Question Presented
You asked whether Julie P~, a representative payee for 17 beneficiaries who also serves
as a conservator for some of those beneficiaries, may charge monthly conservatorship
fees ranging from $500 to $850, and whether such fees are reasonable. You also asked
whether it is a proper use of benefits for Ms. P~ to apply any portion of an individual’s
Social Security benefits towards a conservatorship fee, if the beneficiary does not
have sufficient funds to pay her monthly mortgage and condominium association dues.
Short Answer
Ms. P~ may serve simultaneously as a representative payee and a conservator; however,
she is not entitled to any payment for her services as a representative payee. In
Colorado, conservators may charge the estate of each protected person a reasonable
monthly fee for conservatorship services. Fees for each beneficiary may vary each
month, depending on the services provided. We do not have sufficient accounting information
to assess the reasonableness of Ms. P~’s fees for each beneficiary. However, it seems
doubtful a court would determine as reasonable monthly fees ranging from $500 to $850
dollars for a beneficiary without sufficient funds to cover her monthly housing expenses.
More importantly, Ms. P~’s use of any part of this beneficiary’s Social Security benefits
to pay conservatorship fees when the beneficiary has unmet personal needs constitutes
improper use of those benefits.
Background
You informed us that Ms. P~ simultaneously serves as representative payee and conservator
for five beneficiaries. In July 2010, the agency conducted a random payee review and
learned that Ms. P~ charges each beneficiary a monthly fee ranging from $500 to $850
for her conservatorship services, and that Ms. P~ does not have sufficient funds to
pay the mortgage and condominium association dues for one of the beneficiaries. (Allegedly,
Ms. P~s has initiated the process of filing for bankruptcy on behalf of this beneficiary.)
You did not provide information regarding the amount and type of assets owned by each
beneficiary, Ms. P~’s hourly rate, the specific amount she charged each beneficiary
for any period, or the nature and frequency of the conservatorship services she provides
each of them.
Discussion
Agency policy permits a conservator to act as a representative payee. See POMS GN 00502.105(C)(2), GN 00502.139(A)(1), (B)(1). While a conservator may not charge for services he or she provides
as a representative payee, see POMS GN 00602.110, part of a beneficiary’s Social Security benefits may be used for customary conservatorship
costs (or proceedings) and court ordered-fees, provided:
* the conservatorship appears to be in the beneficiary’s best interests,
* the beneficiary’s personal needs are met first, and
* the beneficiary’s funds would not be depleted by the conservatorship costs.
See POMS GN 00602.040(A). [1]
Colorado law allows conservators to charge a reasonable fee for their services. “If
not otherwise compensated for services rendered,” a conservator is entitled to reasonable
compensation from a protected person’s estate. Colo. Rev. Stat. Ann. § 15-14-417(1).
[2] Unless limited by court order or a “special conservatorship,” a conservator is entitled
to compensation without court order. Id. § 15-14-417(1). [3] If a court subsequently determines compensation is excessive, the conservator must
repay this amount to the estate. Id. In determining the reasonableness of any fee, the factors a court must consider include:
(a) The time and labor required, the novelty and difficulty of the questions involved,
and the skill requisite to perform the service properly;
(b) The likelihood, if apparent, that the acceptance of the particular employment
will preclude the person employed from other employment;
(c) The fee customarily charged in the locality for similar services;
(d) The amount involved and the results obtained;
(e) The time limitations imposed by the circumstances; and
(f) The experience, reputation, and ability of the person performing the services.
Id. § 15-14-417(2).
Here, the court appointed Ms. P~ to serve as either a conservator or successor conservator
with unrestricted duties and powers, and she thus does not require court order to
receive compensation. We do not have sufficient information to evaluate the above
factors for any of the beneficiaries. [4] Nonetheless, it seems doubtful a court would determine as reasonable monthly fees
ranging from $500 to $850 for the beneficiary who does not have sufficient funds to
cover her monthly mortgage and condominium association dues. More importantly, agency
policy precludes use of any part of this beneficiary’s Social Security benefits to
pay Ms. P~’s conservatorship fees for those months when her personal needs are not
met.
Agency policy allows use of part of a beneficiary's funds for guardianship or conservatorship
costs and fees, provided 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. Assuming a conservatorship is in this beneficiary’s best interest, of which we are
not certain, it appears that her personal needs (housing costs) were not met before
Ms. P~ received her conservatorship fee. In addition, it appears those fees possibly
depleted the beneficiary’s funds to the point that the mortgage and condominium association
dues were not paid. Therefore, if Ms. P~ used any part of this beneficiary’s Social
Security benefits to pay her conservatorship fees during months when the mortgage
and condominium association dues were not paid, the agency could find this was an
inappropriate use of benefits. See POMS GN 00602.040(A), (B).
CONCLUSION
In sum, Ms. P~ may serve simultaneously as a representative payee and a conservator
for a beneficiary, but she is only entitled to reasonable compensation for her conservatorship
services. Colorado law does not prohibit her from charging variable monthly conservatorship
fees, as long as they are commensurate with the services she provides. Although we
do not have sufficient information to determine the reasonableness of her fees for
each beneficiary, we question the reasonableness of fees ranging from $500 to $850
per month for a beneficiary without sufficient funds to cover her monthly housing
expenses. Moreover, agency policy precludes a conservator from receiving conservatorship
fees from a beneficiary’s Social Security benefits unless the individual’s personal
needs are met first, and the fees would not deplete the beneficiary’s funds. If Ms.
P~ used any part of this beneficiary’s Social Security benefits to pay her conservatorship
fees during months when she could not meet this beneficiary’s personal needs or the
fees depleted the beneficiary’s funds, the agency could find this was an inappropriate
use of benefits. It might be advisable to develop additional information by obtaining
the annual reports that Ms. P~s is required to submit to the court, and we would be
happy to review any additional information received.
John J. L~
Acting Regional Chief Counsel, Region VIII
By _______________________
Yvette G. K~
Assistant Regional Counsel