Becoming a Representative Payee
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Most older people, retired or disabled, receive a check of some kind from a federal agency, such as Social Security or the Veterans’ Administration. If the recipient is unable to manage the money appropriately because of a disability, family members or friends may want to help by taking control of the money to spend it on that older person’s needs. To do so, they must apply to the agency paying the benefits to be appointed Representative Payee.
As a Representative Payee you are responsible for receiving the older person's check and spending it on his or her care and support. The older person (called the Beneficiary) may request that a Representative Payee be appointed if he or she realizes that failing health may soon make it difficult to manage money. However, usually it is a concerned relative or friend, or perhaps a nursing or boarding home concerned about getting paid, who seeks to have a Representative Payee appointed.
To become a Representative Payee it is not necessary for the older person to be competent or to agree to the arrangement. (This differs from the Joint Bank Account, Durable Power of Attorney and Trust: in all of those arrangements, it is necessary for the older person to agree to the arrangement and sign papers while still competent.)
In order to become a Representative Payee, you must first contact the federal agency and ask for the necessary papers. The papers will require you to describe your older friend’s or relative’s disability and incapacity and include a supporting statement from a doctor or other health professional. You will also be required to provide information about yourself.
Once the agency receives your letter, it will notify the older person that you are seeking to become Representative Payee. The incapacitated person is then given the opportunity to object and to present evidence of his or her ability to manage the money.
The agency will appoint you Representative Payee if it finds that the person is indeed unable to manage his or her own benefits and if you appear to be capable of doing so on that person’s behalf. The agency will start sending the person's benefit check directly to you.
On the other hand, if the agency finds that the person is still able to manage his or her own money or that you are not capable of doing so, then it will deny the application and continue sending the money to your older friend or relative.
The Social Security Administration, the Veterans Administration and other federal agencies each have their own processes for appointing Representative Payees. These agencies insist that people follow their procedures even if they have authority under another type of legal arrangement. Therefore, even if you have already been appointed as a Guardian or Conservator or hold a Durable Power of Attorney, you must still apply to each ofthe federal agencies involved to become Representative Payee.
You may spend the check only for the Beneficiary's benefit. The agencies' regulations require that you spend the money in the following manner:
- First, on current maintenance: food, shelter, clothes, medical care, institutional care and personal comfort.
- Second, for the support of the person's legal dependents: his or her spouse and minor children.
- Third, as payment of the person's debts.
- Fourth, as investments, preferably in interest-bearing accounts in federally insured financial institutions and United States Savings Bonds.
The federal agency is responsible for seeing that you do a good job as Representative Payee and may require you to submit an account showing how you have spent the person's benefits. Therefore, it is important that you keep records of all expenditures, recording all deposits, withdrawals and checks that you write. You should also keep all receipts, bills of sale and canceled checks showing purchases and payments made on the Beneficiary's behalf. If a question ever arises about whether you are fulfilling your responsibilities as Representative Payee, it is important to be able to show that you have acted in good faith and have used the money appropriately and on behalf of the Beneficiary.
If the agency decides that you have taken some of the Beneficiary's money yourself or have managed it negligently, you may be terminated as Representative Payee. The agency may require you to repay the money and could possibly bring criminal charges against you.