When a customer receiving automatic electronic social security payments dies, we know we need to return any payment received after the customer’s death. Does the same rule apply for representative payee accounts? Do we need to return any automatic social security payments made to the representative payee account after the account beneficiary dies?

Yes, social security benefits paid to a representative payee account on behalf of a beneficiary must be returned after the beneficiary’s death.

The regulations governing reclamation of federal benefit payments require banks to return all federal benefit payments received after learning of a beneficiary’s death, whether the payments are made directly to a beneficiary or representative payee. However, a bank will not be liable for post-death benefit payments sent to a representative payee on behalf of a beneficiary if the bank did not have actual or constructive knowledge of the death at the time the authorization for the payment was executed.

Representative payees are responsible for returning any payments intended to cover the month in which the beneficiary died, even if the beneficiary dies on the last day of the month. Social security benefits are paid in the month following the month for which they are due, so a payment intended to cover the month of December would not be paid until January. Thus, if a beneficiary died in the month of December, the payment received in January would have to be returned.

For resources related to our guidance, please see:

Social Security Administration, A Guide for Representative Payees (“When a person who receives Social Security benefits dies, no check is payable for the month of death, even if they die on the last day of the month. You must return any check received for the month the beneficiary died.”)

31 CFR 210.10(a) (“An RDFI shall be liable to the Federal Government for the total amount of all benefit payments received after the death or legal incapacity of a recipient or the death of a beneficiary unless the RDFI has the right to limit its liability under § 210.11 of this part. An RDFI shall return any benefit payments received after the RDFI becomes aware of the death or legal incapacity of a recipient or the death of a beneficiary, regardless of the manner in which the RDFI discovers such information.”)

31 CFR 210.10(c) (“An RDFI shall not be liable for post-death benefit payments sent to a recipient acting as a representative payee or fiduciary on behalf of a beneficiary, if the beneficiary was deceased at the time the authorization was executed and the RDFI did not have actual or constructive knowledge of the death of the beneficiary.”)

Social Security Administration, What You Need to Know When You Get Retirement or Survivors Benefits (“We pay Social Security benefits monthly. The benefits are paid in the month following the month for which they are due. For example, you would receive your July benefit in August.”)

Social Security Administration, What You Need to Know When You Get Retirement or Survivors Benefits (“Let us know if a person receiving Social Security benefits dies. We can’t pay benefits for the month of death. That means if the person died in July, the check received in August (which is payment for July) must be returned. If the payment is by direct deposit, notify the financial institution as soon as possible so it can return any payments received after death.”)