[Federal Register Volume 59, Number 19 (Friday, January 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1919]
[Federal Register: January 28, 1994]
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RAILROAD RETIREMENT BOARD
20 CFR Part 266
RIN 3220-AA83
Representative Payment
AGENCY: Railroad Retirement Board.
ACTION: Final rule.
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SUMMARY: The Railroad Retirement Board (Board) revises part 266 in
order to provide more detailed guidelines regarding the selection,
payment, responsibilities, and monitoring of representative payees. The
title of part 266 is also changed from ``Incompetence'' to
``Representative Payment'' which better describes the contents of part
266. These revisions are being made to improve the administration of
the Board's representative payee program.
EFFECTIVE DATE: January 28, 1994.
ADDRESSES: Secretary to the Board, Railroad Retirement Board, 844 Rush
Street, Chicago, Illinois 60611.
FOR FURTHER INFORMATION CONTACT: Thomas W. Sadler, Assistant General
Counsel, Railroad Retirement Board, 844 Rush Street, Chicago, Illinois
60611 (312) 751-4513; TDD (312) 751-4701.
SUPPLEMENTARY INFORMATION: The Railroad Retirement Act of 1974 (45
U.S.C. 231 et seq.) provides a system of retirement and disability
benefits for railroad employees, their spouses, children, and survivors
who meet certain eligibility requirements under that Act. Section 12 of
the Act (45 U.S.C. 231k) contains the same provisions as section 19 of
the Railroad Retirement Act of 1937, the predecessor of the present
Act, regarding the competence of an annuitant and the Board's authority
in cases where an annuitant is incompetent. Under these provisions, any
claimant or annuitant is presumed to be competent until the Board
receives written notice to the contrary. If a claimant or annuitant is
incompetent, the Board may make payments to, or conduct transactions
with, any legally appointed guardian on behalf of the claimant or
annuitant. Furthermore, section 12(a) expressly authorizes the Board to
make payments, or conduct transactions, directly with the claimant or
annuitant, or with any other person on his or her behalf, even though
he or she is an incompetent for whom a guardian is acting. The
provisions of section 12 are applicable to benefits claimed or paid
under any Act administered in whole or in part by the Board, including
any claim for or payment of social security benefits administered by
the Board pursuant to section 7(b)(2) of the Railroad Retirement Act
(45 U.S.C. 231f(b)(2)).
There has been growing concern in the Congress to assure that
surrogate decision making services, including representative-payee
services, are provided in a uniform, high quality manner which
maximizes the potential of every individual for self-reliance and
independence.
Since the Board is currently in the process of a comprehensive
review, revision, and amendment of its regulations, part 266 is revised
at this time to address concerns that adequate safeguards be provided
where payment of an annuity under the Railroad Retirement Act is made
to a representative payee rather than directly to the annuitant. Thus,
the revised part 266 expands, as well as revises, the present
regulation.
A brief summary of the disposition of the various section of the
present part 266 under the proposed regulation is set forth below.
The present Sec. 266.1 simply sets forth the statutory provisions
of section 12 of the Railroad Retirement Act (RRA) (45 U.S.C. 231k),
and because of this redundancy, is removed.
The present Sec. 266.2 has been incorporated into Sec. 266.1(b) of
the revised regulation. The new Sec. 266.1 sets forth an introduction,
consisting of an explanation of representative payment and the law and
policy used to determine whether to make representative payment.
The present Sec. 266.3 has been incorporated into Sec. 266.3(a) of
the revised regulation. The new Sec. 266.3 sets forth information which
the Board will consider in determining whether to make representative
payment.
The present Sec. 266.4 has been redesignated as Sec. 266.12. New
Sec. 266.4 sets forth what information the Board will use in selecting
a representative payee.
Paragraphs (a) and (b) of the present Sec. 266.5 have been
redesignated as Sec. 266.2, and the term ``beneficiary'' has been
removed and the term ``annuitant'' has been added in its place
throughout the new part 266. New Sec. 266.5 describes the order of
preference the Board will generally use in selecting representative
payees.
