ยท 4 minute read

Keeping the benefits separate from your own money

One account that plainly belongs to the person, and a record every time money moves between you.

A silver pen resting over the dollar amount box of a blank paper check.
Photo by Money Knack on Unsplash

A representative payee keeps the benefits separate from their own money, and holds them in a way that shows they belong to the person they're for. The rule is in SSA's regulations for Social Security and for SSI alike.

It's one of the simpler rules to follow, and following it makes the rest of the job easier: the records, the annual accounting, and any question SSA asks later.

How the account is titled

SSA's policy says the account must be set up so that the person owns the money, the person doesn't have access to it, and you hold it as a fiduciary, for them and not for yourself. In SSA's words, a beneficiary's funds generally "must not be commingled" with the payee's own.

The title SSA prefers follows this pattern:

  • (Person's name) by (your name), representative payee

SSA also accepts "(your name), representative payee for (person's name)". If you're also the person's court-appointed guardian, the title may end in "guardian" instead. When you open the account, read the title on the paperwork before the first deposit goes in.

SSA's own list of things a payee can't do includes putting the person's Social Security or SSI into the payee's account, or anyone else's.

The one exception, and where it stops

The regulations make an exception when the payee is the person's spouse, or their natural or adoptive parent or stepparent, and the two live in the same household.

SSA's policy spells out what that allows. The payee can have benefits direct-deposited to their own personal checking account, once the local Social Security office confirms the money will go to the person's current expenses and won't build up there. If money does accumulate, SSA says it belongs in "a properly titled savings account." The exception covers checking only.

A sibling, an adult child, a grandparent or a friend who serves as payee isn't in that list, so the titled account applies.

When you paid with your own money

It happens. SSA lets you pay yourself back from the benefits for "reasonable, actual out-of-pocket expenses" you paid on the person's behalf. Its examples include getting them to a doctor's appointment (cab fare, mileage and tolls), postage for their bills, and money order fees.

The repayment has to equal what you spent, and you keep a record of it. SSA doesn't allow repaying yourself for overhead, such as your own rent or utilities. For an out-of-pocket cost that isn't for the person's current or reasonably foreseeable needs, SSA asks you to get its approval before using the benefits.

Say you pay a $20 cab fare with your own card to get the person you're payee for to a doctor's appointment. You move exactly $20 from their account to yours, keep the receipt, and write down what it was for. The transfer and the receipt together tell the whole story.

Why a separate account helps you

SSA notes that a checking account gives you canceled checks or statements that show how the money was spent. It also encourages interest-bearing accounts, and any interest the benefits earn belongs to the person.

When the account holds only their money, the monthly statement already does much of your record-keeping. Each deposit is a benefit payment, each withdrawal is something for them, and the balance is theirs. SSA can ask to see your supporting records, and payees who don't have to file the annual report still keep them. With a separate account, those records are mostly already in one place.

How PayeeKit records it

In PayeeKit, an expense you covered yourself can be marked "Paid with my own money." The spreadsheet in the Annual Report Pack lists it as a reimbursement, beside its date, amount and receipts.

Sources

PayeeKit is an iPhone ledger for family representative payees and guardians. See how it works.

This post is general information, not advice about anyone's situation. SSA decides how benefits must be held, and your notices and SSA's own pages are the final word.