Social Security benefits are a core part of retirement or disability planning. Anyone receiving Social Security distributions will want to make sure they continue receiving those benefits even if incapacitated or disabled. In this article, we discuss both general incapacity planning and planning more specifically for an agent for your Social Security benefits.
A Power of Attorney is Vital
The Tarleton Law Firm specializes in helping people plan for managing finances during unexpected circumstances. One way we do this is through a power of attorney for finances, generally called a durable power of attorney. This legal document allows you to give an agent the power to handle your bank accounts and other financial assets. This can be useful in many situations: trips out of the country, accidents, or a dementia diagnosis.
Whatever the future holds, we recommend that you consider designating someone to act on your behalf to help for finances. But, you must be sure you have complete trust and faith in the person named as your agent. You should avoid appointing anyone you do not completely trust under a power of attorney. By having a power of attorney, you can ensure that most of your financial matters can be handled by your agent if you become incapacitated or disabled.
A Power of Attorney Is Not Recognized for Social Security Benefits
It is important to know that the Social Security Administration (“SSA”) will not recognize a power of attorney for finances. The SSA requires a separate designation, called a Representative Payee, to act as your agent to manage your Social Security Benefits.
Many people believe that they can manage Social Security benefits because their name is on the same bank account as the beneficiary. This is not true. Just because benefits are deposited to an account, another party on the bank account is not entitled to talk to the Social Security administration about your benefits.
The Process Before Incapacitation: Advance Designation
Under a recently-enacted law, you may designate an agent for your Social Security benefits in advance (called your potential “Representative Payee”). You should designate this agent prior to your incapacitation, if you want to indicate your preferred agent(s). Otherwise, Social Security will select a Representative Payee for you without your input. You may advance designate a Representative Payee at any time if you are receiving benefits and are over the age of 18 or you are an emancipated minor.
Your advance designation of an agent does not authorizing someone to manage your benefits immediately. You are only indicating your preferred agent to handle your benefits in the future, if you become incapacitated. The SSA will not appoint a Representative Payee for you until you are actually unable to manage your benefits.
Filing an advance designation helps you increase the chances that someone you trust may be in charge of your social security benefits. Otherwise, a person (like a family member or lawyer) or organization (like a nursing home) may request to be your Representative Payee after you become incapacitated. But, you may not advance designate an organization.
Once you become unable to manage your Social Security benefits, the SSA determines who will be your Representative Payee through their own process. The submission of an advance designation is not a guarantee that your pick will be your future Representative Payee. The SSA must still confirm whether the person you have named should serve as a Representative Payee.
You May Designate Alternate Representative Payees
You may propose up to three alternative Representative Payees through advance designation. If you submit alternatives, you must then provide an order of priority for the SSA to consider each applicant. If you decide to use the advance designation option, the SSA will send you the list annually for review.
Unlike a power of attorney, you may not appoint an organization to be your Representative Payee. However, after you are incapacitated, an organization can become your Representative Payee by request.
Submitting or Changing your Advance Designation
You may submit or change advance designations in four ways:
- Online using your personal my Social Security account;
- By telephone at 1-800-772-1213;
- In-person by going to your local SSA field office; or
- By mail using Form SSA-4547 – Advance Designation of Representative Payee.
Advance designation does not expire, and you can change it at any time. Additionally, only you may designate your SSA Representative Payee. An agent under your regular power of attorney or power of attorney for finances cannot advance designate anyone to be your Representative Payee.
Importantly, advance designation is not an appointment of a Representative Payee or a power of attorney. The process is entirely optional for you, but it could hep you manage your future Social Security benefits. In deciding on a Representative Payee, you should only list someone who is detail-oriented and good with finances. The agent will need to keep good financial records and avoid mixing your benefits with the Representative Payee’s own personal funds.
The Process After Incapacitation: Representative Payee
After you become incapacitated, the SSA will likely require an advance designation applicant to appear for an in-person interview before they appoint them as a Representative Payee.
If a beneficiary is already unable to manage their benefits and has not yet filed an advance designation, you must apply in-person at the SSA’s local field office to be a Representative Payee. The SSA’s website has more information on how to become a Representative Payee and correctly manage benefits.
Restrictions on Naming a Representative Payee
The SSA will start an investigation into the potential Representative Payee upon appointment. This may include a face-to-face interview. The person being investigated must submit proof of identity and their social security number. The SSA requires every potential Representative Payee to consent to a background check. Refusal to submit to a background check may result in that applicant’s denial.
The SSA will investigate whether the potential Representative Payee has committed a crime that might disqualify them from being a Representative Payee (this list is not exhaustive):
- Giving false statements to increase payments from Social Security,
- Misstating material facts to the SSA in an application,
- Misrepresenting your identity to the SSA,
- Being convicted of any felony which resulted in imprisonment for more than one-year, or
- Fleeing to avoid confinement after conviction of a felony, prosecution, or custody.
The SSA determines a person’s fitness to serve as a Representative Payee on a case-by-case basis. The SSA will look at whether a potential Representative Payee has previously been terminated as someone else’s Representative Payee for misuse of funds. This information is not a definitive description of the SSA’s investigative process. The SSA will then determine whether there is adequate evidence that it would be in your best interest for a potential Representative Payee to be certified.
If you have questions regarding your eligibility to serve as a Representative Payee, you should contact an attorney and visit the SSA website.
[Please Note: the SSA closed its physical offices on March 17, 2020 during the Coronavirus Pandemic.]
If you are receiving Social Security Benefits
We are committed to helping you achieve peace of mind and financial security. We can walk you through this complicated process and ensure that you are ready, no matter what happens. If you have questions about a power of attorney document, advance designation, or estate planning in general, please contact us at email@example.com or (214) 935-9004. Although we are located in the Dallas/Fort Worth Metroplex, we serve clients all over Texas.