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.
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.
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.
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
Donna L. C~
Regional Chief Counsel
Assistant Regional Counsel