What can I do with my kid’s Social Security benefits?

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Q. When my wife passed away last year, I was able to get Social Security survivor benefits for my 15-year-old daughter. I qualified since I am 60. She will receive this until she graduates from high school in June 2019. This money is supposed to be used for her care as stipulated by Social Security. Can I get those funds direct deposited to my daughter’s 529 plan?
— Still working

A. We’re sorry to hear about your wife, and thank you for your question.

When a child is entitled to Social Security benefits, SSA will appoint a representative payee to receive benefits on behalf of the child, said Timothy Brunnock, a financial advisor and attorney with Trinity Financial Strategies in Morristown.

He said the representative payee collects the benefits and pays the child’s living expenses until the child turns 18, Brunnock said, noting the representative payee is usually the parent.

In your case, you would be the representative payee.

“You can either have the child’s Social Security checks deposited into your household account and you would use the funds to meet the child’s basic needs,” he said “Or, you might have the checks deposited into a special account for the child’s which is set aside for college, such as the college 529 savings account that you already have set up.”

Brunnock said either approach is acceptable.

However, he said, SSA wants to make sure that representative payees are using the money strictly for the beneficiary.

As such, SSA requires an annual accounting of how the funds were used.

“When the child turns 18, they sometimes send a letter stating that any unused funds must be turned over to the child, or perhaps even returned to SSA,” Brunnock said. “Parents who are simply taking care of their children and trying to do the right thing with the funds are sometimes caught off guard by these communications.”

Brunnock recommends you not worry too much.

Parents should comply with all requests for accounting of funds, but unless they are living it up while their kids go hungry, they have nothing to fear, Brunnock said.

He said parents who are serving as representative payees can have the child’s Social Security checks deposited into “a common checking account for all family members living in the same household” showing a parent or spouse as the owner of the account.

Children savings, however, must be kept in a separate savings account for each child, showing the child as the account owner, he said.

“Bottom line? It sounds like what you are doing is completely fine,” Brunnock said. “Just keep documentation showing that the funds were used for your daughter’s care, which could certainly include college costs.”

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