You have asked what an institutional representative payee should do with conserved
funds when the beneficiary dies and the Oregon Department of Human Services (DHS)
is asserting a claim to the funds.
DISCUSSION
Upon the death of the beneficiary, conserved funds belong to the beneficiary's estate.
See Program Operations Manual System (POMS) GN 00603.100B2; NL 00703.204 (notice to representative payee); NL 00703.924 (termination letter to representative payee). The institutional representative payee
should turn the funds over to the legal representative of the beneficiary's estate
for disposition under state law. Id.; see also SSA's publication on A Guide for Representative Payees. If there is no legal representative
of the estate, the institutional representative payee should contact the state probate
court for instructions on what to do with the conserved funds. GN 00603.100B2.
Oregon has a small estates statute that provides for a simplified administration of
the estate. OR. REV. STAT. § 114.515; POMS GN 02315.075. The estate must have a fair market value of $140,000 or less (not more than $50,000.00
attributable to personal property and not more than $90,000.00 attributable to real
property). OR. REV. STAT. § 114.515(2). If the assets of the estate are insufficient
to pay all expenses and claims in full, the assets are distributed in priority order.
See OR. REV. STAT. § 115.125. DHS' claim for medical assistance paid is ninth in the
priority order. OR. REV. STAT. §§ 87.533, 115.125(1)(i).
Oregon law also gives DHS priority to moneys deposited in a deceased depositor's bank
account that has $25,000 or less in deposits. OR. REV. STAT. § 708A.430. The surviving
spouse has first priority and DHS has second priority to the moneys on deposit. Id. at subsection (1)(b). A probate proceeding is not necessary for DHS to establish its
claim to the deposits. Id. at subsection (5). Here, the institutional representative payee maintains a bank
account and has a record of the beneficiary's share of conserved funds in that account.
The Social Security regulations authorize a representative payee to deposit conserved
funds in an interest-yielding bank account in a form that "shows clearly that the
representative payee has only a fiduciary and not a personal interest in the funds."
20 C.F.R. §§ 404.2045(b) and 416.645(b). It does not appear from the facts you presented
that DHS is asserting the claim under OR. REV. STAT. § 708A.430.