If a loved one has designated you to act as their Power of Attorney (POA), it means you are authorized to manage their financial affairs while they are still alive.
Power of Attorney is a strong document. It grants you full trust and discretion to manage the financial decisions of the person who designated you as their agent.
As POA, you can manage activities like accessing a safe deposit box, revising beneficiary designations, resolving tax disputes with the IRS and the state, or setting up, paying, and collecting dividends from trusts, depending on how the document is written.
But does POA allow you to manage someone else’s social security benefits?
The short answer is no. The Treasury Department does not acknowledge POA for negotiating federal payments, such as Social Security and SSI checks.
Being designated as a representative payee by the Social Security Administration is the only way to administer another person’s Social Security benefits legitimately.
What Is Power of Attorney?
Power of Attorney (POA) is a legal procedure where one person can authorize a third party to handle certain business transactions on their behalf.
It does not restrict the person’s rights and often does not give a third-party control over their assets.
Typically, POA does not conclude a person’s aptitude or skill. The Treasury Department does not recognize it for negotiating government payments, such as Social Security or Supplemental Security Income (SSI) checks.
That means even if you have a person’s POA and they are unable to manage their benefits, you still need to apply to be their payee.
What Is a Representative Payee?
A representative payee is someone (usually a family member or close friend) or an agency (such as a hospital, nursing home, or social care agency) that Social Security appoints to run benefits on behalf of a person who is incapable of doing so on their own.
Additionally, they are typically assigned to disabled adults, minor children, or someone found to be legally incompetent.
A representative payee’s job is to receive and manage the incompetent person’s Social Security or SSI benefit payments. It comprises:
- Paying for necessities, including food, shelter, expenses around the house, and medical care. Funds may also be used to pay for personal needs like clothing and entertainment.
- Transferring any remaining monies from benefit payments into a savings bond or interest-bearing bank account fully owned by the beneficiary. (the representative payee, however, can and should be named as a financial agent). A representative payee cannot mix their finances with Social Security benefits.
- Monitoring all payments received, as well as how the payments were spent or saved.
- Reporting to the Social Security Administration annually—any changes or life incidents impacting the beneficiary’s qualification for benefits. It can be the logistics of receiving payments (such as moving, getting married, divorcing, or dying) or changes that affect the representative payee’s capacity to fulfill their obligations in the role.
Who Does the SSA Appoint as Representative Payees?
Whenever possible, the SSA designates family members as payees, regardless of whether the recipient is a child or an adult. If not, they choose a representative from a qualifying agency, institution, or other groups.
However, you don’t need POA to apply as a beneficiary’s representative payee if you expect to manage their Social Security or Supplemental Security Income benefits.
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POA can only be applied at your nearest SSA office. You must complete an SSA-11 form, present identification, and submit your social security number. You cannot do this online or by mail; it has to be done in person.
Most individuals approaching retirement age find it vital to have a POA prepared. A POA will let your loved ones handle your financial affairs if you are worried about what will happen to your 401K or IRA annuity if you become incompetent.
Suppose the person you care for is getting retirement benefits but can no longer handle financial responsibilities. In that case, you should go through all the basics of taking on that role as their representative payee.
You may get all the information from a representative at your nearest Social Security office.
Can I Collect a Fee for Serving as a Representative Payee?
You may not collect a fee for serving as a Representative Payee unless you are an eligible organizational payee who has had your request to collect a fee authorized by Social Security in writing.
The SSA never grants someone permission to bill the payee for services. But it can permit select organizations to deduct a charge from a beneficiary’s monthly benefit to provide payee services.
For example, if you are transporting the beneficiary to the doctor and incur gas fees could be covered. Records of these expenses must be kept, and ensure they receive SSA approval prior.
To collect fees, an organization must apply and meet legal requirements. The fee collection requires written approval from Social Security.
An organization must be one of the following to be considered a “fee for service payee”:
- A community-based, nonprofit social service agency licensed in the state where it acts as payee, or
- A local or state government agency that is in charge of providing social services, health care, or performing fiduciary duties.
- Frequently serves as the payee for five or more beneficiaries.
- Is not the beneficiary’s lender (there are some exceptions)
- Submits an SSA-445 (Application to Collect a Fee) to the SSA; and
- Has received written approval from the SSA to do so.
Need Help with Your Social Security?
Do you want to apply to become a representative payee of your loved one? You must visit your local Social Security office, complete form SSA-11, and provide relevant documents.
You may need to consult an attorney if you are a Social Security beneficiary and have issues with your representative payee.
At Legal Giant, we partner with local disability lawyers who know the ins and outs of disability benefits and regulations.
Contact us at 833-641-1650 for assistance.