This is in response to your request for an opinion regarding whether minors may own
property in the five states and one district in our region and, if so, regarding any
specific requirements on how the property must be titled. This issue has previously
been addressed by our region in a November 1992 memorandum. See Memorandum from Elinor Stoddard, Assistant Regional Counsel, Office of the General
Counsel, Region III, to Larry Massanari, Regional Commissioner, Social Security Administration,
State Laws Regarding the Titling of Property in the Name of a Minor or Incompetent.
In response to your request, we rely mainly on our prior memorandum. This prior memorandum
did not address the issue of any titling requirements within our jurisdictions, but
we have found no authority specifically regarding either "restrictions as to the age
of the minor or the types of property that can be held" or "how the property should/must
be titled to show the minor as the titleholder" in any of our jurisdictions.
This memorandum should serve as an addendum to our November 1992 memorandum, as it
provides further support for our position that a minor may hold title to property
in Pennsylvania, Delaware, the District of Columbia, Virginia, and West Virginia and
may hold title to property in Maryland, unless he has a guardian. Since we have determined
that a minor may hold title to property in all of our jurisdictions, there is no need
to address the fourth question concerning the preferred method of titling property
if a minor cannot hold title to property.
Uniform Transfers to Minors Act
Each of the states and the district in our region has a Uniform Transfers to Minors
Act (UTMA), which provides a mechanism for transferring property to a minor by will,
trust, gift, or payment of debt. 20 Pa. Cons. Star. Ann. §§ 5301(b), 5304-5306 (West
1998); Del. Code Ann. tit. 12, §§ 4504-4506 (1997); D.C. Code Ann. §§ 20-305 to -307
(1998); Va. Code Ann. §§ 31-40 to -42 (Michie 1998); W. Va. Code §§ 36-7-4 to -6 (1998);
Md. Code Ann., Est. & Trusts §§ 13-304 to -306 (1998). Although the UTMA does not
directly address the issue of whether a minor may acquire property with retroactive
benefit checks, it provides further support for the common law proposition that miners
may hold title to property. When property is transferred in accordance with the UTMA,
the custodial property is indefeasibly vested in the minor, but the custodian retains
the authority to take control of, register and record title to, collect, hold, manage,
invest, and reinvest the property. Pa. Cons. Star. Ann. §§ 5311(b), 5312(a) (West
1998); Del. Code Ann. tit. 12, §§ 4511(b), 4512(a) (1998); D.C. Code Ann. §§ 21-311(b),
-312 (1998); Va. Code Ann. §§ 31-47 to -48 (Michie 1998); W. Va. Code §§ 36-7-11(b),
-13 (1998); Md. Code Ann., Est. & Trusts §§ 13-311(b), -312 (1998). Under the UTMA
in each of our jurisdictions, a minor may hold title to property that is received
by gift, will, trust, or payment of debt, and none of our jurisdictions have authority
indicating that miners have lesser rights with respect to property acquired through
purchase or other conveyance. The UTMA in the District of Columbia and Virginia defines
"minor" as an individual under the age of eighteen, while the UTMA in the remaining
jurisdictions, Pennsylvania, Delaware, West Virginia, and Maryland, defines "minor"
as an individual under the age of twenty-one. D.C. Code Ann. § 20-301 (1998); Va.
Code Ann. § 31-37 (Michie 1998); Pa. Cons. Star. Ann. § 5301(b) (West 1998); Del.
Code Ann. tit. 12, § 4501(11) (1998); W. Va. Code § 36-7-1 (1998); Md. Code Ann.,
Est. & Trusts § 13-301(k) (1998).
