Social Security Clawback At Death

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Goodman60
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Social Security Clawback At Death

Post by Goodman60 »

NOTE: Now that I sort of figured this out, I edited this original post to just deal with the direct facts. The original post had stuff that I later learned has nothing to do with the situation.

My 86 year old father died on June 1st of this year. His May SS payment, paid to his account on June 3rd, was clawed back by the bank, to SS, on June 6th. I didn't understand, until a lot of investigation today, that he (my mother/his wife, actually) is entitled to this payment, because it was for the month BEFORE he died. I found out that Form 1724 is required and my mother will have to apply for this payment.

Bottom line is that if you die AFTER the end of the month but before payment is made for that month, you are entitled to keep that payment. But banks often claw it back to SS because they don't know for sure when you died. And the burden is on the deceased's representative to apply to get that payment back.
Last edited by Goodman60 on Fri Sep 03, 2021 3:50 pm, edited 6 times in total.
Soon2BXProgrammer
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Soon2BXProgrammer »

Does the death certificate say may 31st or june 1st?
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
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Goodman60
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Goodman60 »

Soon2BXProgrammer wrote: Fri Sep 03, 2021 12:35 pm Does the death certificate say may 31st or june 1st?
Clearly June 1st.
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Goodman60
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Goodman60 »

I might have the answer to my own question: It appears that SS automatically claws back the last check. The burden is on the deceased's representative to file Form 1724 to prove that the deceased lived the entire prior month.


https://maximizemysocialsecurity.com/wh ... nk-account
Chuckles960
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Chuckles960 »

There is some weird and nonsensical rule about the first of the month counting as being in the previous month:
https://www.aarp.org/retirement/social- ... yment.html :
There's an exception if you were born on the first day of the month. In this case, Social Security considers you to have attained full retirement age on the last day of the previous month. For example, if you were born July 1, 1955, you attain full retirement age on Aug. 31, 2021, and you would receive your first payment in September 2021.
Of course the above is about birth dates when starting benefits, but it could also apply to death dates, I am not sure.
Last edited by Chuckles960 on Fri Sep 03, 2021 12:50 pm, edited 1 time in total.
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Kenkat
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Kenkat »

Goodman60 wrote: Fri Sep 03, 2021 12:47 pm I might have the answer to my own question: It appears that SS automatically claws back the last check. The burden is on the deceased's representative to file Form 1724 to prove that the deceased lived the entire prior month.


https://maximizemysocialsecurity.com/wh ... nk-account
Looks like you did!
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Goodman60
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Goodman60 »

Kenkat wrote: Fri Sep 03, 2021 12:49 pm
Goodman60 wrote: Fri Sep 03, 2021 12:47 pm I might have the answer to my own question: It appears that SS automatically claws back the last check. The burden is on the deceased's representative to file Form 1724 to prove that the deceased lived the entire prior month.


https://maximizemysocialsecurity.com/wh ... nk-account
Looks like you did!
And yet Form 1724 doesn't seem to address the specific issue of a clawed back payment for someone who died after shortly after the end of a full month. So my original question still applies. What does mom do?

EDIT: I got through to a very nice/helpful representative at SS and she confirmed that form 1724 should be sent. She suggested adding a death certificate in case whoever works on the file has any questions as to when the death occurred.
Last edited by Goodman60 on Fri Sep 03, 2021 3:37 pm, edited 1 time in total.
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Kenkat
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Kenkat »

I’d fill out Form 1724 and send it in. Your father is entitled to the payment even though it was clawed back and your mom is a valid beneficiary / recipient for that payment.
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Goodman60
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Goodman60 »

Kenkat wrote: Fri Sep 03, 2021 1:03 pm I’d fill out Form 1724 and send it in. Your father is entitled to the payment even though it was clawed back and your mom is a valid beneficiary / recipient for that payment.
Yes, I now have confirmed exactly that.
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Re: Social Security Clawback At Death

Post by Alan S. »

I don't know when this procedure began, but obviously many survivors will not file the 1724 allowing SSA to retain unjustified clawbacks.

If funeral homes still report the bulk of deaths to SS, why can't they provide a copy of the death certificate with the report. That would clarify when a clawback is valid and when it isn't. Or perhaps the executor or surviving spouse could delay reporting the death for a month so that the clawback of the last check was actually correct.
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Goodman60
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Re: Social Security Clawback At Death

Post by Goodman60 »

Alan S. wrote: Fri Sep 03, 2021 8:55 pm I don't know when this procedure began, but obviously many survivors will not file the 1724 allowing SSA to retain unjustified clawbacks.

If funeral homes still report the bulk of deaths to SS, why can't they provide a copy of the death certificate with the report. That would clarify when a clawback is valid and when it isn't. Or perhaps the executor or surviving spouse could delay reporting the death for a month so that the clawback of the last check was actually correct.
The rep at SS today said that in dad’s case, the clawback was done by the bank after mom notified them that dad had died. And that banks often routinely send the final payment back to SS because most are not entitled to it. And for the few who are (dad’s estate, for instance), the burden is on them/us to apply for repayment. I’ll bet SS keeps millions this way. It’s not clear if all banks do this based on some SS regulation, but that was what we as implied. That the bank is liable to SS to return any final payment made after learning about a customer’s death.
pshonore
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Re: Social Security Clawback At Death

Post by pshonore »

Goodman60 wrote: Sat Sep 04, 2021 1:33 am
Alan S. wrote: Fri Sep 03, 2021 8:55 pm I don't know when this procedure began, but obviously many survivors will not file the 1724 allowing SSA to retain unjustified clawbacks.

