Wards who are in guardianships often receive social security benefits. These monthly payments are an important source of income that helps pay for the ward’s care, medical expenses, and daily needs. Questions arise about who should receive these benefits, who controls how they’re spent, and who must account for them to the court when there is a guardianship in place.
Texas guardians of the estate have broad authority to manage ward property and must account to probate courts for all funds they receive on behalf of wards. However, the Social Security Administration operates under federal law and has its own system for designating who receives benefits on behalf of incapacitated individuals. When the Social Security Administration designates someone other than the court-appointed guardian as the “representative payee” for benefits, confusion can result about accountability and who bears responsibility for managing these funds.
Does the guardian have to account to the probate court for social security benefits when someone else has been designated by the Social Security Administration as the representative payee? What happens when the guardian claims they never received benefits that were paid directly to another person? Can a guardian be held liable for social security payments they didn’t receive?
A Texas appellate decision, Alford v. Marino, No. 14-04-00912-CV, 2005 WL 3482360 (Tex. App.—Houston [14th Dist.] Dec. 8, 2005, no pet.) (mem. op.), provides an opportunity to examine how social security benefits are handled in Texas guardianships and when guardians must account for them.
Facts & Procedural History
Mathew worked as a pipe fitter for approximately twenty years before a chemical burn forced him to retire in 1985 or 1986. He began receiving $310 per month in disability benefits. His physical health and cognitive abilities deteriorated, and in 1989, his brother William was appointed guardian of Mathew’s person and estate.
After William became guardian, Mathew began receiving social security benefits of approximately $1,059 per month. He also received a lump sum payment of $10,000 for past benefits. William deposited the lump sum into a certificate of deposit account.
In the latter part of 1989, Mathew moved to Louisiana to live with his mother, Willie Mae. Because of Mathew’s change of residence, the Social Security Administration made a change to who would receive his benefits. In March 1992, the Social Security Administration sent a letter to Willie Mae informing her that she had been designated the “representative payee” of Mathew’s social security checks.
The letter stated: “We have chosen you to be MATHEW ALFORD’S representative payee. The rest of this letter will give you information about the checks you will receive while you are the payee.” The letter informed Willie Mae she would receive $1,059 per month beginning with the April 1992 payment. It also stated: “It Is Important To Keep Track Of This Money. You will need to keep track of how you use all of the money we send you for MR. ALFORD. Each year we will ask you to report on how you used the money. We call this a representative payee accounting.”
Willie Mae remained the designated representative payee through December 1996—a period of fifty-eight months. In January 1997, the Social Security Administration sent another letter in the same format, this time advising William that he would be Mathew’s representative payee. The letter stated he would receive payments of $1,215 per month, beginning with the January payment. By this time, Mathew had returned to Houston and was placed in a nursing home. Mathew died in March 1997.
During William’s guardianship, he failed to file annual accountings with the probate court as required by law. Shortly before Mathew’s death, Mathew’s son filed a complaint requiring William to file an accounting. In August 1998, the probate court removed William as guardian and appointed a successor guardian. The successor guardian filed an inventory showing only $8,201.50 remained in Mathew’s estate.
In 2002, Simone, Mathew’s daughter and administratrix of his estate, sued William for failing to account for Mathew’s funds during the guardianship. The case was tried to the bench, and the trial court calculated that Mathew had received total income of $17,320 per year during the guardianship. This figure included disability payments of $310 per month ($3,720 annually), social security benefits of approximately $1,100 per month ($13,200 annually), and interest income of approximately $400 annually.
The trial court multiplied this annual income by the years William served as guardian, subtracted documented expenses William could prove with receipts or checks, and determined that William could not account for $105,922.01 of Mathew’s money. The court entered judgment against William for this full amount. William appealed, arguing among other things that he shouldn’t have been required to account for social security benefits during the fifty-eight months when Willie Mae—not William—was designated as the representative payee by the Social Security Administration.
What Is a Representative Payee Under Social Security Law?
Understanding the representative payee system under federal Social Security law helps explain why guardians aren’t always required to account for these benefits to state probate courts.
