Legal Issues When a Loved One Needs Help

Why It Matters:

  • Americans are living longer than ever, and 1 in 3 will die with dementia.1
  • Caring for an incapacitated loved one’s finances requires preparation.
  • When it comes to handling Social Security benefits for someone else, a power of attorney may not be enough.

Chase Squires tkc.profilePicture Written by: Chase Squires | Transamerica
Nov. 04, 2019

4 Min readClock Icon

We all may need to provide a little help to a loved one someday. Maybe a lot of help.

Being willing to provide a hand for someone suffering through a disability or dementia is one thing. Being legally allowed to provide that help is another.

That’s why it’s important to think about powers of attorney and representative payee issues before you’re called into action.

When you consider increases in longevity and the prevalence of Alzheimer’s disease and other forms of dementia, it’s easy to see why it’s so important to understand the process of being designated to care for someone else’s needs. More than 16 million Americans provide unpaid care for people struggling with dementia, and 5.8 million Americans are living with Alzheimer’s. By 2050, that number could reach 14 million.1

If you don’t know someone with dementia, you may in the future. About one in three seniors dies with dementia.1

You may be familiar with the concepts of guardianship, medical directives, and powers of attorney.2 The idea is to create a legal document or documents that grant authority for someone to act on your behalf — financially or even medically — in the case you don’t have the ability to act for yourself. Rules can vary by state, and a qualified legal professional can help.

But when it comes to handling income from Social Security, even a power of attorney isn’t enough.

What is a “representative payee”?

The Social Security Administration (SSA) requires a separate designation — representative payee — to handle Social Security income on behalf of someone who is not capable. The SSA says a representative payee’s main duty is to use the money exclusively for the beneficiary’s needs. Social Security assumes an adult is capable to handle his or her own benefits unless evidence to the contrary is presented.3

The law requires that most minor children (say, a child entitled to Supplemental Security Income — known as SSI — as a result of a disability) and all legally incompetent adults have a representative payee.

“A payee must also keep records of expenses,” the agency says. “When we request a report, a payee must provide an accounting to us of how he or she used or saved the benefits.”

In most cases, you cannot be paid for the work you do on behalf of the incapacitated person. You can reimburse yourself for what the agency calls “reasonable” out-of-pocket expenses, but not for overhead such as rent, supplies, or utilities.

It can be complicated

And here’s where it gets a bit complicated. While you must be designated a representative payee to handle Social Security income for the beneficiary, that designation doesn’t allow you to do other things, such as sign legal documents. For that, you’ll need to be appointed a legal guardian or have powers of attorney.

Becoming a representative payee will likely require a trip to a Social Security field office and you’ll need to fill out a form (SSA-11), usually in person, and submit your own Social Security number while explaining why the beneficiary needs assistance and why you’re the best person for the job.4

If you want to learn more, the Social Security Administration offers a series of training videos, a downloadable guide, and a frequently asked questions page for representative payees.5

Transamerica also offers a free guide to related topics, “A Go-To Guide for Estate Planning Basics.”

Things to Consider

  • Laws vary by state with powers of attorney and health care directives — a legal professional can help.
  • If you’re handling a loved one’s Social Security benefits, you may need to become a representative payee through the agency.
  • A financial professional can help you consider what steps to take should you or a loved one become incapacitated.


1
“Facts and Figures,” Alzheimer’s Association, accessed October 2019

2 “Pick the Right Power of Attorney Instrument,” American Bar Association, March 2017

3 “Representative Payee Interdisciplinary Training,” Social Security Administration, accessed October 2019

4 “Program Operations Manual System (POMS),” Social Security Administration, June 2019

Social Security Administration, accessed October 2019


Neither Transamerica nor its agents or representatives may provide tax, investment, or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.

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