In this opinion the Regional Chief Counsel (RCC) explores state laws in Region V that relate to SSA's determination of equitable ownership and may affect the application of the home exclusion. All six states recognize equitable ownership interest and recognize life estates. There are some differences in conveyance requirements and exceptions among the states surveyed.

 

 

You asked for an opinion about what constitutes equitable ownership in the six states in Region V, for purposes of the application of the home exclusion in POMS SI 01130.100. All six states in Region V recognize equitable ownership interests in property. For example, in each of the six states, an equitable ownership interest may arise from the execution of a valid installment contract for the purchase of real property. In addition, all six states in Region V recognize a life estate, which is the most common type of equitable ownership. Each state generally requires any interest in land, including a life estate, to be conveyed in a written document. In some cases, state courts may reform a deed or other written instrument due to mistake and/or fraud. However, all six states also recognize one or more exceptions that allow the conveyance of an equitable ownership interest by oral contract.

 

DISCUSSION

 

To qualify for SSI benefits, an individual’s income and resources must fall below the statutorily mandated limit. See 42 U.S.C. § 1382(a); 20 C.F.R. § 416.202(c), (d); see also POMS SI 00501.001(B)(1). In determining the resources of an individual, the Agency excludes the individual’s home. See 42 U.S.C. § 1382b(a)(1); 20 C.F.R. §§ 416.1210(a), 416.1212(b); see also POMS SI 01130.100(B). A home is defined as “any property in which an individual (and spouse, if any) has an ownership interest and which serves as the individual’s principal place of residence,” including the shelter in which he or she lives, the land on which the shelter is located, and related outbuildings. 20 C.F.R. § 416.1212(a); see POMS SI 01130.100(A)(1).

 

Agency policy acknowledges that an individual who is not the legal owner of his or her home may nevertheless have an equitable ownership interest in the home where permitted by state law. POMS SI 01110.515(C)(3), SI 01130.100(C)(4). Equitable ownership is defined as a form of ownership that exists without legal title to property. POMS SI 01110.515(A)(2)(b). In particular, SSA policy provides that an individual “may acquire an equitable ownership interest in his or her home through personal considerations or by performing certain activities such as: making mortgage payments or paying property taxes; making or paying for additions to a shelter; or making improvements to a shelter.” POMS SI 01110.515(C)(3).

 

The most common type of equitable ownership involves life estates. “A life estate confers upon one or more persons (grantees) certain rights in a property for his/her/their lifetimes or the life of some other person.” POMS SI 01110.515(A)(2)(a), SI 01140.110(A)(6). A life estate is a form of legal ownership that is usually created through a deed or will or by operation of law. POMS SI 01110.515(A)(2)(a). However, the owner of a life estate does not have title to the property. POMS SI 01140.110(A)(6).

 

All six states in Region V recognize equitable ownership interests in real property. In particular, as discussed below, in each of the six states, a n equitable ownership interest may arise from the execution of a valid installment contract^[1] for the purchase of real property, at which time the purchaser or vendee becomes the equitable owner. Therefore, an individual may establish equitable ownership of a property by providing a copy of the installment contract showing that he or she is the purchaser or vendee.

 

With respect to life estates, as discussed below, each of the six states in Region V follows some version of the Statute of Frauds, which requires a conveyance or sale of any interest in land to be in writing. In some instances, a state court may reform the deed or other writing to include a life estate that was originally omitted due to mistake and/or fraud. Thus, an individual may establish a life estate by providing a deed, will, or other legal document evidencing the life estate (including a court order reforming the original document to include the life estate). However, each state has one or more exceptions to the Statute of Frauds that allow the conveyance of an equitable ownership interest in real property by oral contract.

 

 

Illinois

 

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  Equitable Ownership Interest Created by Installment Contract

 

Under Illinois’ doctrine of equitable conversion, an individual becomes an equitable owner upon entering into a valid and enforceable contract to purchase realty, despite the fact that the seller continues to hold the legal title. Grochocinski v. Schlossberg, 402 B.R. 825, 839 (N.D. Ill. Mar. 11, 2009) (citing In re Lefkas Gen. Partners, 112 F.3d 896, 901 (7th Cir. 1997)). This includes installment contracts. SeeCarollo v. Irwin, 959 N.E.2d 77, 84 (Ill. Ct. App. 2011).