The present Sec. 266.6 has been incorporated into the new
Sec. 266.9(a). The new Sec. 266.9 sets forth general responsibilities
of a representative payee.
The present Secs. 266.7, 266.9, 266.10, and 266.11 have been
revised and incorporated into a single section, Sec. 266.10, which
details how a representative payee is to use benefit payments.
The present Sec. 266.8, ``Conservation and investment of benefit
payments,'' has been revised and incorporated into the new Sec. 266.11.
Sections Secs. 266.6, 266.7, and 266.8 are new. Section 266.6
provides that a representative payee applicant must provide the Board
with the information listed in Sec. 266.4 and will generally be
required to undergo a face-to-face interview with a field
representative of the Board.
Section Sec. 266.7 provides that the representative payee make an
accounting to the Board for the use of benefits he or she receives as
payee and sets forth what information will satisfy the requirement of
an accounting.
Section Sec. 266.8 provides that an annuitant may challenge the
appointment or selection of a representative payee. However, an
individual who requests to be made a representative payee for an
annuitant has no standing to challenge the Board's refusal to make the
appointment.
The present Sec. 266.12 has been revised and incorporated into the
new Sec. 266.7(c) described above. Section Sec. 266.12, as noted
earlier, is the redesignated Sec. 266.4.
The present Sec. 266.13 has been redesignated as the new
Sec. 266.15. Sections Secs. 266.13 and 266.14 are new. The former
section describes when the Board will terminate an individual's status
as a representative payee and appoint a new one. The latter section
describes what evidence an annuitant must provide to the Board to
terminate representative payments and thereby receive benefits
directly.
The Board published this regulation as a proposed rule on March 10,
1993 (58 FR 13225), requesting comments by April 9, 1993. A number of
comments were received.
One commenter suggested that a paragraph be added to Sec. 266.4
(Information considered in selecting a representative payee) to provide
that a creditor who provides goods and services to the annuitant should
not be able to serve as a representative payee unless such creditor is
a relative, legal guardian, or connected with a licensed or certified
care facility. The Board agrees with this comment and a new paragraph
(i) is added to Sec. 266.4 to reflect this proposal.
One commenter suggested that Sec. 266.6 be modified to require a
face-to-face interview with the payee-applicant rather than a
discretionary interview as was proposed in that section. In the Board's
experience a mandatory interview with the payee-applicant is not always
necessary. In many cases the payee-applicant is a court appointed legal
guardian or conservator or is a licensed care facility. However, the
Board will modify its internal procedures to provide that where the
payee-applicant is not interviewed, the Board employee responsible for
developing the application for representative payment shall document in
writing why no interview was done.
In the same vein, another commenter suggested that the regulation
provide for a mandatory interview with the annuitant when a payee is
proposed and that the Board seek suggestions from the annuitant as to
whom would make an appropriate payee. As in the case of payee-
applicant, the Board has found that a requirement to interview the
annuitant in each and every case where a representative-payee is
required is not necessary. In many cases, the reason for the
appointment of a representative payee is that the annuitant is no
longer sentient or capable of significant communication. Of course, in
these cases a requirement for an interview would serve no purpose.
Rather than adopt a mandatory requirement for an interview with the
annuitant, the Board is of the opinion that the better approach is the
one referred to above with respect to the payee-applicant interview;
namely, that the annuitant will be interviewed and his or her
recommendations sought whenever possible. Where the annuitant is not
interviewed, the Board employee responsible for developing the
application for representative-payee must document the basis for not
conducting the interview. The Board's internal operating procedures
will be modified to reflect this change.
