How Representative Payees Should Spend Leftover Social Security Disability Money

You know that you have difficulty managing your money, but the thought of handing over your Social Security benefits to someone else to make purchases seems unthinkable. You don’t want to give up control of your only source of income—and there’s always the concern that your payee will take some of your benefits without you knowing about it. How can you be sure that your payee will have your best interests at heart?

Social Security Has Rules About How a Representative Payee Can Spend Extra Money

Before you sign over your disability benefits to a representative payee, you should know that the Social Security Administration (SSA) has rules about what can and cannot be bought using a beneficiary’s benefits. In general, all purchases made should improve the life and comfort of the beneficiary. If the beneficiary’s needs are met and there is money left over, a beneficiary may make special or large purchases, including:

  • Past-due bills. A beneficiary may have neglected to pay past-due bills if he was waiting for backdated disability payments. A surplus in benefits can be used to pay down old debts as long as the beneficiary’s future costs of care are not affected.
  • Housing improvements. If a beneficiary still lives in his own home, disability payments may be used toward a mortgage or as a down payment on a new house (as long as the beneficiary’s name is on the deed). You can also use surplus disability funds to make safety and mobility improvements to a structure, such as installing ramps or building a covered walkway to a garage to avoid falls.
  • Home goods. Beneficiaries who live in their own homes have more control over their environments than residents in nursing homes, and their benefits can be used to improve their living space. New furniture, pots and pans, or even a television or other electronics may be purchased with disability funds.
  • A car. Disability funds can be used to pay for a car payment, car insurance, or as a down payment toward a new vehicle as long as the car is owned by the beneficiary and is primarily for his use.
  • Support for dependents. In some cases, excess disability benefits can be used to support a beneficiary’s relatives, including a legally dependent spouse, child, or parent.

You should know that a representative payee must be approved by the SSA, and has to account for all money spent on behalf of the beneficiary—and can face harsh penalties if any money is missing. If you need help designating a representative payee, we can help. Call 402-933-5405 to speak with one of the attorneys at Cuddigan Law today or order our free guide, 5 Deadly Mistakes That Can Destroy Your Social Security Disability Case.

Sean D. Cuddigan
SSA and VA Disability Attorney in Omaha, Nebraska
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