 

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  Life Estates

 

Under Illinois law, if a grantor wishes to convey an estate that is less than fee simple (such as a life estate), the grantor must express that intention in the deed; otherwise, it will be presumed that the grantor intended to convey a fee simple estate. 765 Ill. Comp. Stat. 5/13. In addition, under the Illinois Frauds Act, a person generally may not bring an action to enforce a contract for the sale of land or any interest in or concerning land (including a life estate) unless the contract is in writing and signed by the person against whom the action is brought. 740 Ill. Comp. Stat. 80/2. Therefore, a life estate in Illinois generally must be in writing to be enforceable.

 

Illinois courts may, under certain circumstances, reform a written instrument based on oral evidence. For example, in Darst v. Lang, 10 N.E.2d 659, 661 (Ill. 1937), the court reformed a deed conveying a gift of property from parents to their daughter to include a life estate under the doctrine of mutual mistake. The court also noted that alternatively, the deed could be reformed to include the life estate based on fraud. Id. A written instrument “may also be reformed upon proof of a mistake by one party to the contract when the other party knows of the mistake and fails to inform the other party or conceals the truth from him.” Ballard v. Granby, 412 N.E.2d 1067, 1069 (Ill. App. Ct. 1980).

 

EXCEPTION: In Illinois, oral contracts for the conveyance of real property may be excepted from the Statute of Frauds under the doctrine of partial performance. Culbertson v. Carruthers, 383 N.E.2d 618, 623 (Ill. App. Ct. 1978). “ There are three requisites for the application of the doctrine of partial performance: (1) the performance must be in reasonable reliance on the contract, (2) the remedy of restitution must be inadequate, and (3) the performance must be one which in some degree evidences the existence of a contract and is not readily explainable on any other ground.” Brunette v. Vulcan Materials Co ., 256 N.E.2d 44, 47 ( Ill. App. Ct. 1970) (citation omitted). We recommend that any matter involving an allegation of equitable ownership based on partial performance of an oral contract be referred for an OGC opinion.

 

 

Indiana

 

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  Equitable Ownership Interest Created by Installment Contract

 

In Indiana, where there is an installment contract for the sale of real estate, “the vendee becomes the equitable owner thereof; the vendor simply holding the title as security for the purchase money. The vendee, being the equitable owner, secures all the benefits and assumes all the risks of ownership.” Knapp v. Ellyson Realty Co., 211 Ind. 180, 183 (1937). Said risks include the risk of loss, absent any language to the contrary in the contract. Ridenour v. France, 442 N.E.2d 716, 717 (Ind. Ct. App. 1982).

 

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  Life Estates

 

Under the Indiana Statute of Frauds, a conveyance of land or any interest in land (including a life estate), except for a bona fide lease for a term not exceeding three years, must be in writing. Ind. Code Ann. § 31-21-1-1, 31-21-1-13. If a grantor intends to convey a life estate, the grantor must express that intention in the deed; otherwise, Indiana courts will presume that the grantor intended to convey a fee simple estate. Ind. Code Ann. § 32-21-1-16; seeLong v. Horton, 133 N.E.2d 568, 571-73 (Ind. Ct. App. 1956). Additionally, a person generally may not bring an action involving any contract for the sale of land, unless the agreement is in writing and signed by the person against whom the action is brought. Ind. Code Ann. § 32-21-1-1(b)(4). Indiana courts may, however, reform a written instrument when, because of mutual mistake or mistake of one of the parties accompanied by the fraud of the other, the written instrument fails to express the parties’ agreement correctly. Baker v. Pyatt, 9 N.E. 112, 114-18 (Ind. 1886); Harvey v. Hand, 95 N.E. 1020, 1022 (Ind. Ct. App. 1911).

 

EXCEPTION: In Indiana, oral contracts may be excepted from the Statute of Frauds under the doctrine of partial performance. Marathon Oil Co. v. Collins, 744 N.E.2d 474, 478 (Ind. Ct. App. 2001). To qualify for the partial performance exception, Indiana courts require clear and definite proof of a combination of circumstances, such as possession of the property; payment or partial payment of the purchase price; and “valuable and lasting” improvements made to the land based on the oral contract. Id. at 478-79. We recommend that any matter involving an allegation of equitable ownership based on partial performance of an oral contract be referred for an OGC opinion.

