Guardianship, Powers of Attorney, and Advance Health Care Directives
Field Guide to Social Security

Why It Matters:
  • Rules over powers of attorney and health care directives can vary by state.
  • Clients handling a loved one’s Social Security benefits need to become a representative payee through the agency.
  • You can help clients understand what designations they’ll need now, before there’s a need.

If you don’t already have a client dealing with the ravages of Alzheimer’s or other forms of dementia, chances are, you will.

That’s why, whether it’s a client in the early stages of dementia or a client caring for a loved one, it’s important to know that when it comes to handling Social Security payments for a disabled senior, powers of attorney are not enough.

Social Security requires a special designation known as a representative payee, something clients may not be aware of or understand.

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 15 million Americans provide unpaid care for people struggling with dementia, and more than 5 million Americans are living with Alzheimer’s. By 2050, that number could reach 16 million.1
About 1 in 3 seniors dies with dementia.1
Your clients may be familiar with the concepts of guardianship, medical directives, and powers of attorney. The idea is to create a legal document or documents that grant authority for someone to act on another’s behalf – financially or even medically. But those documents are not enough for the Social Security Administration.


Explaining representative payee
Social Security requires a separate designation – representative payee – on behalf of someone who is not capable of representing themselves. The SSA says a representative payee’s main duty is to use the money exclusively for the beneficiary’s needs.
The rules require 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.
In most cases, payees cannot be paid for the work they do on behalf of the incapacitated person. And the agency requires careful records be kept.

Additional parts of a complicated process
Clients juggling the demands of caregiving could be confused about permissions they need to handle a loved one’s affairs. While representative payees can handle Social Security income for the beneficiary, that designation doesn’t allow them to do other things, such as sign legal documents. For that, they still 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 office and a completed form (SSA-11) explaining why the beneficiary needs assistance and why the applicant is the best person for the job.
Social Security offers a series of training videos, a downloadable guide, and a frequently asked questions page for representative payees.
Transamerica also offers a free guide to related topics, “Guardianship, Powers of Attorney, and Advance Health Care Directives.”

1Alzheimer’s Association, “2017 Alzheimer’s Disease Facts and Figures,” 2017

Things to Consider:
  • It may be easier to have discussions about powers of attorney and representative payees before the situation advances.
  • By the time clients need a personal representative, if may be too late for them to share their wishes.
  • Like estate planning, discussing powers of attorney and other directives may be uncomfortable, but it can beat not having a plan in place.

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.