TN 1 (11-10)

PR 07245.007 Colorado

A. PR 11-013 Guardianship/Conservatorship Fees – REPLY

DATE: November 8, 2010

1. SYLLABUS

In Colorado, conservators may charge the estate of each protected person a reasonable monthly fee for conservatorship services. However, a conservator serving as a representative payee for a social security or supplemental security income beneficiary must use those benefits to meet the beneficiary’s current and reasonably foreseeable needs before using those funds to recover fees reasonably associated with conservatorship. Social Security 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. It would be an inappropriate use of benefits if a conservator serving as a representative payee used any part of a beneficiary’s Social Security benefits to pay conservatorship fees during months when the representative payee could not meet the beneficiary’s personal needs or the fees depleted the beneficiary’s funds.

2. OPINION

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


Footnotes:

[1]

The POMS require referral of cases to the regional chief counsel for review where Social Security benefits represent at least 50% of the estate, the conservatorship fees appear excessive in light of the beneficiary’s income and resources, and part of an individual’s Social Security benefits is used to pay any portion of conservatorship fees. See POMS GN 00602.040(A), (B). The agency should have no concerns about conservative fees paid from a beneficiary’s other assets. See Memorandum from Reg. Chief Counsel, Chicago, to Ass’t Reg. Comm.-MOS, Chicago, Minnesota—Fee for Power of Attorney (POA) Services Rendered by Representative Payee (Sept. 16, 2009) [hereinafter Memorandum, Minnesota—Fee for POA].

[2]

H.B. 1105, 67th Gen. Assem., Reg. Sess. (Co. 2010), would create a new part in the Colorado Probate Code concerning compensation of fiduciaries, lawyers, and third parties. The bill’s conforming amendments would affect how courts apply the standard of reasonableness and expand the list of factors courts must consider. On May 3, 2010, the Senate Committee on Judiciary postponed this bill indefinitely.

[3]

Although POMS GN 00602.040 refers to court-ordered fees, part of a beneficiary’s funds may be used to pay a conservator who is compensated without a court order. Cf. Memorandum, Minnesota—Fee for POA Services Rendered by Representative Payee (advising that Minnesota law and the facts supported payment of POA fees, which were not court-ordered, from a beneficiary’s Social Security benefits).

[4]

It might be advisable to develop such information, which could be done by obtaining the reports Ms. P~s is required to submit annually to the court. Colorado law requires a conservator to annually report to the court about the administration of the estate. Colo. Rev. Stat. Ann. § 15-14-420. These reports must include a list of the assets of the estate under the conservator’s control and must reflect the services provided to the protected person. Id.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/1507245007
PR 07245.007 - Colorado - 11/22/2010
Batch run: 11/24/2010
Rev:11/22/2010