Representative Payees

When a Social Security recipient is unable to handle his or her financial affairs, a relative, friend or nursing home can request that the Social Security payments be paid to them for the benefit of the recipient. This request must include clear proof that the recipient is unable to manage the funds. If the request is granted, checks are sent directly to the representative payee for the benefit of the recipient.

What is the Representative Payee Required to do?

The representative payee must use the money in the recipient’s best interest. In general, the money should be used to pay for the recipient’s basic living expenses.

There are two restrictions on the use of the payment by the representative payee:

    Benefit checks must be used to provide for the recipient's current and reasonably foreseeable needs before they are used to pay for any of the recipient's prior debts;
    The payee must report to the Social Security Administration and account for all payments and all expenditures made by him or her as payee.

One important disadvantage to having a representative payee receive your Social Security checks is that Social Security is not responsible if the payee misuses your benefits. If the payee is not using your money in your best interest, you would have to take action against the payee personally. The only remedy that Social Security will provide in this situation is to appoint a new payee.

Transaction Limitations:

The Credit Union will not permit the primary member (Beneficiary of Social Security funds) to withdraw any funds from the account. The Representative Payee, as named by the Social Security Administration (“SSA”), has the right to hold, manage, pledge, invest, and reinvest funds received from the SSA on behalf of the Beneficiary.

Can a debit card be issued? A debit card cannot be issued to the beneficiary of the account. If the Representative Payee is requesting a debit card, the request is to be made at a branch with a branch manager. There are no compliance issues with issuing a debit card to the Representative Payee of the account.

Other Terms and Conditions:

1. A Representative Payee is appointed by the SSA to handle Social Security benefits only. A Representative Payee has no legal authority to manage non-Social Security income. In order to manage other funds, the Representative Payee must have a Power-Of-Attorney and open a separate account. The SSA does not recognize a Power-Of-Attorney for managing a Beneficiary’s funds.

2. Representative Payee accounts are not Joint accounts with rights of survivorship, but rather, single ownership accounts. A Representative Payee account is insured through CUNA as a single ownership account for the Beneficiary.

3. The Beneficiary cannot withdraw funds or close the account. While the Beneficiary retains ownership interest in the account, this type of account does not permit him/her to have direct access to the funds. However, the Credit Union is under no obligations to monitor the proper use of such funds for the purposes of the Beneficiary.

4. When the Beneficiary dies, the Social Security funds in the account DO NOT belong to the Representative Payee. A ‘Payable On Death’ beneficiary can be named so that the account does not proceed to probate court. If no beneficiary is named, the funds must be turned over to the legal representative of the estate.

5. When a Representative Payee resigns or passes away, any benefits, including interest and cash on hand, must be returned to the Social Security Administration and the funds will then be reissued to the beneficiary or to the new Representative Payee.