 

 

Michigan

 

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  Equitable Ownership Interest Created by Installment Contract

 

“Under Michigan law, the sale of real property under [an installment] contract operates as an equitable conversion.” Batton-Jajuga v. Farm Bureau Gen’l Ins. Co. of Mich., 913 N.W.2d 351, 358 (Mich. Ct. App. 2017) (quotations and citation omitted). Accordingly, when an installment contract becomes effective, the buyer/vendee becomes the equitable owner, acquiring equitable title despite not yet acquiring the legal title. Id.

 

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  Life Estates

 

Under the Michigan Statute of Frauds, no estate or interest in land, other than a lease of one year or less, may be created, granted, declared, assigned, or surrendered except by operation of law, or by a deed or other conveyance in writing. Mich. Comp. Laws § 566.106. In addition, every contract for the sale of any land or any interest in land must be in writing and signed by the seller. Mich. Comp. Laws § 566.108. A life estate is an interest in land and therefore must be established by a written conveyance. In re Estate of Williams , No. 262203, 2005 WL 3304119, *2 (Mich. Ct. App. Dec. 6, 2005). Michigan courts have also reformed a contract or deed under the doctrine of mutual mistake, or when there is mistake on the part of a plaintiff and fraud on the part of a defendant. Schwaderer v. Huron-Clinton Metropolitan Authority , 45 N.W.2d 279, 283-84 (Mich. 1951) (collecting cases).

 

EXCEPTION: In Michigan, “partial performance of an oral contract to convey an interest in land may remove that contract from the operation of the statute of frauds.” Zaborsky v. Kutyla, 185 N.W.2d 586, 587 (Mich. App. Ct. 1971). Consequently, partial performance may establish that a life estate exists, despite not being in writing. SeeEstate of Williams, 2005 WL 3304119 at *3. The factors for establishing partial performance include: possession, improvements in regard to the property, and payment of money pursuant to the contract. Zaborski, 185 N.W.2d at 587. The acts must unequivocally refer to, and result from, the oral agreement. Groening v. McCambridge, 275 N.W. 795, 796 (Mich. 1937). We recommend that any matter involving an allegation of equitable ownership based on partial performance of an oral contract be referred for an OGC opinion.

 

 

Minnesota

 

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  Equitable Ownership Interest Created by Installment Contract

 

In Minnesota, “[t]he vendee in a contract to convey real estate, who has paid a part of the purchase price of the land and entered into possession thereof . . . is the equitable owner of the land, and has an interest therein which he may convey, which is descendible to his heir, and which, if not his homestead, may be subject to the lien of a judgment against him.” Stearns v. Kennedy, 94 Minn. 439, 442 (1905). Thus, an individual purchasing a property through an installment contract has an equitable ownership interest in the property.

 

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  Life Estates

 

The Minnesota Statute of Frauds provides that “[n]o estate or interest in lands . . . shall hereafter be created, granted, assigned, surrendered, or declared, unless by act or operation of law, or by deed or conveyance in writing.” Minn. Stat. § 513.04. In addition, every contract for the sale of any land or any interest in land must be in writing and signed by the seller. Minn. Stat. § 513.05. A life estate is an interest in land and therefore must be in writing.

 

Minnesota courts have recognized that a written instrument regarding real property may be reformed when there was a mutual mistake of the parties, or a unilateral mistake accompanied by fraud or inequitable conduct by the other party. Theros v. Phillips, 256 N.W.2d 852, 857 (Minn. 1977); Karger v. Wangerin, 40 N.W.2d 846, 850 (Minn. 1950). For example, in Olson v. Olson, No. 97-1978, 1998 WL 170111, *1-2 (Minn. Ct. App. June 17, 1998), the Minnesota Court of Appeals upheld a trial court’s reformation of a deed based on mutual mistake where a father transferred land to his children but the parties neglected to include a life estate for the father in the deed.