District of Columbia
The District of Columbia Code provides that a personal representative may distribute
estate assets to a minor without the need for assistance of the court if the underlying
will so provides. D.C. Code Ann. § 20-1106 (1998). If the will does not contain terms
specifying how the property is to be distributed or if the deceased has died intestate,
the personal representative may distribute property to the minor's guardian or custodian
or may distribute property to the minor with the assistance of the court. Id. Although this provision regarding the distribution of estate assets does not directly
address the issue of whether a minor may acquire property, it does indicate that a
minor may hold property and, as previously stated, controlling law does not indicate
that property purchased should be treated differently than property inherited or received
as a gift.
District of Columbia case law provides further support for the proposition that a
minor may hold property. In Bonner v. Morgan, 126 F.2d 121, 122 (D.C. Cir. 1941), the Court of Appeals for the District of Columbia
noted that the protection of a minor's property rights necessitates the rule that
a minor cannot be held liable on his personal contracts or on contracts for the disposition
of his property. In addition, the Court of Appeals for the District of Columbia has
decided cases involving the purchase of personal or real property by a minor without
commenting on the general ability of a minor to hold or acquire property. See Hurwitz v. Barr, 193 A.2d 360 (D.C. 1963); see also Murphy v. Holcer, 57 F.2d 431 (D.C. 1932). It appears, therefore, that minors have the right to hold
title to property, but that the sale or transfer of such property is subject to approval
by the court, as explained in our previous memorandum. See State Laws Regarding the Titling of Property in the Name of a Minor or Incompetent
at 4.
CONCLUSION
For the above reasons, in addition to the reasons outlined in our November 1992 memorandum,
we believe that a minor may own and acquire property in Pennsylvania, Delaware, Maryland,
Virginia, West Virginia, and the District of Columbia.
Attachment
SOCIAL SECURITY
DATE: November 25, 1992 TITLE: State Laws Regarding the Titling of Property in the
Name of a Minor or Incompetent AUTHOR: Hardnett, Charlotte; Newman, James C.; Stoddard,
Elinor AUTHOR—POSITION: Acting Chief Counsel; Division Chief, Program Review; Assistant
AUTHOR—POSITION: Regional Counsel RGNDIV: R3 ADDRESSEE AND POSITION: Massanari, Larry
G.; Regional Commissioner ADDRESSEE—LOCATION (Region/Div): SSA
TEXT
This is in response to your memorandum in which you ask whether property in Region
III states can be titled in the name of a minor or an incompetent. You asked this
question in the context of evidencing a Supplemental Security Income (SSI) beneficiary's
ownership in property that representative payees purchase as a conservation or investment
of SSI benefits.
In brief, our survey reveals that only Pennsylvania clearly allows minors and incompetents
to hold title to real and personal property. We believe that District of Columbia
law places title in minors and, unless they have conservators, incompetents as well.
Delaware law strongly indicates that both minors and incompetents can have title to
property. Among the remaining states, minors may have title in Virginia and West Virginia,
and lose title in Maryland if they are under guardianship. In those same states, incompetents
retain title in Virginia, may retain title in West Virginia, and lose title in Maryland
if they are under guardianship.
BACKGROUND
According to Corpus Juris Secundum (C.J.S.), minors generally can have title to real
and personal property, and "insane" persons retain title to their real and personal
property. In researching the states in Region III, however, other than in Pennsylvania,
we can find no specific authority answering the question of whether title can rest
with a m/nor or incompetent. In these states one must rely on statutes and cases governing
the relation between guardian and minor or incompetent, or on statutes in other areas
of the law. Where the law is unclear, C.J.S. assertions may indicate that these states
would allow minors and/or incompetents to hold title to real and personal property.
C.J.S., however, merely describes its general findings among the states. It in no
way controls the law of any state.
DISCUSSION
IV. District of Columbia: A. Minors District of Columbia Statutes and Case Law Indicate
That Minors Can Hold Title to Real and Personal Property.