A comment was also received with respect to Secs. 266.7 (b) and
(c). Under these sections where the representative payee fails to
provide the Board with an accounting of his or her expenditures or
fails to provide other information, the Board may suspend payment to
the payee and then the payments are held in trust by the Board until a
new representative payee is found or payments are reinstated to the
present payee. One commenter was concerned that the regulation did not
provide that if a new representative payee is not found, or payment to
the present representative payee reinstated, within 30 days, that
payments were not required to be made to the annuitant. The commenter
pointed out that such a provision is provided for in the Social
Security Act with respect to its representative payee program. See 42
U.S.C. 204(j)(2)(D). In the Board's experience the vast majority of
annuitants for whom representative payees are appointed are not
competent to handle their finances. When payment to a representative
payee is suspended pending appointment of a new payee, the Board seeks
to appoint a new payee with the utmost speed. However, this process may
take longer than 30 days because, as the commenter pointed out, there
is indeed a shortage of individuals willing to act as representative
payees. On the other hand, making payments to an individual who cannot
manage his or her own affairs would not be in the best interest of the
annuitant. Consequently, the Board has modified Sec. 266.7 by adding a
new paragraph (d) which provides that where payment to a representative
payee is suspended to appoint a new representative payee, such payment
must be reinstated within 30 days unless the annuitant is an
unemancipated minor under age 18, or is judged by the Board to be
incapable of handling his benefit payments, in which case the Board
will hold the payments in trust until a new representative payee is
appointed.
Finally, one commenter suggested that the Board seek legislative
authority to impose administrative penalties on representative payees
who misuse funds. The Board agrees that this suggestion has merit and
will take it under advisement.
The Board has determined that this is not a significant regulatory
action for purposes of Executive Order 12866; therefore, no regulatory
impact analysis is required. Information collection has been approved
by the Office of Management and Budget under control numbers 3220-0151
and 3220-0052.
A distribution table is provided to show the distribution of the
old part 266.
------------------------------------------------------------------------
Old section New section
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266.1....................................... Removed.
266.2....................................... 266.1(b).
266.3....................................... 266.3(a).
266.4....................................... 266.12.
266.5....................................... 266.2 and 266.5.
266.6....................................... 266.9(a).
266.7....................................... 266.10 (a) and (b).
266.8....................................... 266.11.
266.9....................................... 266.10(b).
266.10...................................... 266.10(c).
266.11...................................... 266.10(d).
266.12...................................... 266.7.
266.13...................................... 266.15.
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A derivation table is provided to show the sources of the revised
part 266.
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Old section New section
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266.1............................................... 266.2.
266.2............................................... 266.5.
266.3............................................... 266.3.
266.4............................................... none.
266.5............................................... 266.5.
266.6............................................... none.
266.7............................................... 266.12.
266.8............................................... none.
266.9............................................... 266.6.
266.10.............................................. 266.7, 266.9,
266.10, 266.11.
266.10.............................................. 266.8.
266.12.............................................. 266.4.
266.13.............................................. none.
266.14.............................................. none.
266.15.............................................. 266.13.
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List of Subjects in 20 CFR Part 266
Railroad employees, Railroad retirement.
For the reasons set out in the preamble, title 20, chapter II, Part
266, of the Code of Federal Regulations is revised as follows:
PART 266--REPRESENTATIVE PAYMENT
Sec.
266.1 Introduction.
266.2 Recognition by the Board of a person to act in behalf of
another.
266.3 Information considered in determining whether to make
representative payments.
266.4 Information considered in selecting a representative payee.
266.5 Order of preference in selecting a representative payee.
266.6 Information to be submitted by a representative payee
applicant; face-to-face interview.
266.7 Accountability of a representative payee.
266.8 Advance notice of the determination to make representative
payment.
266.9 Responsibilities of a representative payee.
266.10 Use of benefit payments.
266.11 Conservation and investment of benefit payments.
266.12 Effect of matters or actions submitted or taken by legal
guardian, etc.
266.13 When a new representative payee will be selected.
266.14 When representative payment will be stopped.
266.15 Transfer of accumulated benefit payments.
Authority: 45 U.S.C. 231k and 231f.