 

EXCEPTION: In Minnesota, an oral contract concerning the conveyance of real property may be taken out of the Statute of Frauds by partial performance. Crossroads Church of Prior Lake MN v. County of Dakota, 800 N.W.2d 608, 614 (Minn. 2011). Generally, partial performance may be established by taking possession of the land and making valuable improvements or paying part of the purchase price. Id . “The underlying principle is that, when one of the contracting parties has relied on an oral agreement to such an extent that it would be a fraud on the part of the other contracting party to void the agreement, equity will make that agreement an exception to the statute of frauds.” Id . (citation omitted). We recommend that any matter involving an allegation of equitable ownership based on partial performance of an oral contract be referred for an OGC opinion.

 

 

Ohio

 

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  Equitable Ownership Interest Created by Installment Contract

 

In Ohio, a vendee in a land installment contract stands as an equitable owner of the property. Blue Ash Bldg. & Loan Co. v. Hahn, 484 N.E.2d 186, 189-90 (Ohio Ct. App. 1984). “An equitable owner is recognized in equity as the owner of the property because ‘the real and beneficial use and title belong to him, although the bare legal title is invested in another.’” Shrock v. Mullet, No. 18 JE 0018, 2019 WL 2767002, *7 (Ohio Ct. App. June 28, 2019) (quoting Levin v. Carney, 161 Ohio St. 513, 518 (1954)).

 

• •

  Life Estates

 

Under the Ohio Statute of Frauds, an estate or interest in land (including a life estate) may only be assigned or granted by deed or note in writing and signed by the party granting or assigning it, or by act and operation of law. Ohio Rev. Code § 1335.04. In addition, no action shall be brought against an individual upon a contract or sale of land or interest in or concerning it (including a life estate) unless the agreement upon which such action is brought is in writing and signed by the party to be charged. Ohio Rev. Code § 1335.05. Consequently, a life estate in Ohio generally must be in writing to be enforceable. Ohio courts may also reform a written agreement such as a deed when it fails to reflect the intent of the parties as the result of a mutual mistake or fraud. Lukacevic v. Daniels , 128 N.E.3d 845, 850-51 (Ohio Ct. App. Jan. 10. 2019) (citations omitted).

 

EXCEPTIONS: In Ohio, an oral contract concerning an interest in real property may be brought outside the Statute of Frauds under the doctrines of partial performance and promissory estoppel. Brown v. Brown, No. 04CA000018, 2005 WL 914490, *3 (Ohio Ct. App. Apr. 14, 2005). “An agreement is removable from operation of the Statutes of Frauds by virtue of partial performance only where the party relying on the agreement changes his position to his detriment thereby making it impractical or impossible to return the parties to their original status. An agreement is removable from operation of the Statutes of Frauds by virtue of the doctrine of promissory estoppel only when there has been a misrepresentation of compliance with the Statutes of Frauds or a promise to make a writing of an oral agreement.” Saydell v. Geppetto’s Pizza & Ribs Franchise Sys., Inc., 652 N.D.2d 218, 224 (Ohio Ct. App. 1994) (citations omitted).We recommend that any allegation of equitable ownership based on an oral agreement involving either partial performance or promissory estoppel be referred for an OGC opinion.

 

 

Wisconsin

 

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  Equitable Ownership Interest Created by Installment Contract

 

In Wisconsin, “[b]y execution of a land contract, the vendee becomes the owner of the land in equity, while the vendor retains legal title to secure the balance due on the purchase price.” Kallenbach v. Lake Publications, Inc., 142 N.W.2d 212, 214 (Wis. 1966). Thus, an individual purchasing a property through an installment contract has an equitable ownership interest in the property.

 

• •

  Life Estates

 

Under Wisconsin law, any transaction of any interest in land (including a life estate) must be evidenced by a conveyance that: (a) identifies the parties; (b) identifies the land; (c) identifies the interest conveyed, and any material term, condition, reservation, exception or contingency upon which the interest is to arise, continue, or be extinguished, limited or encumbered; (d) is signed by or on behalf of each of the grantors; and (e) is signed by or on behalf of all parties, if a lease or contract to convey. Wis. Stat. Ann. § 706.02.^[2] Thus, if a party wishes to enforce a contract affecting real property, “the contract must be in writing, set forth all the essential terms with particularity, and be signed by all parties to the transaction.” Prezioso v. Aerts, 858 N.W.2d 386, 392 (Wis. Ct. App. 2014). Accordingly, a life estate generally must be in writing to be valid. Wisconsin courts may also reform a written agreement that was entered into by mutual mistake or by mistake on the part of one party and fraud by the other party. Bailey v. Hovde, 213 N.W.2d 69, 73 (Wis. 1973).