If funeral homes still report the bulk of deaths to SS, why can't they provide a copy of the death certificate with the report. That would clarify when a clawback is valid and when it isn't. Or perhaps the executor or surviving spouse could delay reporting the death for a month so that the clawback of the last check was actually correct.
The rep at SS today said that in dad’s case, the clawback was done by the bank after mom notified them that dad had died. And that banks often routinely send the final payment back to SS because most are not entitled to it. And for the few who are (dad’s estate, for instance), the burden is on them/us to apply for repayment. I’ll bet SS keeps millions this way. It’s not clear if all banks do this based on some SS regulation, but that was what we as implied. That the bank is liable to SS to return any final payment made after learning about a customer’s death.
I'm confused - if a person dies in a given month, they or their estate is always entitled to any regular payment received during that same month because it represents the previous month's benefit as SS is paid in arrears. I don't buy the idea that the banks routinely return payments.
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Re: Social Security Clawback At Death and Widow's Benefit

Post by grabiner »

Chuckles960 wrote: Fri Sep 03, 2021 12:49 pm There is some weird and nonsensical rule about the first of the month counting as being in the previous month:
https://www.aarp.org/retirement/social- ... yment.html :
There's an exception if you were born on the first day of the month. In this case, Social Security considers you to have attained full retirement age on the last day of the previous month. For example, if you were born July 1, 1955, you attain full retirement age on Aug. 31, 2021, and you would receive your first payment in September 2021.
Of course the above is about birth dates when starting benefits, but it could also apply to death dates, I am not sure.
This is an unrelated issue. Under the common law, you are considered to have attained an age on the day before your birthday. There are many such examples in the tax code; for example, if your 65th birthday is on January 1, 2022, you can claim the increased standard deduction for being 65 in 2021. But it also applies in non-financial places. In Maryland, when I was registering voters for a November 6th election, the instructions said that anyone whose 18th birthday was on November 7 would be eligible to vote.
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Goodman60
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Re: Social Security Clawback At Death

Post by Goodman60 »

pshonore wrote: Sat Sep 04, 2021 7:55 am
Goodman60 wrote: Sat Sep 04, 2021 1:33 am
Alan S. wrote: Fri Sep 03, 2021 8:55 pm I don't know when this procedure began, but obviously many survivors will not file the 1724 allowing SSA to retain unjustified clawbacks.

If funeral homes still report the bulk of deaths to SS, why can't they provide a copy of the death certificate with the report. That would clarify when a clawback is valid and when it isn't. Or perhaps the executor or surviving spouse could delay reporting the death for a month so that the clawback of the last check was actually correct.
The rep at SS today said that in dad’s case, the clawback was done by the bank after mom notified them that dad had died. And that banks often routinely send the final payment back to SS because most are not entitled to it. And for the few who are (dad’s estate, for instance), the burden is on them/us to apply for repayment. I’ll bet SS keeps millions this way. It’s not clear if all banks do this based on some SS regulation, but that was what we as implied. That the bank is liable to SS to return any final payment made after learning about a customer’s death.
I'm confused - if a person dies in a given month, they or their estate is always entitled to any regular payment received during that same month because it represents the previous month's benefit as SS is paid in arrears. I don't buy the idea that the banks routinely return payments.
You could be right. In our case, I guess it doesn't matter. Dad's estate (mom) is entitled to that clawed back money and we'll have to apply and wait for processing, lost files, long phone holds etc etc to get it. Fortunately you only die once.
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Re: Social Security Clawback At Death and Widow's Benefit

Post by Big Dog »

Chuckles960 wrote: Fri Sep 03, 2021 12:49 pm There is some weird and nonsensical rule about the first of the month counting as being in the previous month:
https://www.aarp.org/retirement/social- ... yment.html :
There's an exception if you were born on the first day of the month. In this case, Social Security considers you to have attained full retirement age on the last day of the previous month. For example, if you were born July 1, 1955, you attain full retirement age on Aug. 31, 2021, and you would receive your first payment in September 2021.
Of course the above is about birth dates when starting benefits, but it could also apply to death dates, I am not sure.
For those born on the 1st, SS & Medicare benefits just start a month earlier. It ties into the IRS rule for those born on January 1, are considered the day prior, Dec 31 for age 65+ tax filings, for example.
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Goodman60
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Re: Social Security Clawback At Death

Post by Goodman60 »

Update: to our pleasant surprise, we submitted the suggested form, along with a death certificate, and quickly mom was paid in about 2 weeks. The clawback of the May payment, made in June, was incorrect and Social Security promptly corrected this error once we sent the form.
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