PART 266--REPRESENTATIVE PAYMENT
Sec. 266.1 Introduction.
(a) Explanation of representative payment. This part explains the
principles and procedures that the Board follows in determining whether
to make representative payment and in selecting a representative payee.
It also explains the responsibilities that a representative payee has
concerning the use of the funds which he or she receives on behalf of
an annuitant. A representative payee may be either a person or an
organization selected by the Board to receive benefits on behalf of an
annuitant. A representative payee will be selected if the Board
believes that the interest of an annuitant will be served by
representative payment rather than direct payment of benefits.
Generally, the Board will appoint a representative payee if it
determines that the annuitant is not able to manage or direct the
management of benefit payments in his or her interest.
(b) Statutory authority. Section 12 of the Railroad Retirement Act
provides that every annuitant and claimant shall be conclusively
presumed to have been competent until the date on which the Board
receives a notice in writing that a legal guardian or other person
legally vested with the care of the person or estate of an incompetent
or a minor has been appointed: Provided, however, That despite
receiving such notice, the Board may, if it finds the interests of such
annuitant or claimant to be served thereby, recognize actions by,
conduct transactions with, and make payments to such annuitant or
claimant.
(c) Policy used to determine whether to make representative
payment. (1) In accordance with section 12 of the Railroad Retirement
Act, the Board's policy is that every annuitant has the right to manage
his or her own benefits. However, some annuitants due to mental or
physical condition or due to their youth may be unable to do so. If the
Board determines that the interests of an annuitant would be better
served if benefit payments were certified to another person as
representative payee, the Board will appoint a representative payee in
accordance with the procedures set forth in this part. The Board may
appoint a representative payee even if the annuitant is a legally
competent individual. If the annuitant is a legally incompetent
individual, the Board may appoint the legal guardian or some other
person as a representative payee.
(2) If payment is being made directly to an annuitant and a
question arises concerning his or her ability to manage or direct the
management of benefit payments, the Board may, if the annuitant is 18
years old or older and has not been adjudged legally incompetent,
continue to pay the annuitant until the Board makes a determination
about his or her ability to manage or direct the management of benefit
payments and the selection of a representative payee.
Sec. 266.2 Recognition by the Board of a person to act in behalf of
another.
(a) Regardless of the receipt of written notice of the appointment
of a guardian or other person legally vested with the care of the
person or estate of an incompetent or a minor who is receiving or
claiming benefits or to whom any right or privilege is extended under
the law, the Board may, in its discretion, validly recognize actions by
and conduct transactions with others acting on behalf of the individual
found by the Board to be a minor or to be unable to manage his or her
affairs, if the Board finds such actions or transactions to be in the
best interest of such individual.
(b) In the absence of a written notice of the appointment of a
guardian or other person legally vested with the care of the person or
estate of an incompetent or minor, the Board shall, except where
special circumstances appear, recognize a person to act on behalf of an
individual under the following circumstances:
(1) When the individual has been adjudged mentally incompetent by a
court having jurisdiction to do so;
(2) When the individual has been committed to a mental institution
by a court having jurisdiction to do so;
(3) When the individual is an inmate of a mental institution;
(4) When the individual is less than 16 years of age; or
(5) When the individual is between 16 and 18 years of age and is in
the care of another person and does not have the capacity to act on his
or her own behalf.
Sec. 266.3 Information considered in determining whether to make
representative payments.
In determining whether to make representative payment, the Board
may consider the following information:
(a) Evidence of legal guardianship. Evidence of the appointment of
a legal guardian or other person legally vested with the care of the
person or estate of an incompetent or a minor shall be a certified copy
of the court's determination.
