Social Security Death Benefits
Social Security death benefits will terminate upon death, and sometimes upon marriage or divorce. When you setup monthly benefits via direct deposit in a bank account, make sure you understand the rules and regulations that the bank will follow in specific circumstances. For example, what will the bank do in specific situations that involve the events which will terminate Social Security benefits? The Social Security rules determine what types of events cause the termination of benefits.
1. What are the rules?
According to the Social Security rules, benefits terminate the month before the month of the occurrence of the terminating event. For example, if a beneficiary dies in the month of September, the benefits terminate in the month of August.
2. Benefits are Paid in Arrears
As you may know, Social Security benefits are paid in arrears. This means that the payment received in September is actually for the month of August. As such, the beneficiary is fully entitled to receive the payment deposited in the month of September. In the case of a beneficiary who dies in September, the check or direct deposit that may be received in October must be returned. In other words, funds received (in October) for the month of death (September) and later must be returned to Social Security.
3. Direct Deposit Made After Date of Death
However, a bank may have their own rules regarding a direct deposit for Social Security or similar benefits from any organization or the government. The bank may reverse a direct deposit made after the death of the beneficiary and return the funds to the sending organization, such as the U.S. Treasury whether the beneficiary is entitled to receive the payment or not. As in the example above, a beneficiary who dies in the month of September is entitled to receive the payment received in September since it is actually for the month of August. However, a bank is likely to return the payment to the sending organization, such as Social Security, since the direct deposit was made after the death of the beneficiary.
4. Contact the Social Security Office
A returned Social Security deposit made after the death of the beneficiary can cause a great deal of frustration and anxiety for family members. For example, a surviving spouse may be shocked when he or she discovers that a bank reversed a direct deposit for Social Security benefits made after the death of his or her loved one, even though, according to the Social Security rules, the family of the beneficiary was entitled to the deposit.
If the beneficiary was receiving Social Security benefits, any checks received via direct deposit after the date of death will need to be returned to the Social Security office.
The Bottom Line
Social Security death benefits will terminate upon death. If you recently lost a loved one, you will need to contact the Social Security office at 1-800-772-1213.
As described above, Social Security benefits are paid in arrears. This means that the payment received in the month of death is actually for the previous month. Even though the beneficiary is fully entitled to receive the payment deposited in the month of death, checks deposited after death will be returned.
If the beneficiary is entitled to the payment, Social Security will reissue a check after being contacted by the survivor.