Inasmuch as the personal assets of the decedent's estate have been exhausted and as the value of the decedent's real property is insufficient to satisfy the claim of the secured creditor, it appears that no assets will remain to satisfy unsecured priority claims such as that of the Social Security Administration.

(Woody T~ - ~ - CCIV - [Walters] - to ARC, Progs., Atl., 06/06/90)

You have requested our assistance in persuading the administrator of the Woody T~ estate to refund an overpayment of Supplemental Security Income (SSI) benefits.

The facts in this case are that at the time of Mr. T~'s death, on September 30, 1988, there was an outstanding SSI overpayment on his record of $3,010.68. In April 1989, the Social Security Administration filed a formal claim against the decedent's estate in the Chancery Court of Hardeman County, Tennessee. Mr. Ed J. H~, attorney for the administrator, indicated in a letter dated June 26, 1989, that personal assets of the estate amounted to approximately $5,300, but that these personal assets would be exhausted by the payment of funeral expenses and costs of estate administration including attorney's fees.

Mr. H~ indicated that the estate also included real property with an outstanding mortgage of $57,591.15. Contact with the local tax office by the Social Security office in Selmer, "shows the value of the property to be $101,700". Pursuant to Tennessee Code Annotated §30-5-130 entitled "Sale Of Real Estate To Pay Debts",

When the personal estate is ascertained by the report of the clerk and master, and the confirmation thereof by the court, to be insufficient for the payment of the debts of the estate, the court shall direct that the real estate, subject to sale, or so much thereof as is necessary, be sold for the payment of debts".

Thus, if there was sufficient equity in the real property to satisfy the debt of the estate, the Administration would wish to file a Motion to Compel a Court Order Of Sale pursuant to the above-quoted statute.

Telephone contact on April 16 and 18, 1990, with Ms. Marion N~, Clerk and Master of the Chancery Court for Hardeman County, verified receipt of the Administration's formal claim and verified that if there was sufficient equity in the real property, the claim of the Social Security Administration would have to be paid before the estate could be closed. In a further telephone conversation with Ms. N~ on May 4, 1990, she indicated she had checked the status of the real property in question with Mr. F~, director of the Farmers' Home Administration; the Farmers' Home Administration holds the mortgage on the real property which was owned by Mr. T~. Mr. F~ stated that foreclosure papers were "coming down" as $75,100 was owed on the property and it had an actual value of "no more than $50,000". Mr. F~ indicated that the mortgage had at one time been paid down to $30,000 or $40,000 but that unpaid interest had resulted in the current outstanding mortgage balance of $75,100.

Ms. N~ was advised of our information that the actual value of the property was $101,700. Ms. N~ thereupon contacted Ms. Mary P~, trustee for Hardeman County, and was informed that the tax assessor had reappraised the real property last year. The current tax appraisal value was given as $62,900. It, therefore, appears that the value of the real property is, in fact, insufficient to satisfy the claim of the secured creditor, the mortgage company, and, clearly, no assets will remain to satisfy unsecured priority claims such as that of the Social Security Administration. Ms. N~ further noted that the only reason the estate remains open is that there are insufficient funds to pay-the $85 fee required to file a Motion For Insolvent Estate which would allow the estate to close with assets insufficient to pay the debts.

Consideration may be given to having another local source appraise the real estate to determine its actual value independent of the tax appraisal value for purposes of verifying that the equity does not exceed the amount of the outstanding mortgage. Nevertheless, based upon the information before us, it is our opinion that, as the estate of Woody T~ is insolvent, no further action to recover the SSI overpayment is warranted.

The United States government has a cause of action in federal courts against the personal representative of an estate where he, with notice of the government's claim, distributes the assets of the estate to inferior creditors. United States v. Vibradamp Corporation, 257 F.Supp. 931 (D.C.Cal. 1966). Nevertheless, where the government's claim is de minimus ($224) and the estate has been closed, further action to recover the overpayment would not be warranted.

(O~, Thelma - SSN ~ - CCIV - [Walters] - to ARC, Progs., Atl., 05/08/90)

You have requested our assistance in obtaining a refund of an overpayment of Supplemental-Security Income (SSI) benefits. The facts, as set forth in the file, are that Thelma O~ was overpaid SSI benefits in the amount of $421.40 for the period from April 1984 through July 1986. Before Ms. O~ became ineligible for SSI benefits in June 1986, $197.~0 of the overpayment was collected from her monthly payment checks. A balance of $224.00 is outstanding.

Ms. O~ died in July 1988. Attorney Robert F. S~, administrator of her estate, was notified of the. overpayment balance on August 30, 1989, with a copy sent to the Macon County (North Carolina) Clerk of Court. On September 22, 1989, Mr. S~ notified the Administration that as the government's claim was not presented Within six (6) months after notice to creditors was published in a paper of general circulation, it was rejected.

Telephone contact with Mr. S~ on April 18, 1990, revealed that the estate has been closed and that, following the payment of funeral bills, cost of administration, etc., the remaining $1,000 in assets was not sufficient to satisfy formal claims of creditors. The creditors were paid pro rata at approximately ten cents on the dollar.

Telephone contact with the Macon County Clerk of Court's office on April 18, 1990, verified that the estate was closed on January 17, 1990, and that, under North Carolina law, the last date to exhibit claims was February 12, 1989. The assets of the estate when opened were $10,000 in real property and $1,376 in personal property. When the estate was closed, $6,666.67 had been received in proceeds from the sale of the real property and the personal property continued to be valued at $1,376; total assets were $8,042.67. Disbursements of $7,247 included funeral and administration costs, medical and hospital expenses, attorney's fees, etc. The remaining assets were apparently distributed to creditors, as indicated by Mr. S~, on a pro rata basis.

The United States government has a cause of action in federal court against the personal representative of an estate where he, with notice of the government's claim, distributes the assets of the estate to inferior creditors. United States v. Vibradamp Corporation, 257 F.Supp. 931 (D.C.Cal. 1966). Nevertheless, it is the opinion of this office, that as the government's claim is de minimus, an outstanding overpayment balance of $224, and as the estate has been closed and the limited assets distributed, further action to recover the overpayment would not be cost- effective and, thus, would not be warranted.