(b) Medical evidence. The Board may use medical evidence, when such
is available, to help determine whether an annuitant is capable of
managing or directing the management of benefit payments. For example,
a statement by a physician or other medical professional based upon his
or her recent examination of the annuitant and his or her knowledge of
the annuitant's present condition will be used in the Board's
determination, if it includes information concerning the nature of the
annuitant's illness, the annuitant's chances for recovery and the
opinion of the physician or other medical professional as to whether
the annuitant is able to manage or direct the management of benefit
payments.
(c) Other evidence. The Board may also consider statements of
relatives, friends, and other people in a position to know and observe
the annuitant, which contain information helpful to the Board in
deciding whether the annuitant is able to manage or direct the
management of benefit payments.
Sec. 266.4 Information considered in selecting a representative
payee.
In selecting a representative payee, the Board tries to select the
person, agency, organization or institution that will best serve the
interest of the annuitant. In making this selection, the Board may
consider such factors as the following:
(a) The relationship of the person to the annuitant, including the
type of relationship, e.g., family or legal guardianship; degree of
relationship, if the person is a family member; and the length of
association, if a non-family member;
(b) The amount of interest that the person shows in the annuitant,
including the contributions the person makes to the welfare of the
annuitant and the contacts and frequency of such contacts with the
annuitant;
(c) Any legal authority the person, agency, organization or
institution has to act on behalf of the annuitant;
(d) Whether the potential payee has custody of the annuitant;
(e) Whether the potential payee is in a position to know of and
look after the needs of the annuitant;
(f) Verification of the social security account number, name,
address, telephone number, place of employment, and main source of
income if applicable, accepted as part of any person's application for
designation as a representative payee, unless such person's
identification has already been established to the satisfaction of the
Board;
(g) Whether an applicant for designation as a representative payee
has ever been convicted of a felony or misdemeanor under the statutes
administered by the Board or the Social Security Act, or convicted of a
felony under any other Federal or State law; and
(h) Whether the services of such person as representative payee
have previously been terminated, suspended, or declined by the Board or
the Social Security Administration for:
(1) Misuse of the benefits of the annuitant for whom they were
intended;
(2) Failure to comply with any provision of or regulation under the
Railroad Retirement Act or the Social Security Act; or
(3) Failure to meet the requirements of this part.
(i) Whether the potential payee is a creditor of the annuitant. A
creditor who provides goods and services to the annuitant ordinarily
may not serve as a representative payee unless such appointment poses
no substantial conflict of interest and unless the creditor is:
(1) A relative who resides with the annuitant;
(2) A legal guardian or legal representative of the annuitant; or
(3) A licensed or certified care facility (or owner, administrator
or employee thereof) where there annuitant resides.
Sec. 266.5 Order of preference in selecting a representative payee.
As a guide in selecting a representative payee, categories of
preferred payees have been established. These preferences are flexible.
The primary concern of the Board is to select the payee who will best
serve the annuitant's interest. The preferences are:
(a) For annuitants 18 years old or older, the preference is:
(1) A legal guardian, spouse, or other relative who has custody of
the annuitant or who demonstrates strong concern for the personal
welfare of the annuitant;
(2) A friend who has custody of the annuitant or demonstrates
strong concern for the personal welfare of the annuitant;
(3) A public or nonprofit agency or institution having custody of
the annuitant;
(4) A private institution operated for profit and licensed under
State law, which has custody of the annuitant; and
(5) Persons other than those listed above who are qualified to
carry out the responsibilities of a representative payee and who are
able and willing to serve as a payee for an annuitant; e.g., members of
community groups or organizations who volunteer to serve as
representative payee for an annuitant.
(b) For annuitants under age 18, the preference is:
(1) A natural or adoptive parent who has custody of the annuitant,
or a legal guardian;
(2) A natural or adoptive parent who does not have custody of the
annuitant, but is contributing toward the annuitant's support and is
demonstrating strong concern for the annuitant's well-being;
(3) A relative or stepparent who has custody of the annuitant;
(4) A natural or adoptive parent who does not have custody of the
annuitant and is not contributing toward his or her support but is
demonstrating strong concern for the annuitant's well-being;
(5) A relative who does not have custody of the annuitant but is
contributing toward the annuitant's support and is demonstrating
concern for the annuitant's well-being;
(6) A relative or close friend who does not have custody of the
annuitant but is demonstrating concern for the annuitant's well-being;
and
(7) An authorized social agency or custodial institution.
