1620. A Beneficiary's Savings

1620.1 How should funds be handled that are not required for current needs?

Funds not required for current or reasonably foreseeable needs, or for the support of legal dependents, must be conserved or invested for the beneficiary. Part of the funds can be set aside for definite foreseeable needs, such as education for a young person or rehabilitation for a person who has been disabled.

1620.2 How should investment of funds be made?

Accumulated funds of more than $500 should be placed in an interest-yielding account or investment on behalf of the beneficiary. Any interest and dividend payments that result from checking accounts, savings or an investment are the property of the beneficiary and may not be considered to be the property of the payee.

1620.3 What investments are preferred?

Preferred investments include:

1. U.S. Savings Bonds; or

2. Deposits in an insured interest or dividend paying account in a bank, trust company, savings and loan association, or credit union that is insured under either Federal or State law.

Payees may otherwise invest funds according to State laws governing the investment of trust estates by trustees.

1620.4 Are there restrictions on investing funds?

Guidelines for managing the beneficiary's money are as follows:

1. Funds may not be invested in any company, corporation, or association when such an investment will involve the representative payee in a conflict of interest;

2. Money should not be kept at home or mingled with the representative payee's own money or with other funds; and

3. Accurate records should be kept in order to account for the use of funds.

1620.5 In what form should the investments be held?

All conservation and investments must be in a form that shows that the payee holds the property in trust for the beneficiary. The preferred forms of accounts and registrations are the following:

1. U.S. Savings Bonds bought for a beneficiary under age 18 - (Name of Beneficiary), (Social Security Number), a minor, for whom (Name of Payee) is representative payee for Social Security funds.

2. U.S. Savings Bonds bought for a beneficiary age 18 or older - (Name of Beneficiary), (Social Security Number), for whom (Name of Payee) is representative payee for Social Security funds.

3. Various forms of accounts recognized by banks, trust companies, savings and loan associations, or credit unions as establishing the trust relationship between the beneficiary and the representative payee are acceptable as long as they clearly establish that relationship under the applicable State law.

4. For a savings or checking account, an acceptable title is (Name of Payee), representative payee for (Name of Beneficiary). A statement such as (Name of Payee) in trust for (Name of Beneficiary) should not be used because some States treat the funds in this type of account as belonging to the representative payee.

Note: The examples listed above are not all-inclusive. The payee should always consult with the bank to verify that, under State law, the titling of an account:

1. Shows that the payee has only a fiduciary interest;

2. Permits the payee ready access to the funds when needed for the beneficiary's current maintenance; and

3. Does not permit the beneficiary to have direct access to the funds.

Last Revised: Aug. 2, 2007