For people who are aging, ill, or have a disability and expect to be in situations where they will no longer have the capability to oversee their own personal matters, it is common to have a lawyer draft a power of attorney.
In very simple terms, a power of attorney is a legally binding document that allows you as the principal to appoint another person as your agent. Your agent then has the power to make decisions on your behalf. In your power of attorney, you can establish the extent of representation you wish to allow your agent to have.
There are many reasons for having a power of attorney, but it is most commonly used when people are aging or ill and soon may not have the ability to make important decisions or to accomplish common tasks such as paying bills, selling, or transferring assets to cover medical costs.
However, if you require assistance with matters concerning your Social Security benefits, such as cashing checks, a power of attorney will not suffice. The United States Treasury Department does not accept power of attorney for federal payments such as SS or SSI benefit checks. For this reason, the SSA requires that a representative payee be appointed for all matters concerning your retirement or disability benefits.
What is a Representative Payee?
When SS benefits are involved, United States law says that minor children and legally incompetent adults must have payees. If, after evaluation, the Social Security Administration determines that a beneficiary needs a representative payee, they appoint one. A representative payee can either be an individual or an organization.
Once the payee begins receiving monthly benefits on behalf of their beneficiary, they are responsible for using that money to pay for whatever the beneficiary needs. They must also keep track of all the expenses in written form and save any unused funds to be used for the beneficiary in the future.
The payee must report to the SSA whenever requested, to provide all the recorded information about how they spent or saved their beneficiary’s benefits.
Who Does the SSA Appoint as Representative Payees?
Whether the beneficiary is a child or adult, the SSA appoints relatives as payees whenever that is possible. If not, they appoint someone from an agency, institution, or other qualified organization.
If you have power of attorney for someone and you expect to be managing their SS or SSI payments, you must apply to become that person’s representative payee. You can do that by applying at your local SSA office. They will ask you to fill out an SSA-11 form, show proof of identity, and provide your SS number. This must be done in person and not online or by mail.
Having a power of attorney drawn up is important for many people who are close to retirement age. If you are concerned about what will happen to your 401K or IRA annuities if you become incapacitated, a power of attorney will allow your loved ones to manage those financial matters.
If you are caring for someone who is receiving retirement benefits and is no longer capable of managing financial tasks, you should discuss all the details of how you can become a representative payee for them. An agent at your local Social Security office can give you all the necessary information.