Sec. 266.6 Information to be submitted by a representative payee-
applicant; face-to-face interview.
Before the Board selects a representative payee, the Board may
request the payee-applicant to provide information concerning the
factors listed in Sec. 266.4 of this part. An employee of the Board may
also conduct a face-to-face interview with the payee-applicant.
(Approved by the Office of Management and Budget under control
number 3220-0052.)
Sec. 266.7 Accountability of a representative payee.
(a) A representative payee is accountable for the use of benefits.
The Board will require periodic written reports from representative
payees. The Board may also, at the Board's option, verify how a
representative payee used benefit payments. A representative payee must
keep records of what was done with all benefit payments in order to
make accounting reports. The Board may ask the following questions:
(1) The amount of benefit payments on hand at the beginning of the
accounting period;
(2) How the benefit payments were used;
(3) How much of the benefit payments were saved and how the savings
were invested;
(4) Where the annuitant lived during the accounting period;
(5) The amount of the annuitant's income from other sources during
the accounting period. The Board may ask for information about other
funds to enable the Board to evaluate the use of benefit payments; and
(6) Whether the representative payee has been convicted of a felony
or misdemeanor offense under the statutes administered by the Board or
by the Social Security Administration within the past 15 years or
whether any such charges are pending.
(b) An individual to whom payments are certified as representative
payee on behalf of an annuitant shall submit a written report in such
form and at such times as the Board may require, accounting for the
payments certified to him or her on behalf of the annuitant. If,
however, such payee is a court-appointed fiduciary and, as such, is
required to make an annual accounting to the court, a true copy of each
such account filed with the court may be submitted in lieu of the
accounting form prescribed by the Board. If any representative payee
fails to submit the required accounting within a reasonable period of
time after it is requested, no further payments shall be made to him or
her on behalf of the annuitant unless for good cause shown, the default
of the representative payee is excused by the Board, and the required
accounting is thereafter submitted.
(c) At any time after the Board has selected a representative
payee, the Board may ask such payee to submit information showing a
continuing relationship to the annuitant and a continuing
responsibility for the care of the annuitant. If the representative
payee does not give the Board the requested information within a
reasonable period of time, the Board may stop paying such payee unless
the Board determines that the payee had a good reason for not complying
with the Board's request, and the Board receives the information
requested.
(Approved by the Office of Management and Budget under control
numbers 3220-0052 and 3220-0151.)
(d) Where, pursuant to paragraphs (b) or (c) of this section, the
Board suspends payments, such suspension shall not exceed a period of
30 days; thereafter, the payments will be made to the annuitant except
where the annuitant is an unemancipated minor under age 18 or where in
the Board's judgment the interests of the annuitant would not be served
by releasing payment to the annuitant.
Sec. 266.8 Advance notice of the determination to make representative
payment.
(a) As a general rule, whenever the Board intends to make
representative payment and to name a representative payee, the Board
will notify the annuitant or, in the case of an unemancipated minor
under age 18, or an individual who is legally incompetent, the
individual acting on his or her behalf of the Board's proposed actions.
Such notice will tell the person that the Board plans to name a
representative payee and who that payee will be. The notice will also
ask the person to contact the Board within 15 days of the date of the
notice if he or she objects to either proposed action. If he or she
objects to either proposed action, the objecting party may--
(1) Review the evidence upon which the proposed actions will be
based; and
(2) Submit any additional evidence regarding the proposed actions.
(b) If the objecting party objects to the proposed actions, the
Board will review its proposed determinations and consider any
additional information provided. The Board will then issue a decision
on whether to appoint a representative payee and who that payee will
be. If the objecting party is dissatisfied with either determination,
he or she may request a reconsideration under part 260 of this chapter.
