SS Representative Payee Change

There is no official guidance on what your customer should do in this circumstance and the options depend in large part on the previous representative payee's willingness to cooperate. Assuming you have verified the the new representative payee's authority, she should open a new, properly titled account. The previous representative payee should close the first account by writing a check for the balance. The check should be payable to the new representive payee and reflect the fiduciary relationship. It should be deposited in the new account. If the previous representative payee refuses to cooperate, you are not involved; you are not empowered to take the funds from the original account or transfer them to the new account.

In the minds of people specializing in work avoidance, the preferred option would probably be just file maintenancing the account to add the new represntative payee and remove the old. Nevertheless, my preference on accounts subject to check is always "Close account A and open account B."

First, as noted above, you would still need the first representative payee's permission to revise signature authority. Second, even after consolidation, the previous representative payee may still have checks or there may have been an outstanding check. Modern check handling process makes it likely that your bank would pay that item even though your records indicate that person is no longer authorized to sign on the account.

Distinguish this situation from one where the fiduciary is court appointed and the relationship is under court supervision. There would be no pressing need to close the first account in that circumstance, as the decdent's or guardianship estate is the customer and the changing of a fiduciary pursuant to a court order has no material effect on who your customer is.

First published on BankersOnline.com 3/15/10