TN 4 (10-09)

PR 07210.026 Minnesota

A. PR 09-172 Minnesota—Fee for Power of Attorney (POA) Services Rendered by Representative Payee—Doris K~, SSN ~ Your Ref: S2D5G6 Our Ref: 08-0154-NC

DATE: September 16, 2009

1. SYLLABUS

May a representative payee who is also acting under a Power of Attorney (POA) in Minnesota for that same individual charge a fee for POA services that were not related to services performed as representative payee. Under Minnesota law, the payee may charge such a fee, and the fee appears reasonable in this case. If the fee was paid from the beneficiary's inheritance, SSA has no concerns about the transaction. If the fee was paid, in part or in whole, from the beneficiary's Social Security benefits, the payment is permissible as long as the POA was in the beneficiary's best interest; the beneficiary's personal needs were met before the fee was paid; and the beneficiary's funds were not depleted by payment of the fees.

2. OPINION

You asked whether a representative payee who is also acting under a Power of Attorney (POA) in Minnesota for that same individual may charge a fee for POA services that were not related to services performed as representative payee. We believe that, under Minnesota law, Mr. S~ can charge such a fee, and that the fee appears reasonable in this case. If the fee was paid from Ms. K~ inheritance, SSA should have no concerns about the transaction. If you believe that the fee was actually paid, in part or in whole, from Ms. K~ Social Security benefits, then the payment would still be permissible so long as the POA was in Ms. K~ best interest; her personal needs were met before the fee was paid; and her funds were not depleted by payment of the fees.

BACKGROUND

Paul S~, the representative payee for Doris K~, is also a representative payee for other Social Security beneficiaries. For those other beneficiaries, Mr. S~ also acts as guardian and conservator. He receives compensation for acting as guardian/conservator for those other beneficiaries, and those fees are approved by a court. However, Mr. S~ is not a guardian or conservator for Ms. K~. Rather, he was apparently asked to act on her behalf under a POA, rather than as a guardian or conservator, because this would be a less costly alternative. In 2005, Ms. K~ signed a durable POA (that would remain in effect if she became disabled, incompetent, or absent) authorizing Mr. S~ to act on her behalf. The document does not address whether Mr. K~ will be compensated for her services under the POA.

Ms. K~ apparently received an inheritance, and assets from that inheritance are held in the same account where her Social Security benefits are deposited. Ms. K~ tax refunds were also deposited in this same account. Mr. S~ advised that he administers total assets of about $30,000 for Ms. K~. Mr. S~ reported that, for the periods from June 1, 2005, through May 31, 2007, he used the vast majority of Ms. K~ Social Security benefits for her food and housing, and a small portion (for the period from June 1, 2005 through May 31, 2006) were used for other things for her benefit, such as clothing, education, medical and dental expenses, recreation or personal items. He reported that he did not conserve any of Ms. K~ Social Security benefits for the period from June 1, 2005, through May 31, 2007.

On January 3, 2007, Mr. S~ withdrew about $550 from that account for services rendered under the POA. Mr. S~ has advised that this fee was taken from Ms. K~ inheritance. The copy of the check book ledger from the account shows that the balance in the account at the time the $550 fee was paid in January 2007 was about $6,000. It is not clear from the portion of the records provided what portion of the balance in the account as of January 3, 2007, might represent Social Security benefits, and how much might be allocable to inheritance or other sources.

Mr. S~ advised that most people acting under a POA charge $35 to $75 per hour for their services, while he charges only $29 per hour. Apparently, Mr. S~ is now being paid by the county to manage Ms. K~ inheritance, and he will, therefore, no longer be charging Ms. K~ for his services under the POA.

DISCUSSION

We note as an initial matter that appointment of a POA to act as representative payee is permitted under Agency policy, especially since the presence of a POA indicates a favorable, trusted relationship exists between the beneficiary and the person holding the POA. See POMS GN 00502.105(C); 00502.139(A)(6), (B)(6). Because Mr. S~ also charges Ms. K~ a fee for services he provides for her outside of the representative payee context, he is also her creditor. See POMS GN 00502.135. Nevertheless, as you pointed out, even as Ms. K~ creditor, Mr. S~ is not precluded from being her representative payee, so long as he is otherwise an acceptable representative payee, does not pose any harm to Ms. K~, the financial relationship does not pose any substantial conflict of interest, and no other representative payee can be found. POMS GN 00502.135. Apparently, Mr. S~ is otherwise an acceptable representative payee and the best available representative payee for Ms. K~, and there is no suggestion that he would pose any harm to Ms. K~. We believe it would also be reasonable to conclude that there is no substantial conflict of interest between him acting as Ms. K~ representative payee and acting for her under a POA, so long as he is properly charging a reasonable fee as a POA.

