K was a social security beneficiary who was confined to a mental institution. His son, L, was the payee of his social security benefits. A recipient of social security benefits may have a payee appointed to receive and manage the benefits for the use and benefit of the beneficiary. Such a payee is a fiduciary, with an obligation to act solely in the beneficiary’s best interests. A payee may be a family member of the beneficiary.

L did not use the monthly benefit amount, which was $79, to pay for K’s hospital expenses or his current needs. Rather, he accumulated the money, ostensibly for the purpose of building a burial fund for K

The hospital appealed to L to pay $60 per month for K’s reasonably assessed hospital expenses, and use an additional $10 per month for K’s canteen expenses. L refused to do so until he had accumulated $2,000 for burial expenses.

Social Security held that, while the accumulation of funds for burial expenses could be for a beneficiary’s “use and benefit”, it should not be at the expense of the beneficiary’s current needs. L was required to use the monthly benefits for K’s hospital and canteen expenses, or be removed as payee.

See Social Security Ruling (SSR) 61-23.

This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.