Alternatives to
Legal and Financial Support

What they are called and when to use them

By Pam Privette

T he following represent terms and types of various relationships and tools that can be used to assist you in helping yourself or others manage their finances. This can be done before a problem occurs, or after. The goal is to know what your choices are.

Representative Payee – This position is assigned by an agency (such as the SSA, VA, OPM, etc.), to an individual or agency, for a person receiving financial benefits from that agency. It can be voluntary or court ordered. There is usually a cap on the fee that can be charged for this role. Most agencies do not recognize the Power of Attorney as an automatic assigning of the Rep Payee function. Appropriate papers must be filed with the agency.

Protective Payee – This position is assigned to an individual or agency for the administration of another person’s funds and is either voluntary or court ordered. A non-interested person is becoming the payee to “protect” another. This role is usually designated after there has been some financial exploitation or abuse, OR can be set up to prevent problems occurring from such situations as dementia, medication changes, etc. The person may be receiving several sources of income such as pension, interest payments, Social Security, settlement funds, etc.

When are Representative Payees and Protective
Payees Utilized?

These types of payees are used in relation to a person’s financial affairs, and are the least restrictive methods to managing a person’s affairs. They do however, carry some degree of agency oversight and accountability. On the flip side, they offer little legal muscle when problems occur due to their limited scope.

Power of Attorney – “Power of Attorney”, “Agent” or “Attorney-in-Fact” are terms used to designate another individual to help a person make decisions for them at times and in situations when they are not capable or able. Family members are usually assigned this role out of their familiarity with the person creating the Power of Attorney (Principal). However, when that is not a viable option, a professional, friend, or other person, can be designated.

Also an “alternate” is usually specified if the primary agent is unable to act.

There are basically four types of POA’s
(Power of Attorney) –

• General • Durable • Springing • Special or Limited

Powers of Attorney are considered the most common and lesser restrictive methods of managing a person’s affairs. Unfortunately, these documents are often fraught with interpretation and “scope of duties” ambiguity. Drafting this document by an attorney is highly recommended.

Guardianship – A guardianship is a court appointment between an “incapacitated person” and a “guardian”. The guardian may be family, friend, or a professional guardian. A Petition is filed, and after a court process, using a Guardian Ad Litem (investigator to assist the court’s interest and diligence), an investigation of people and events, as well as a physician’s evaluation, the judge may find the person is in need of a guardian, and that less restrictive alternatives are not a viable option. The court will have continual oversight of a guardianship. The guardianship may be of the estate (managing the financial affairs) or of the person (managing the health, housing and environment). The guardian makes decisions as if the incapacitated person had “capacity.” The guardianship may cover both areas, one or the other, be limited in scope, or be only for a particular time period.

Blocked Accounts – this protection can be required within several of the above capacities. A blocked account is one in which access is “blocked” to the asset (money, stocks, property). All remaining assets outside of the blockage remain available.

Bond – This is like “insurance” for the benefit of the person who has access to the assets of a person, and as recourse by the person whose assets are being accessed. A bond is usually set based on the amount of access the person will have usage of on behalf of another.

This article was not intended to take the place of legal advice. It was written by Pam Privette, a Professional Guardian, Private Investigator and 30+ years Accountant. She can be reached at 360-866-1063 or jpprivette@earthlink.net.

The opinions offered in this article are for your consideration only. To further explore this topic, the publisher encourages you to contact trusted professionals.

.....Back