When the Social Security Administration determines that a beneficiary cannot manage their own benefits, it designates a “representative payee” to receive and manage the benefits on the beneficiary’s behalf. The representative payee system operates under federal law and regulations independent of state guardianship proceedings.
The Social Security Administration has discretion to select who serves as representative payee. The agency considers various factors including the person’s relationship to the beneficiary, their concern for the beneficiary’s well-being, their knowledge of the beneficiary’s needs and circumstances, and their ability to manage the benefits. The representative payee doesn’t need to be the person appointed by a state court as guardian.
Representative payees have duties under federal law. They must use the benefits for the beneficiary’s current maintenance, which includes food, clothing, shelter, and medical care. They must conserve or invest excess funds for the beneficiary’s future needs. They must report annually to the Social Security Administration about how benefits were used. These federal reporting requirements are separate from any state court accounting requirements.
The Social Security Administration sends benefit payments directly to the designated representative payee. If Willie Mae is designated as representative payee, the Social Security Administration sends checks to Willie Mae or deposits funds into an account in her name as representative payee. The court-appointed guardian doesn’t receive these payments unless the guardian is also designated as the representative payee.
How Does the Representative Payee System Interact with State Guardianships?
The relationship between federal representative payee designation and state guardianship appointments creates potential confusion about who controls social security benefits and who must account for them.
A court-appointed guardian of the estate has authority under state law to manage the ward’s property. This authority extends to most income and assets belonging to the ward. However, the guardian’s authority doesn’t automatically extend to social security benefits if someone else has been designated as representative payee.
Federal law gives the Social Security Administration authority to determine who receives benefits on behalf of incapacitated beneficiaries. This federal authority operates independently of state guardianship proceedings. The Social Security Administration may decide that someone other than the court-appointed guardian should serve as representative payee.
When this happens, the representative payee—not the guardian—receives and manages the social security benefits. The benefits don’t pass through the guardianship estate. The representative payee accounts to the Social Security Administration under federal requirements, not to the state probate court under guardianship requirements.
The State Bar of Texas Guardianship Manual recognizes this relationship: “The power of a court-appointed guardian of the estate to receive and manage [social security] benefits is subordinate to that of a representative payee. The Social Security Administration may deny a court-appointed guardian of the estate the right to receive the ward’s [benefits] and may appoint another individual as representative payee.”
This subordination means guardians cannot simply claim authority over social security benefits when the Social Security Administration has designated someone else as representative payee. The federal agency’s determination controls who receives the benefits.
When Must Guardians Account for Social Security Benefits?
The Court of Appeals in Alford addressed when Texas guardians must account to probate courts for social security benefits, relying on established case law principles.
The court cited Tharp v. Blackwell, 570 S.W.2d 154, 160-61 (Tex. Civ. App.—Texarkana 1978, no writ), which established that social security benefits paid to individual payees other than the guardian are not included in the ward’s estate. Therefore, the guardian is not required to account for them to the probate court.
However, if the social security funds are paid to the guardianship or are commingled with guardianship estate funds, then they must be accounted for by the guardian. The distinction turns on whether the guardian actually received the benefits, not on whether the benefits theoretically belong to the ward.
This principle makes practical sense. Guardians can only account for funds they actually receive and manage. If the Social Security Administration sends benefits directly to another person designated as representative payee, the guardian never receives those funds and has no information about how they’re spent. Requiring the guardian to account for funds they never received would be impossible and unfair.
The rule also respects the federal-state division of authority. The Social Security Administration designates representative payees under federal law and requires those payees to account under federal procedures. State probate courts don’t have authority to supervise or second-guess federal agency determinations about who should receive benefits.
The Takeaway
The Alford decision provides important guidance for guardians, families, and attorneys handling guardianship matters involving social security benefits. Guardians should determine early in the guardianship who is designated as the representative payee for any social security benefits the ward receives. This information is available from the Social Security Administration. Knowing who receives benefits helps the guardian understand what income flows through the guardianship estate and what income goes elsewhere. Guardians who are not designated as representative payees should not include social security benefits in their guardianship accountings. Including benefits they don’t receive misstates the guardianship estate’s income and creates confusion about what the guardian must account for. Accountings should reflect only income the guardian actually receives.
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