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Why you need to designate a Social Security representative payee

On Behalf of | Oct 3, 2021 | Estate Planning

A crucial part of estate planning is giving someone your financial power of attorney (POA) so they can handle your finances if you are incapacitated and unable to do so yourself. Many people assume that this person will also handle their Social Security benefits. 

However, the Social Security Administration (SSA) doesn’t recognize people’s designated POAs. Therefore, when you first claim your benefits, you should designate a representative payee with the SSA. You can also do it at any time if you’re already receiving benefits. The SSA considers this an “advance designation” since the representative payee hasn’t yet taken over (and may never have to) managing your benefits. If the representative payee does take over, the SSA will work directly with them.

Many people choose the same person they’ve selected as their financial POA to be their representative payee. However, you can choose someone else or even select a nursing home or organization recognized by the SSA. You can name a first, second and third choice. If for some reason, the first choice can’t do it, the SSA will go to the next on the list.

SSA has to approve your representative payee

SSA doesn’t just accept anyone to take on this role. It evaluates whether they’re suitable and accepts or rejects them.

If you haven’t named a representative payee before you become unable to look after their finances, people can apply for the role. If they don’t, or if the SSA doesn’t deem any of the applicants suitable, it can choose an individual or organization to handle your benefits.

Obviously, the choice of someone to receive your Social Security benefits if you’re no longer able to manage your money and ensure that they’re saved or spent wisely and with your well-being in mind is crucial. That’s why it’s best for you to make the choice yourself before you need that help. You can always change your designated representative payee later, as long as you still have the capacity to do so.

This is just one of the many aspects of estate planning that too many people overlook. That’s why it’s crucial to have experienced legal guidance as you plan not just for what happens after you’re gone, but if you reach a point where you need others to look after you.