Basic (09-06)

PR 07245.048 Texas

A. PR 04-016 Whether Representative Payees May Collect Guardianship Fees from Social Security and Supplemental Security Income Beneficiaries and Recipients in the State of Texas - REPLY

DATE: September 23, 2003


This opinion references whether Representative Payees may collect Guardianship Fees from Social Security and Supplemental Security Income beneficiaries in the State of Texas. The opinion settles an inquiry regarding whether Texas state law prohibits a representative payee from collecting guardianship fees and the limit placed on these fees for Title II and XVI Social Security benefits. In addition, it addresses that guardianship fees are not subject fee limitations as a organizational representative payee who has been authorized to collect such a fee under Section 205 (j)(4)(A)(i) and 1632 (a)(2)(D)(i). The opinion concluded that an appointed legal guardian is not prohibited under state law from charging guardianship fees. However, there is a statutory limit to such charges which is consistent with our policy for guardianship fees.


This revised memorandum responds to your request for our opinion on the question of whether Texas state law prohibits a representative payee that is also a court-appointed guardian from collecting guardianship fees from Title II or Title XVI Social Security Benefits. In addition, if Texas state law permits the collection of guardianship fees from Social Security payments, does Texas state law limit the amount of guardianship fees that may be collected for from individuals receiving Title II or Title XVI benefits? This memorandum replaces the earlier version. We conclude that Texas state law does not prohibit the collection of guardianship fees from Title II or Title XVI benefits. Although Texas state law ordinarily limits guardianship fees to five percent, state judges are permitted to award fees in excess of five percent if the court finds the amount to be unreasonably low considering the services rendered.

You requested this opinion to resolve a dispute between the Office of Inspector General (OIG) and the Harris County Guardianship Program (HCGP) regarding the appropriateness of collecting guardianship fees from SSA's beneficiaries' funds under Texas state law. HCGP (formerly Harris County Community Development - Guardianship) is a Harris County governmental entity that was established to provide guardianship and related services to indigent adults deemed incapacitated by one of Harris County's four probate courts.

In 1998, HCGP began collecting guardianship fees as a method of supplementing their program's income. An OIG audit revealed that HCGP reported that 88 of 571 beneficiaries were assessed guardianship fees of $127,710 between May 1, 2000 and April 30, 2001. OIG cites to the Texas Probate Code when asserting that guardianship fees are prohibited. See Texas Prob. Code Ann. § 665(h)(1). HCGP disagrees with OIG that the Probate Code prohibits collecting guardianship fees for these payments. HCGP denies that any limitations as to guardianship fees in the Probate Code apply to them. Rather, they argue that the Texas Administrative Code gives probate judges the authority to establish any reasonable fee without limitation. However, as will be seen, we believe that the Texas Probate Code controls.

As an introductory issue, we note that Federal law provides that qualified organizations may collect a fee for their service as representative payee for Social Security beneficiaries and Supplemental Security Income recipients. This includes any state or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities. See Social Security Act (the Act) §§ 205(j)(4)(B) and 1631(a)(2)(D), 42 U.S.C. §§ 405(j)(4)(B) and 1383(a)(2)(D). HCGP manages and monitors the beneficiaries' personal care, such as placement in a residential facility and appropriate medical treatment. HCGP employs approximately twenty-four caseworkers and three supervisors who also manage the financial affairs of the beneficiaries and make personal decisions including living arrangements, education, medical care, and social activities among others. Therefore, HCGP also appears to satisfy the requirements to serve as a fee for service organizational representative payee.

The Act expressly provides that a qualified organizational representative payee may collect from an individual a monthly fee for expenses, including overhead, incurred in providing services performed as representative payee. The fee is limited to the lesser of either ten percent of the monthly benefit or $25 per month._11 See Washington State Department of Social And Health Services, et al., v. Guardianship Estate Of Danny Keffeler, et al., 537 U.S. 371 n. 13 (2003). This limitation applies to organizational representative payees who act on a fee for service basis. It does not address organizational representative payees serving as court-appointed guardians. SSA has a practice of allowing use of Title II and Title XVI benefits for computation of guardianship fees in some circumstances, e.g., See POMS GN00602.40; GN 00506.210.

