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State Foster Agencies Taking Children’s Benefits

We have written in the past about Social Security Benefits, specifically Survivor’s Benefits, and how they play a role in adoption of the minor receiving those benefits. What the author did not realize is that, in the case where the child is in foster care, many state welfare agencies seemingly apply for, receive, and take those benefits from the children, without any notice.

Among those benefits taken are survivor’s benefits, where the child is entitled to SSA benefits because their parent’s have passed away. These benefits are the child’s property. It seems that the funds that are received from SSA by the payee welfare agency are utilized to pay for supporting the child—room, board, and other services for the child. Alaska is facing a class action suit over the practice, a case that might be in appellate review.

Los Angeles County has decided to be proactive in the cause. They recently enacted a rule to ensure that the SSA benefits are kept safe in an interest-bearing account until the child ages out of social services, wherein the account will be transferred to the child that is leaving. Maryland is the only state that has a similar law protecting the SSA benefits for children in foster care. However, Congress is also contemplating a similar bill that seeks to ensure that these benefits make it into an account for the benefit of the child.

It is not illegal for these agencies to apply to be the child’s financial representative; to receive the benefits and use those benefits for the child’s “best interests.” (It reads almost like a fiduciary duty.) But in some of these cases, it is alleged that the child is never notified that the benefit has been applied for and taken by the agency. It will be interesting to see where the case in Alaska will go, and if Congress is willing to enact law to seek a more robust accounting for how these benefits are to be used or protected.