Negotiating U.S. Treasury Checks

Question:

What are our responsibilities on negotiating a US Treasury Check payable as follows: Ruby Winter for Jessica Summer The check will either state "Soc Sec for July" or "SSI for July". Can it be accepted for deposit into an individual account for Ruby, can Ruby cash it,or must it be deposited into an account styled exactly like the check is payable? Do we have any responsibility for ensuring the funds are used for the minor? It has become a customer service issue. For example, perhaps Jessica's father was killed, so she receives the SS benefit. Ruby uses the money to make the house payment, buy groceries, etc. and does not want to keep up with another account.

Answer:

If Ruby endorses the check with her signature, she can cash it or deposit it into an account in her name.Social Security provides a publication for Representative Payees

It clearly indicates the Representative Payee is not to commingle funds, should use the funds only for the benefit of the person entitled to the benefit, etc. However, neither the publication nor SSA regulations make a direct attempt to hold your institution liable if the funds are misused, even with your knowledge. (Some states have laws that specifically address misuse of fiduciary payments.)

If your institution is concerned that someone might try to hold you liable for the funds' apparent misuse, you could institute a policy that required opening a Representative Payee account; i.e., refuse to cash the checks or accept them for deposit to a different account . However, I do not know how you could effectively monitor the use to which the funds were put even then.

First published on BankersOnline.com 9/16/02