durable power of attorney in place that authorizes a trusted person (such as a healthy spouse or an adult child) to handle the elder's financial affairs in the event of incompetency or other disability. 

This is a sound strategy but, unfortunately, does not apply to management of Social Security benefits.  This is because the Social Security Administration (SSA) simply does not honor powers of attorney and, because SSA is a federal agency, they do not concern themselves with state laws that require financial and other institutions to honor valid power of attorney.

The solution is to convince SSA to appoint a Representative Payee.  Usually this happens at the instigation of someone other than the elder, because the elder usually manages his or her own Social Security benefits all the way up until the time he or she can do so no longer, and often beyond.

WHAT IS A REPRESENTATIVE PAYEE?

A representative payee is a person, agency, organization or institution that SSA selects to manage a person's benefits when we determine that you are unable to do so yourself or direct others to do it for you.   For more information on representative payees see the publication “When a Representative Payee Manages Your Money” at www.ssa.gov/pubs/EN-05-10097.pdf. 

Before appointing a representative payee, SSA evaluates medical and other types of evidence about the elder's ability to manage his or her benefits. 

WHO MUST HAVE A REPRESENTATIVE PAYEE?

most children under the age of 18;

legally incompetent adults; and

anyone SSA determines to be incapable of managing or directing the management of his or her benefits.

WHO CAN SERVE AS A REPRESENTATIVE PAYEE?

someone who is concerned with the elder's welfare, usually a parent, spouse, close relative, guardian, or friend;

an institution, such as a nursing home or health care provider;

a public or nonprofit agency, social service agency, or financial organization;

providers or administrative officers at homeless shelters; or

a community based non-profit agency that has been approved by SSA to charge a fee for its service as a payee.

WHAT ARE THE DUTIES OF A REPRESENTATIVE PAYEE?

The most important duty of a representative payee is to know the elder's needs and to use the benefits in the elder's best interests.  The Representative Payee must first use your benefits for your current basic needs for food, clothing, housing, medical care and personal comfort items.  After paying for such needs the Representative Payee must save any money left, preferably in an interest-bearing bank account. 

Each year, SSA will ask certain Representative Payees to complete a Representative Payee accounting report showing how they spent and saved the money they received for the elder.  The Representative Payee should respond to any of our requests for action or information. Common requests are the annual Representative Payee accounting report, a redetermination of eligibility or request for a continuing disability review.  The Representative Payee must report to SSA any changes in the elder's circumstances that could affect the elder's eligibility to benefits (income, resources, change of address, living arrangements, return to work, etc.).

The Representative Payee's authority is limited to matters between the elder and SSA.  A power of attorney does not give someone authority to act as the principal's Representative Payee.  A Representative Payee has no authority to enter into any binding contracts on the elder's behalf.

The elder (if he or she regains competency, for example) or the Representative Payee may, at any time, request that SSA change or terminate the payee arrangement. Following such a request, SSA will investigate the situation and make a determination.

HOW DOES ONE BECOME A REPRESENTATIVE PAYEE?

Take the elder to the nearest Social Security office during business hours.  Bring with you the elder's identification (driver license AND passport), birth certificate, marriage certificates and divorce decrees (if applicable), social security number.  Bring identification for yourself.  If you happen to have a power of attorney from the elder, bring it.  They won't honor it, but it can serve as evidence that you are a person that the elder trusts.  If the elder is not ambulatory, go alone; Social Security will send someone to the elder's place of residence to evaluate him or her.

Be prepared for your appointment to take a few weeks to process.

If you would like more information, please visit our website at www.ssa.gov/payee or call your local Social Security office.

Also, please see the booklets, A Guide for Representative Payees at www.ssa.gov/pubs/10076.html.