(c) If the objecting party does not file a timely objection to the
proposed actions, the Board will issue a decision on whether to appoint
a representative payee and who that payee will be. If the objecting
party is dissatisfied with either determination, he or she may request
a reconsideration under part 260 of this chapter.
(d) A request for reconsideration or an appeal from a determination
under this section under part 260 of this chapter shall not prevent the
Board from making payments to a representative payee during the
pendency of such reconsideration or appeal.
(e) The Board's failure or refusal to select an individual as
representative payee or the Board's termination of representative payee
status with respect to an individual is not subject to a request for
reconsideration or an appeal under part 260 of this chapter by such
individual.
Sec. 266.9 Responsibilities of a representative payee.
(a) A representative payee shall, subject to review by the Board
and to such requirements as it may from time-to-time prescribe, apply
the payments made to him or her on behalf of the annuitant only for the
use and benefit of such annuitant, and in a manner and for purposes
which are in the annuitant's best interests.
(b) A representative payee shall notify the Board of any event that
will affect the amount of benefits the annuitant receives or the right
of the annuitant to receive benefits.
(c) A representative payee shall notify the Board of any change in
his or her circumstances that would affect performance of the payee
responsibilities.
Sec. 266.10 Use of benefit payments.
(a) Current maintenance. Payments made to an individual as
representative payee on behalf of an annuitant shall be considered as
having been applied for the use and benefit of the annuitant when they
are used for the annuitant's current maintenance. Current maintenance
includes costs incurred in obtaining food, shelter, clothing, medical
care, and personal comfort items.
Example: An aged annuitant is entitled to a monthly railroad
retirement benefit of $800. His son, who is his representative
payee, disburses his benefits in the following manner:
Rent and utilities
$500
Medical
50
Food
80
Clothing (coat)
90
Savings
60
Miscellaneous
20
The above expenditures would represent proper disbursements on
behalf of the annuitant.
(b) Institutional care. If an annuitant is receiving care in a
Federal, state, or private institution because of mental or physical
incapacity, current maintenance includes the customary charges made by
the institution in providing care and maintenance, as well as
expenditures for those items which will aid in the annuitant's recovery
or release from the institution or expenses for personal needs which
will improve the annuitant's conditions while in the institution.
(c) Support of legal dependents. If the current maintenance needs
of the annuitant are met, the representative payee may use part of the
payments for the support of the annuitant's legally dependent spouse,
child, and/or parent.
(d) Claims of creditors. Where a debt arose prior to the first
month for which benefits are certified to a representative payee, the
representative payee may satisfy such debt out of present benefit
payments only if the current and reasonably foreseeable needs of the
annuitant are met.
Example: A retroactive railroad retirement annuity check in the
amount of $2,100, representing benefits due for November 1989
through January 1990, was issued on behalf of the annuitant to the
annuitant's daughter, who is the representative payee. The check was
certified in February 1990. The nursing home, where the annuitant
resides, is owed money for maintenance expenses the annuitant
incurred prior to February 1990.
If the accrual is not required for the annuitant's current
maintenance and the annuitant had no foreseeable needs which would
require large disbursements, the expenditure of the accrual or part
thereof for the past due maintenance charges would be consistent with
the Board's guidelines.
Sec. 266.11 Conservation and investment of benefit payments.
(a) General. If benefit payments made to a representative payee are
not needed for the annuitant's current maintenance or reasonably
foreseeable needs or the support of legal dependents or to pay
creditors in accordance with Sec. 266.10, they shall be conserved or
invested on behalf of the annuitant. Such funds must be invested in
accordance with the rules applicable to investment of trust estates by
trustees. Any investment must show clearly that the representative
payee holds the property in trust for the annuitant.