 

EXCEPTIONS: Wisconsin law provides that a transaction of any interest in land not meeting the requirements of Wis. Stat. § 706.02 may nonetheless be enforceable under the following doctrines of equity: (1) reformation of a deficient conveyance; (2) unjust enrichment; and (3) equitable estoppel. See Wis. Stat. Ann. § 706.04. We recommend that any allegation of equitable ownership based on an oral agreement that involves any of the above doctrines of equity be referred for an OGC opinion.

 

CONCLUSION

 

In each of the states within Region V, equitable ownership may be established by virtue of an installment contract for the purchase of real property. Additionally, each state recognizes a life estate as a type of equitable ownership. A life estate generally must be created in a written document, typically a deed. However, in each of the six states, a court may reform a written document to include a life estate based on mistake and/or fraud.

 

Moreover, each state recognizes one or more exceptions to the general rule that an interest in land (such as a life estate) must be conveyed in writing, with the most common exception being partial performance. Where an individual claims an equitable ownership interest under an oral contract based on partial performance or one of the other doctrines of equity identified above, we recommend the matter be referred for an OGC opinion.

This Regional Chief Counsel opinion examines whether an SSI claimant has an equitable ownership interest in a property that she lives in but does not legally own (it was purchased by the claimant's daughter with the claimant's money). The opinion concludes that, under Indiana state law, the claimant should have no equitable ownership interest because the property was purchased with intent to defraud her creditors. Therefore, it is neither her “home” nor a resource to her for SSI purposes. However, the transfer of money to her daughter to purchase the property would need to be evaluated under the SSI transfer of resource rules to determine whether the claimant received fair market value from the transfer.

QUESTION

You asked us to evaluate whether [claimant] has an equitable ownership interest in a property that she lives in but does not legally own. Here, claimant transferred cash to her daughters to fund the purchase of the property in one daughter’s name with the intent that claimant live in the purchased property.

SHORT ANSWER

Our review of Indiana law suggests that, under the facts in this case, an Indiana court would not find claimant to have an equitable ownership interest in the property that she lives in because, by her own admission, the property was purchased with intent to defraud her creditors. Therefore, it is not considered her “home” for SSI purposes, nor is it a resource to her.

However, we note that the fact that claimant transferred cash to her daughters intending to secure housing for the remainder of her lifetime should be evaluated under the agency’s transfer of resource rules. Under the applicable POMS, the adjudicator should determine, among other things, whether the transfer was valid, and whether claimant received fair market value for the transferred resource (in the form of in-kind support and maintenance).

BACKGROUND

Claimant received a cashier’s check in the amount of $30,000.00 in a divorce settlement. Claimant wanted to use this money to purchase a house, but she received legal advice that because she had a large outstanding medical debt which exceeded the value of the divorce settlement she should not put the house in her own name. She made a verbal agreement with her two daughters whereby she gave each of them $15,000.00 to fund the purchase of a house that claimant herself would live in. One daughter then gave her share of the funds to the other daughter and the second daughter employed the funds to purchase the house with the intention that her mother live in it for her lifetime.

Claimant and her two daughters provided written, signed statements confirming this plan as well as documentation of the purchase of the property in the name of one of claimant’s daughters in July 2019. The total purchase price of the property was $25,000.00 plus $771.00 closing costs. Claimant represented that the remainder of the $30,000.00 was used by her daughter to renovate the property (e.g., appliances, paint, flooring, and other supplies) and pay for needs such as utilities and insurance.

DISCUSSION

I. Federal Law and Policy

To qualify for SSI benefits, an individual’s resources must fall below the statutorily-mandated limit. See 42 U.S.C. § 1382(a); 20 C.F.R. § 416.202(d); see also POMS SI 00501.001B.1. Under the SSI program, all resources are generally countable unless excluded from consideration by statute. See 42 U.S.C. § 1382(a).