District of Columbia statutes relating to your question appear upon initial reading
to be contradictory. First, several "Guardianship of Infants" provisions imply that,
absent action by a court, a minor could not execute a contract to buy real or personal
property or sell and pass title to real or personal property. One statute discusses
the infant's being merely "entitled" to real or personal estate subject to liens or
executory contracts. D.C. Code Ann. Secs. 21-144, 145. (1989). Court decrees concerning
liens and executory contracts have effect "as if the infant were of full age." D.C.
Code Ann. Sec. 21-144 (emphasis added). Regarding the sale of the minor's real estate,
"the court may confirm the contract and order a deed to be executed . . Sales and
deeds made in pursuance of the order are sufficient in law to transfer the estate
and interest of the infant in the real estate." D.C. Code Ann. Sec. 21-146. Finally,
section 21-154 states "(a) sale of property of an infant is not effectual to pass
title to the property sold until it is reported to and ratified by a court." D.C.
Code Ann. Sec. 21-154.
One provision of the "Building Restrictions and Regulations", however, refers to a
minor, who has no guardian, having title to real property. D.C. Code Ann. Sec. 5-709
(1958). C.J.S.'s coverage of "Infants" may answer this apparent inconsistency, and
may demonstrate that minors can hold title to real and personal property. Sections
126 to 146 of C.J.S. describe the law regarding an infant's acquisition and alienation
of property. 43 C.J.S. Infants Sec. 126-46. Section 126 states that "(g) enerally,
an infant has the capacity to acquire and own property. So an infant may receive title
to property . . . . Similarly, an infant has capacity to alienate and transmit title
to property. While such transactions may be voidable . . . they are not absolutely
void." In support of this proposition the authors cite Bonner v. Moran, 126 F.2d 121, 75 U.S. App. D.C., (1941). However, this case actually states that
a minor cannot be held liable for personal contracts or contracts for disposition
of their property. Id. at 122. C.J.S.'s authors apparently read Bonner to say that a minor's power to disaffirm
contracts prevents the other party from forcing the minor to perform under the contract.
Section 137, and the District of Columbia case cited with it, provide a clearer answer.
Describing both real and personal property, the section states that "(until) a contract
of purchase is avoided by the infant's disaffirmance thereof, an infant purchaser
has the capacity to pass good title to the property."
C.J.S. then cites L.P. Steuart & Bro., Inc., v. Capital View Realty Co., Inc., 112 F. 2d 583, 72 App. D.C. 193 (1940). That case involved a minor's purchase of
an oil burner. The court explained at 584 that when the minor paid full price for
the oil burner, "title passed absolutely to the infant subject to his right of disaffirmance.
(T)he contract between appellant and Harrell (the minor) was not void but voidable.
(citation omitted) Until avoided, Harrell had capacity to pass title".
According to C.J.S., and at least the case of L.P. Steuart & Bro., minors do hold
title to real and personal property until or unless they disaffirm the contracts under
which they acquire the property.
The guardianship statutes referred to above discussed "entitlement" to property and
the need for court ratification of sales of property. These provisions seemed to imply
that minors did not have full rights with respect to property and that they could
not hold title. However, by reading C.J.S. and L.P. Steuart & Bro. together with the
guardianship and "Building Restrictions" provisions, the guardianship provisions appear
simply to address the fact that minors can disaffirm contracts for property. That
is, C.J.S., L.P. Steuart & Bro., and section 5-709 of the "Building Restrictions"
all state that minors can have title to property. Thus, rather than implying that
minors cannot hold title, the guardianship provisions are merely describing how, in
light of the minor's ability to disaffirm contracts, to finalize acts with respect
to a minor's property.
Thus, District of Columbia case law and statutes appear to support the C.J.S. assertion
that an infant generally can hold title to property.
B. Incompetents The Incompetent Retains Title Unless a Conservator Has Been Appointed.
Chapters 20 and 21 of the District of Columbia Code address the guardianship of incapacitated
individuals and conservatorship of their property. First, the role of guardian is
largely one of maintaining the incompetent on a regular basis. There are no provisions
for title to property to pass to the guardian. The role of conservator, however, is
one of protecting the incompetent's property.-The incompetent's assets are transferred
to the conservator, and the conservator thus takes title to the property. D.C. Code
Ann. Sec. 21-2066.