(b) Preferred investments. Preferred investments for excess funds
are deposits in an interest or dividend paying account in a bank, trust
company, credit union, or savings and loan association which is insured
under either Federal or State law, direct obligations of the United
States Government or obligations for which both principal and interest
are guaranteed unconditionally by the United States Government. The
account must be in a form which shows clearly that the representative
payee has only a fiduciary, and not a personal, interest in the funds.
If the payee is the legally appointed guardian or fiduciary of the
annuitant, the account may be established to indicate this
relationship. If the payee is not the legally appointed guardian or
fiduciary, the accounts may be established as follows:
(1) For U.S. Savings Bonds--
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(Name of annuitant)
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(Social Security Number), for whom
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(Name of payee)
is representative payee for Railroad Retirement benefits;
(2) For interest or dividend paying accounts--
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(Name of annuitant) by
----------------------------------------------------------------------
(Name of payee), representative payee.
(c) Interest and dividend payments. The interest and dividends
which result from an investment are the property of the annuitant and
may not be considered to be the property of the representative payee.
(d) Prohibition against commingling. The representative payee shall
not commingle his or her personal funds with the representative
payments. A representative payee may consolidate and maintain an
annuitant's funds in an account with other annuitants if he or she
maintains a separate, accurate and complete accounting of each
annuitant's funds under his or her control.
Sec. 266.12 Effect of matters or actions submitted or taken by legal
guardian, etc.
All matters and actions in connection with an annuity submitted or
taken by the guardian or other person legally vested with the care of
the person or estate of an incompetent or a minor shall be considered
by the Board in the same manner and with the same effect as though such
matters or actions had been submitted or taken by the ward, if the ward
had capacity to act in his or her own behalf; Provided, however, That
the Board may, if it deems it necessary, require the guardian or other
person legally vested with the care of the person or estate of an
incompetent or a minor to submit a certified copy of an order from the
court of appointment authorizing some particular action which the
guardian or other person legally vested with the care of the person or
estate desires to take in connection with the application.
Sec. 266.13 When a new representative payee will be selected.
When the Board learns that the interests of the annuitant are not
served by continuing payment to the present representative payee or
that the present representative payee is no longer able to carry out
the payee responsibilities, the Board will undertake to find a new
representative payee. The Board will select a new representative payee
if the Board finds a preferred payee or if the present payee--
(a) Has not used the benefit payments on the annuitant's behalf in
accordance with the guidelines in this part;
(b) Has not carried out the other responsibilities described in
this part;
(c) Dies;
(d) No longer wishes to be representative payee;
(e) Is unable to manage the benefit payments; or
(f) Fails to cooperate, within a reasonable time, in providing
evidence, accounting, or other information which the Board requests.
Sec. 266.14 When representative payment will be stopped.
If an annuitant receiving representative payment shows the Board
that he or she is mentally and physically able to manage or direct the
management of benefit payments, the Board will make direct payment to
the annuitant. Information which the annuitant may give to the Board to
support his or her request for direct payment include the following:
(a) A physician's statement regarding the annuitant's condition, or
a statement by a medical officer of the institution where the annuitant
is or was confined, showing that the annuitant is able to manage or
direct the management of his or her funds;
(b) A certified copy of a court order restoring the annuitant's
rights in a case where an annuitant was adjudged legally incompetent;
or
(c) Other evidence which establishes the annuitant's ability to
manage or direct the management of benefits.
Sec. 266.15 Transfer of accumulated benefit payments.
A representative payee who has conserved or invested funds from
railroad retirement payments made to him or her on behalf of an
annuitant shall, upon direction of the Board, transfer any such funds
(including interest or dividends earned from investment of such funds)
to a successor representative payee appointed by the Board, or, at the
option of the Board, shall transfer such funds, including interest, to
the Board for payment to a successor payee or to the annuitant.
Dated: January 21, 1994.
By Authority of the Board.
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 94-1919 Filed 1-27-94; 8:45 am]
BILLING CODE 7905-01-P