Mr. S~ could not charge Ms. K~ for the services he provides as the representative payee of her Social Security benefits. See POMS GN 00602.110. However, Mr. S~ claims that the $550 fee was not for his services as Ms. K~ representative payee, but rather solely for the services he provides for Ms. K~ under the POA in managing her inheritance. It appears that, under Minnesota law, Mr. S~ can charge a reasonable fee for his services under a POA.

Under Minnesota law, a court must approve compensation for services performed as a guardian or conservator of an individual’s estate. See Minn. Stat. Ann. § 524.5-502(c). However, an individual acting under a POA, as in this case, is not subject to court review of his or her actions. See generally Minn. Stat. Ann. § 523.21 (POA has no duty to render an accounting of transactions unless requested by the principal, required by the instrument conferring the POA, or the individual with the POA reimburses himself for an expenditure made on behalf of the principal). The Minnesota statutes do not address whether, when, or how much an individual can charge for services provided under a POA. Compare Minn. Stat. Ann. § 523.23(5) (addressing the right of the individual acting under a POA to reimbursement for expenditures made on behalf of the principal). However, in a case before the Minnesota Supreme Court that involved a dispute over an accounting, the court upheld a trial court’s determination of the amount of compensation and individual should receive for his services under a POA where the agreement between the parties made no provision for compensation. Frisbie v. Frisbie, 33 N.W.2d 23, 30 (Minn. 1948). Thus, it appears that Minnesota would permit an individual acting under a POA to charge a fee for services, even if the agreement between the parties does not expressly provide for compensation. However, the fee will likely be limited to a reasonable level if challenged.

Here, as in the Frisbie case, the document establishing the POA does not expressly provide for compensation. But neither does it prohibit compensation. We believe that Minnesota law would permit Mr. S~ to charge a reasonable fee, from Ms. K~ assets, for his services under the POA. If Mr. S~ collected only a one-time fee (or an annual fee) of about $550, that would probably be seen as reasonable. Compare Frisbie, 33 N.W.2d at 30 (approving $4,139.47 in both fees and expenses for services performed under a POA during a period of a little more than three years from 1943 to 1946). Mr. S~ advised that most individuals acting under a POA charge $35 to $75 per hour for their services, and he charged only $29 per hour. Assuming this is accurate, and assuming he charged a reasonable number of hours, his fee seems reasonable.

However, even though Minnesota would allow Mr. S~ to charge this fee, the question still remains whether it was proper for Mr. S~ to collect those fees from the bank account where Ms. K~ Social Security benefits are held. Mr. S~ asserts that the fee was taken from a bank account that holds Ms. K~ Social Security benefits, as well as her inheritance, and that the fees were taken from the inheritance. We found no SSA policy that would prohibit the representative payee from commingling the beneficiary’s Social Security benefits with the beneficiary’s other assets. And assuming that the fee was taken from funds allocable to Ms. K~ inheritance, there would be no violation of SSA policy. However, even if a portion or all of the fee were paid from Ms. K~ Social Security benefits, this would not necessarily be a violation of SSA policy. POA fees are analogous in many ways to guardianship and conservator fees. Under SSA policy, part of a beneficiary’s funds may be used for guardianship or conservatorship costs and fees so long as the guardianship or conservatorship appears to be in the beneficiary’s best interest; the beneficiary’s personal needs are first met; and the beneficiary’s funds would not be depleted by the guardianship or conservatorship costs. POMS GN 00602.040. Here, Ms. K~ voluntarily agreed to the POA, and it appears to be in her best interest, especially since it is less costly than a guardianship or conservatorship. The fact that the county is now willing to cover the costs of the POA in administering the inheritance also suggests that this arrangement is in Ms. K~ best interest. Based on the information we were provided, it would appear reasonable to conclude that Ms. K~ personal needs were met before the POA fee was paid. And based on the account balances, payment of the fee did not deplete her funds. Therefore, we believe it would be appropriate to find that this was an appropriate use of benefits if some or all of the POA fee was paid from the Social Security benefits.

CONCLUSION

In sum, the POA fee Mr. S~ charged was permitted under Minnesota law and appears to be reasonable. If the fee was paid from Ms. K~ inheritance, as Mr. S~ has asserted, there would be no suggestion of a violation of SSA policy. However, even if the funds were paid in whole or in part from Social Security benefits, you could find, based on the information provided, that the payment would be an appropriate expenditure of benefits.

Sincerely
Donna L. C~
Regional Chief Counsel
By: _______________

Suzanne D~
Assistant Regional Counsel


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http://policy.ssa.gov/poms.nsf/lnx/1507210026
PR 07210.026 - Minnesota - 10/28/2009
Batch run: 10/30/2009
Rev:10/28/2009