Is This Normal?

Jan 11 2021 - 11:41am

Hi, I'm writing you because my father passed on November 28, 2020. He was in assisted living and had a payee to take care of his funds. He had a saving account under the payees name which he received from Social Security. The Payee claims that everything that was in the saving account was sent back to Social Security. My mom contacted Social Security with the understanding that she would be entitled to the money he had left in the bank. Social Security informed her that they have nothing to do with his savings account before his death. My question is, Is it normal for a payee to send money that was saved during the year back to Social Security and Social Security not having knowledge about it? Thank you for your time


I'm sorry for your loss.

It sounds like what you're referring to are conserved funds. When a payee is appointed to handle someone's Social Security benefits, they are required to use the benefits for the person's current needs, and to save any remainder for future needs. Those savings are referred to as conserved funds.

If the person with a payee dies and if the payee has conserved funds belonging to the deceased individual, the payee is not supposed to return those funds to Social Security. Instead, the payee is required to give the conserved funds to the legal representative of the beneficiary’s estate. If there is no estate, then the funds are supposed to be transferred in accordance with the laws of the applicable state. In most states, that would mean transferring the funds to the probate court of the deceased's residence.

I don't know if your father's payee actually returned conserved funds to Social Security, or if he is instead referring to returning a benefit payment that was received after your father's death. For example, if your father received a benefit payment in December, that payment wouldn't be due. It would need to be returned to Social Security and could not be reissued.

However, if your father's payee did in fact mistakenly return conserved funds to Social Security instead of the legal representative of your father's estate or to the proper probate court, those funds should at some point show up as a credit on Social Security's records. At that point, Social Security would try to transfer the funds to the legal representative of your father's estate, or in accordance with the applicable state's law.

Best, Jerry