QUESTION You asked whether a life estate interest, which the SSI recipient’s mother devised
to him and his three siblings through her last will and testament, would constitute
a countable resource for SSI purposes.
OPINION
We believe the SSI recipient’s life estate interest should not be considered a countable
resource for SSI purposes because the will lawfully prohibited the SSI recipient from
selling his life estate interest while he and his siblings are alive.
BACKGROUND
Michael L~ (Recipient) currently receives SSI. Recipient’s mother, Carolyn L~ (“Testator”),
published her last will and testament on March 6, 2009. Testator died on April 4,
2009. Testator’s will was probated on September 4, 2009. Item IV of the will states
that Testator gifted, devised, and bequeathed to each of her four children, including
Recipient, a one-fourth “life estate interest” in her 58-acre farm. However, the will
provides that the transfer of realty interest to her children is subject to the condition
that the realty is never to be sold while any of her four children are alive. Item
IV of the will also provides that upon the death of each of her children, that child’s
undivided one-fourth interest shall pass to his or her children or, if no children,
to his or her intestate heirs, in fee; the child’s heirs are to share and share alike.
Item IV of the will states that, after the death of all of Testator’s children, the
realty can be sold “be [sic] the heirs of my children.” Item IV of the will further
provides that for the first five growing years after her death, Testator authorized
Roy J. T~ and Charlie F~ to lease the farm for farming purposes upon the payment of
$500.00 to her estate annually and on the condition that they maintain the farm and
its improvements.
DISCUSSION
Under the Social Security Act (Act), a disabled individual may receive SSI benefits
if his or her income and resources do not exceed certain annual limits. See Act § 1611(a); 20 C.F.R. § 416.202(c), (d) (2009). The Act does not define “resources”
and provides only a list of certain items excluded in determining the resources of
an individual. See Act § 1613(a). Governing regulations provide that resources include “any real or
personal property interest that an individual . . . owns and could convert to cash
to be used for his or her support and maintenance.” 20 C.F.R. § 416.1201(a) (2009).
“If the individual has the right, authority or power to liquidate the property, or
his or her share of the property, it is considered a resource.” 20 C.F.R. § 416.1201(a)(1).
The regulations also define liquid and non-liquid resources. See 20 C.F.R. § 416.1201(b), (c). Included among “resources” are nonliquid resources,
“defined as property which is not cash and which cannot be converted to cash within
20 days. . . . Examples of resources that are ordinarily nonliquid are . . . buildings
and land.” 20 C.F.R. § 416.1201(c)(1); see also Program Operations Manual System (POMS) SI 01110.310 (Resources Assumed to be Nonliquid).
Unless the will establishing a life estate restricts the life estate owner’s rights,
the owner has the right to use or sell his or her life estate interest. POMS SI 01110.515.B.1.a. We refer to state law to determine the interest Recipient holds in the property
in question. See Cannuni v. Schweiker, 740 F.2d 260, 264 (3d Cir. 1984) (discussing significance of ownership interest in
property and variance in state laws with respect to ownership). Under Kentucky law,
if an estate is given by will to a person for life and then to his or her children,
and if no children, to his or her heirs, the estate is construed as an estate for
life. See Ky. Rev. Stat. Ann. § 381.090 (Thomas R~ 2010); see also Curtsinger v. Curtsinger, No. 2001-CA-001078-MR, 2003 WL 22059785, at *1 (Ky. Ct. App. Sept. 5, 2003) (where
will provided for remaindermen to take the property and where the power to dispose
of the property was limited, the estate created was not a fee).
Item IV of the will here states that Recipient and his siblings each received a one-fourth
“life estate interest” in Testator’s 58-acre farm. This provision further states that
Recipient’s remainder should go to his children or if no children to his intestate
heirs, in fee. Lastly, this will provision also prohibits sale of the farm until after
Recipient and his siblings have died. All of this language indicates Recipient and
his siblings hold a life estate as joint tenants.
Because Recipient has a life estate interest, the restraint on Recipient’s ability
to sell the property while he and his siblings are alive is valid. See Curtsinger, 2003 WL 22059785, at *1 (will provision that the land was not to be sold for 50 years
was deemed valid); see also Atkinson v. Kish, 420 S.W.2d 104, 109 (Ky. Ct. App. 1967) (“‘It is settled in Kentucky that a restraint
prohibiting voluntary alienation of a legal life estate for the entire duration of
the estate is valid’”) (quoting Dukeminier, Perpetuities Law in Action, Kentucky Case Law and the 1960 Reform Act, p. 119)). Because
Applicant does not have the power to sell the farm while he or his siblings are alive,
the property is not a resource to recipient for SSI purposes. See 20 C.F.R. § 416.1201(a)(1); POMS SI 01110.100.B.1 (noting that for real property to be considered a resource, the individual must
have the right, authority, or power to convert the property to cash); POMS SI 01110.100.B.3 (providing that an individual who has an ownership interest in property but who
is not legally able to transfer that interest to anyone else does not have a resource).
CONCLUSION
For the foregoing reasons, we conclude Recipient is a joint tenant who does not have
the power to sell his life estate interest in the farm. Consequently, the farm is
not a resource to Recipient for SSI purposes.
Mary A. S~
Regional Chief Counsel
By _______________
Arthurice T. B~
Assistant Regional Counsel