That probably is not how that question is actually phrased, because we just learned about this “Advance Designation”, so it does not appear to be widely known. The question is probably more along the lines of “What should I do if my spouse (or parent) is unable to manage their financial affairs”? And “What should I do in case I become unable to manage my own financial affairs”?
We “preach” with almost religious fervor: Everyone Needs to Have Executed Durable Power of Attorney Documents!
While a durable POA document will take care of many/most of your financial matters, and everyone should have one, it does NOT apply to Social Security Benefits, and will not be accepted by the Social Security Administration. They now have their own process. So here is how it works: If you are a Social Security recipient, you can now name up to three individuals to eventually become a “Representative Payee” for your benefits, by completing an Advanced Designation.
How Does the Advanced Designee Work?
While you are still able to make your own decisions, you provide Social Security with the names of a 1st, 2nd and 3rd choice of individuals you would wish to receive your social security payments and pay your bills should you become unable to do so; this is what they refer to as a “Representative Payee”. You can change and re-order the representatives at any time. In the event you can no longer make your own decisions (think dementia, etc.), you and your family can rest easy that you have already chosen someone to manage your Social Security benefits.
Obviously, the payee should be someone you trust, who sees you often (preferably in the same town or area), and who understands your needs. Social Security only contacts these designees if you need assistance. It is not a power of attorney, and you can change or withdraw a designee at any time. You will receive a notice from Social Security every year listing your Advanced Designees for you to review.
How to Set Up an Advance Designee for Social Security Benefits?
- The application to add the Advanced Designee is found in your personal My Social Security Account online if you have set up an account: www.ssa.gov.
- You can also call them to request it: 800-772-1213
- If you are just now applying or when you apply for Social Security, you can complete the Advanced Designation at that time. At a minimum, it would be advisable to name your spouse.
What Does the Advance Designation Do?
If Social Security is notified that you need assistance in managing your money, they will select your representative from the list you provide them. They will then receive your social security benefits on your behalf and must use it to pay for your current needs, including:
- Housing and utilities
- Medical expenses,
- Personal needs
If the Representative Payee is not a spouse, they are required to complete a form every year with a record of how your Social Security benefit was spent. If they misuse the funds, they will have to pay them back. The Representative Payee is not allowed to use any of your Social Security funds for their own benefit. Again, please note that this requirement does NOT apply to spouses, though your Social Security benefit should still be used for your needs.
This Representative Payee will also receive your annual Social Security Benefit Statement (1099) required for the preparation of your taxes (if you are required to file).
Should I Complete an Advanced Designation for my Social Security Benefits?
Since we now know about this option, we will take the same attitude that we do toward having a Durable Power of Attorney and designating beneficiaries on accounts, which simply stated is, “Do it”. There are so many things in life that we cannot control or plan, and therefore it makes sense to take the steps and complete the plans that we can make. One never knows when or if they will find themselves in a situation where they cannot manage their own affairs, so our oft-stated premise is:
Pray or Hope for the best, but prepare for the worst.
Here is the link to the introduction to the Advanced Designation/Representative Payee with links to other information:
Social Security also provides a Guide for Representative Payees here: https://www.ssa.gov/pubs/EN-05-10076.pdf