Social Security Disability &
  Special Needs Planning News
 Sheri R. Abrams, Attorney at Law
In This Issue:
Representative Payee - A Job That Should Be Taken Seriously
How To Choose an Investment Adviser for a Special Needs Trust
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Source: Reprinted from the Summer 2016 Newsletter of Sheri R. Abrams, Attorney at Law,


Issue: # 90

 Summer 2016

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Welcome to our monthly newsletter. 

These monthly newsletters are designed to provide useful information on Disability Law & Issues with a special emphasis on Social Security Disability & Supplemental Security Income (SSI) benefits and Special Needs Trusts & Planning.

You may have been added to our e-mail newsletter mailing list if you are a client, business associate, a Facebook friend, a Linked-In connection, or another professional contact of Sheri R. Abrams, Attorney at Law. 

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Representative Payee - A Job That Should Be Taken Seriously
Rep. Payee
Most people with special needs who receive Social Security Disability and/or Supplemental Security Income (SSI) benefits are qualified to manage their own money and can make other financial decisions for themselves. The Social Security Administration (SSA) pays these people directly each month.

However, when a person with special needs cannot make important financial decisions, the SSA sends the benefits directly to a third party, known as a Representative to Payee, who is charged with managing the funds for the beneficiary.

When a relative or friend signs up to be a Representative Payee, they often do not take the time to truly understand what their job entails, which could lead to problems.

Here are a few key things to remember about being a Representative Payee:

It's Not Your Money--  The funds you receive are the beneficiary's funds, not yours. When you agree to be a Representative Payee, you are responsible for managing the beneficiary's money for their benefit, not yours. It's easy to lose track of the beneficiary's funds, especially when finances are mixed together.  As a Representative Payee, you must ensure that the monthly payments get to, and are used for, the beneficiary and no one else.

Don't Commingle--  The best way to ensure that the beneficiary's funds are used for their benefit is to  separate  the funds in a separate bank account. This account should reflect the beneficiary's ownership of the funds, and should not be a joint account with the representative payee as the other owner.   Instead, the bank account should be titled in the name of the beneficiary, with the Representative Payee noted on the account, i.e., "Your name, as Representative Payee for disabled person."  

File Your Representative Payee Report-- The SSA requires that a Representative Payee file an annual accounting called the Representative Payee Report. This report details what you, as the Representative Payee, have done with the beneficiary's funds during the previous year.  If you have kept accurate records of the beneficiary's funds over the course of the year, the report will be very easy to fill out. Commingling funds, or not keeping accurate records of expenditures, can lead to problems when it comes time to file the report. Not filing the report, on the other hand, could lead to your removal as Representative Payee.

Know the SSI Rules-- If you are serving as a Representative Payee for a person receiving SSI benefits, your job is made even more difficult by the SSI program's strict income and asset rules. For instance, SSI beneficiaries can have only $2,000 in their name in order to be eligible for benefits. As Representative Payee, you must make sure that you know the rules regarding asset accumulation and their effect on the beneficiary. You must also deal with any lump-sum payments that the beneficiary may receive as "past due" SSI benefits, which have their own set of rules.  Not knowing the rules can lead to loss of benefits and the possibility of having to repay an overpayment.

Get Help-- B eing a Representative Payee is a difficult job that should not be undertaken lightly.   The SSA offers information for Representative Payees here , but the best way to make sure that you understand your duties is to speak with a qualified Special Needs Planning Attorney who can explain the intricacies of the system and give you tips that fit your particular situation.  

How To Choose an Investment Adviser for a Special Needs Trust         
Trustees of S pecial Needs Trusts have a duty to properly manage the funds in their care.  However, most trustees are not sophisticated investors and they should not be directly managing the investment of large sums of money. 

This does not mean that the trustee of a Special Needs Trust should simply open a savings account and be done with it.  On the contrary, a trustee needs to grow the trust principal as best he or she can, keeping in mind the current and future needs of the trust's beneficiary. In many cases, this means that the trustee should hire a professional investment adviser.

There are so many investment professionals out there to choose from, that the choice of an investment adviser can be overwhelming. The website of the Securities and Exchange Commission (SEC) offers several tips for beginning investors who are seeking to hire an investment professional.

According to the SEC, investors should know exactly what services they are looking for prior to interviewing advisers, and they should find out what services their potential investment adviser provides, how much those services cost, and how and when the adviser gets paid.

These threshold questions are important, but the SEC also recommends asking each potential adviser a battery of specific questions, including questions about their experience, education and employment history, whether the adviser is limited to recommending a certain set of products and whether the adviser is registered with the SEC or with a state licensing agency. 

Trustees should also understand the various types of fee structures used by investment advisers, including a percentage fee based on the total assets under management, an hourly system, a fixed fee or a commission based on the products sold.

Trustees of Special Needs Trusts have slightly different needs than typical investors, and, if possible, they should work with advisers who are flexible and who already have experience investing the funds of Special Needs Trusts. 

Trustees should also be aware that hiring a poor financial adviser could lead to a breach-of-fiduciary duty claim against the trustee, so more detailed background checks and due diligence are required than if the trustee were an individual investor.

Asking friends, relatives and your Special Needs Planning Attorney-- to recommend an adviser is always a good idea.

To learn more from the SEC about selecting an investment adviser, click here.

To review the standards for Certified Financial Planners, a subset of advisers who have chosen to pursue accreditation, click here

Free Download of Sheri Abrams' Book "Don't Gamble With Your Social Security Disability Benefits"

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We provide legal services in the areas of Social Security Disability Law, Special Needs Planning, Elder Law, Special Needs Trusts, Wills and Trusts, Powers of Attorney, Advance Medical Directives, Guardianship, Disability Planning and Student Loan Discharge. 
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