The court appoints a conservator if it finds the person is incapacitated and either
has property that will be wasted or needs money for support (of himself or dependents)
and protection to obtain the money. Conservators clearly take title from the incompetent,
but not all incompetents will have conservators. When the incompetent has only a guardian,
title appears to remain in the incompetent.
CONCLUSION
Viewing Region III as a whole, we believe the uncertain results of our survey demonstrate
the difficulty with SSI's approach to handling representative payee purchases of real
and personal property with SSI funds. Another, perhaps more logical, approach to the
problem of tying the purchases in question to the minors or incompetents would be
to treat the purchase of the assets or improvements/additions thereto as "use" of
the benefits, rather than conservation of the benefits. We believe this approach is
consistent with the regulations and avoids what could be an awkward, if not exceedingly
complicated, means of ensuring that the beneficiary actually collect upon the eventual
sale of the "investment" asset.
The SSI regulations on "Use of benefit payments" for SSI recipients states that "(w)
e will consider that payments we certify to a representative (sic) payee to have been
used for the use and benefit of the beneficiary if they are used for the beneficiary's
current maintenance. Current maintenance includes costs incurred in obtaining food,
shelter, clothing, medical care and personal comfort items." 20 C.F.R. Sec. 416.640
(1992).
The regulations regarding "Conservation and investment of benefit payments" state:
If payments are not needed for the beneficiary's current maintenance or reasonably
foreseeable needs, they shall be conserved or invested on behalf of the beneficiary.
Conserved funds should be invested in accordance with the rules followed by trustees
. . . . . . Preferred investments for excess funds are U.S. Savings Bonds and deposits
in an interest or dividend paying account in a bank, trust company, credit union,
or savings and loan association . . . . 20 C.F.R. Sec. 416.645 (1992).
The types of assets most frequently in question here are houses, additions and/or
improvements to existing real estate, automobiles, mobile homes, trucks, vans, and/or
special equipment added to motor vehicles. While the purchase of a home is to some
extent an investment, the additions/improvements to homes or motor vehicles that representative
payees make to benefit the beneficiary may not add market value to the underlying
asset. Furthermore, the purchase of vehicles such as automobiles, vans, and trucks,
or even mobile homes, whose value decreases rapidly in time, does not seem to fit
the type of conservation or investment of funds envisioned in the regulations at Sec.
416.645, which list deposits in savings account or the purchase of U.S. Savings Bonds
as acceptable or preferred investments. In fact, the purchase of depreciating assets
like automobiles hardly qualifies as an "investment" in any context.
We believe that in most instances the purchases of homes, vehicles, or additions/improvements
thereto will qualify under the "Use of Benefits" provision of Sec. 416.640. These
purchases appear to directly serve the needs of beneficiaries and meet the definition
of "current maintenance" as shelter, personal comfort items, or reasonably foreseeable
needs. Therefore, deeming the purchases as use, rather than conservation, of benefits
is both a more accurate description of the transactions and a way to avoid the necessity
of developing ownership or titling of property as the means to ensure that the beneficiary's
benefit upon the sale of the asset. The true benefit to the beneficiary of an automobile
or even a house is the daily use or availability of the asset, and not its resale
value.
Finally, we ask that if a beneficiary or his representative has information contrary
to what we have concluded in this memorandum concerning title, please forward it to
us and we will consider it. Also, if you have any questions about this memorandum,
please call the undersigned at 596-1246.
FN2 "'Committee' includes any reorganization or protective committee formed for the
purpose of formulating, proposing, or carrying out any plan of reorganization or to
act in any other manner for the protection of the interests of the holders of any
class or classes of securities, or persons performing a similar function, and any
corporation formed or acting for any such purpose."