The Social Security Administration and state guardianship courts should have a process for sharing information about misuse of funds. Confusing the appointment of a payee with the appointment of a guardian is a common mistake. They are two completely different processes without any connection or influence on each other.

If the Social Security Administration finds someone cannot manage their own benefits, it will appoint a representative payee to receive that person’s benefits and pay the person’s bills. The Social Security Administration can appoint a guardian to serve as a payee, but it is not required to do so.

The lack of coordination between the two systems can lead to increased misuse of funds. For example, the Social Security Administration does not have a process for informing a court if it removes a payee for misuse of funds, even if the payee is also the beneficiary’s court-appointed guardian. Nor is there a procedure for courts to inform Social Security that they have sanctioned or removed a guardian for exploiting a person’s finances. So, a fraudulent payee could continue in the role of guardian or a fraudulent guardian could continue as payee.

In 2010, the U.S. Government Accountability Office released Guardianships: Cases of Financial Exploitation, Neglect, and Abuse of Seniors. The report reviewed instances of both guardians and representative payees misusing funds. It concluded that without a systematic means for sharing information between state guardianship courts and the representative payee program, many people who have a guardian and receive their benefits via a payee are at risk of financial exploitation. Discussions continue to try to address this problem.