Under the Act, organizational payees who collect a fee for their service may not exceed the Federal limits under any circumstances. Consequently, fee for service organizational representative payees who exceed the federal limits in charging fees, are subject to civil and criminal penalties. See Social Security Act §§ 205(j)(4)(C), and 1631(a)(2)(D)(iii), 42 U.S.C. §§ 405(j)(4)(C) and 1383(a)(2)(iii).

However, your inquiry concerned assessment of fees by an appointed guardian who has not qualified under the fee for services provisions discussed above, but under state probate law.

As part of your inquiry, you requested our opinion on the issue of whether Texas state law permits guardianship fees to be assessed against Social Security benefits. The language of the Texas statute is arguably ambiguous by stating that, gross income "does not include Department of Veterans Affairs or Social Security benefits received by a ward." We believe that Texas law does not prohibit the collection of guardianship fees from Social Security payments. See Texas Probate Code Ann. § 665(h)(1). This provision of the Probate Code merely prohibits collection of guardianship fees, or the counting of Social Security income for that purpose, when Social Security payments are given directly to the ward rather than indirectly through a guardian.

We interpret the above-cited statute to prohibit a guardian from assessing fees for income paid directly to the ward when the guardian had no control or responsibility for that portion of the ward's income. Thus, a guardian is unable to include Social Security payments that are made directly to the ward as part of the ward's gross income. By excluding this income from the guardianship, the guardian cannot increase his fees based on income that did not pass through his care or control. Tharp v. Blackwell, 570 S.W.2d 154 (Tex.Civ.App.-Texarkana Jul 31, 1978) (no. 8511)._11

Texas Probate Code § 665(a) governs the fees a guardian may charge in Texas. However, HCGP maintains that there is no limitation with respect to the fees they may charge for providing guardianship services, as long as the fees were approved by a Texas judge. HCGP maintains that their authority to charge fees is derived solely from the Administrative Code which contains no express fee limitations. However, that interpretation is fundamentally at odds with Texas state law on statutory interpretation which provides that statutes relating to the same class of things or purpose are to be construed together. State of Texas v. William Owen Juvrud, 96 S.W.3d 550, 557 - 558 (Tex.App.-El Paso Nov 07, 2002) (No. 08-02-00064-CR). The Texas Probate Code specifically provides for the appointment of guardians and the fees they may charge. The Texas Administrative Code allows "a guardianship" to charge to clients, but requires that any fees charged to an incapacitated person's funds must receive prior approval from the judge having jurisdiction over the guardianship. See Texas Admin Code Ann. § 381.323. This is plainly a more general rovision. Consequently, the specific provisions of the Texas Probate Code on guardianship fees prevail over other general statutes. Although the Texas state Probate Code provisions govern the award of guardianship fees, HCGP is correct when they maintain that a state judge has the authority to depart from the ordinary fee limitation.

The Texas Probate Code provides that the court may set fees "not to exceed five percent" of the ward's gross income. This represents the maximum fee ordinarily permitted for guardians under Texas law. The fee is granted only after the court finds the guardian has properly taken care of and managed the ward's estate. See Texas Prob. Code Ann. § 665(b).

In very rare circumstances, the Texas Probate Code § 665(c) permits an interested person to seek an exception to the maximum fee if the court finds that the amount is unreasonably low when considering the services rendered as guardian. Therefore, Texas state law governs the fees that a representative payee that performs guardianship services may charge for its services as a guardian.

In conclusion, as an appointed guardian HCGP is not prohibited under state law from charging guardianship fees. However, there is a statutory limit to such charges. You may wish to undertake additional development to determine if the fees were within the limits established by the Probate Code and/or whether HCGP obtained the requisite findings to exceed the statutory maximum fees.

Tina M. W~
Acting Regional Chief Counsel, Region

By _______________________
William W. N~
Assistant Regional Counsel

_11The provision establishing a $25.00 limit also indicates that the Commissioner will raise the amount annually in the same manner and to the same extent as adjustments are made for other payable social security benefits. See Social Security Act § 205(j)(4)(A)(I)(II), 42 U.S.C. § 405 (j)(4)(A)(I)(II).

_22Certain civil procedure provisions of this case have been superseded by statute. Nevertheless, the dicta in Tharp illustrates the Texas common law understanding of how Social Security benefits are treated for purposes of calculating guardianship fees. Tharp v. Blackwell, 570 S.W.2d 154, 160 - 161 (Tex.Civ.App.-Texarkana Jul 31, 1978) (no. 8511).

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PR 07245.048 - Texas - 09/15/2006
Batch run: 04/25/2016