The agency defines resources as cash, personal property, or real property that an individual (1) owns; (2) has the right, authority, or power to convert to cash; and (3) is not legally restricted from using for her support and maintenance. See 20 C.F.R. § 416.1201(a); POMS SI 01110.100B.1. In addition, for SSI purposes, a “home” is defined as “any property in which an individual (and spouse, if any) has an ownership interest and which serves as the individual’s principal place of residence.” 20 C.F.R. § 416.1212(a); see POMS SI 01130.100A.1.

As relevant here, agency policy acknowledges that an individual who is not the actual or legal owner of a property may nevertheless have an equitable ownership interest in that property where permitted by state law. POMS SI 01130.100A.4, C.4. Thus, an individual may have an equitable ownership interest in her home. As a general matter, a home, regardless of value, is an excluded resource (i.e., it does not count against the statutory limit). See 42 U.S.C. § 1382b(1); 20 C.F.R. §§ 416.1210(a), 416.1212(b); POMS SI 01130.100B.1 (also known as the “home exclusion”).

II. Indiana Law

Under the Indiana Statute of Frauds, contracts for the sale of land generally must be in writing. See Ind. Code Ann. § 32–21–1–1(b)(4) (a person may not bring an action involving any contract for the sale of land unless the promise, contract, or agreement is in writing and signed by the person against whom the action is brought); see also Brown v. Branch, 758 N.E.2d 48, 51 (Ind. 2001). In addition, a conveyance of land or of any interest in land must be made by a written deed. See Ind. Code Ann. § 32–21–1–13. Notably, oral agreements for the conveyance of real property that are not excepted from the Statute of Frauds are voidable, not void.^[3] Marathon Oil Co. v. Collins, 744 N.E.2d 474, 478 (Ind. Ct. App. 2001); Summerlot v. Summerlot, 408 N.E.2d 820, 828 (Ind. Ct. App. 1980).

In the past, Indiana courts recognized a common law exception to the Statute of Frauds where an individual buys a property in his or her own name on behalf of another individual who supplies the purchase funds. See Marcilliat v. Marcilliat, 25 N.E. 597, 598 (Ind. 1890). The presumption was that “he who furnished money for the purchase of land taken in the name of another intended to acquire title for himself.” Auten v. Sevier, 202 N.E.2d 274, 278 (Ind. App. 1964) (citation omitted). This transaction created what is known as a “resulting trust,” which created an equitable property interest for the party providing the purchase funds. See Ronald Chester et al., Bogert’s The Law of Trusts and Trustees § 454 (2019) (purchase money resulting trust).

Indiana later reversed this presumption and abolished resulting trusts by statute, with limited exceptions. See Ind. Code Ann. § 30–1–9–6 (“When a conveyance for a valuable consideration is made to one (1) person, and the consideration therefor paid by another, no use or trust shall result in favor of the latter; but the title shall vest in the former, subject to the provisions of the next two (2) sections.”); see also Koehler v. Koehler, 121 N.E. 450, 455 (Ind. App. 1919). The express purpose of this provision was to “prevent the grantor or the person materially interested in the real estate from defrauding third parties by hiding assets.” Melloh v. Gladis, 309 N.E.2d 433, 438 (Ind. 1974); see also U.S. v. Mayfield, No. NA 92–72–C, 1994 WL 764114, *6 (S.D. Ind. Dec. 22, 1994).

The three statutorily prescribed exceptions to Ind. Code Ann. § 30 – 1 – 9 – 6 are found in § 30 – 1 – 9 – 8. Specifically, a resulting trust may exist where: (1) the grantee has taken title in his or her own name without the consent of the party providing the money, (2) the grantee has purchased the property with another person’s money in violation of a trust, or (3) it appears that, by agreement and without fraudulent intent, the conveyance was made to or title was vested in the grantee to hold the land in trust for the party providing the purchase money. See Ind. Code Ann. § 30–1–9–8; see also Chester et al., supra, § 467. The burden is upon the person seeking to establish a resulting trust to prove all of the elements essential under the statute to the existence of the trust. See Koehler , 121 N.E. at 455.

III. Analysis

A. Claimant's Ownership Interest

As noted above, Indiana statutory law provides that, where a grantee uses an individual’s money with that individual’s knowledge and consent to purchase property in the grantee’s name (as was the case here), the purchase must be made without “fraudulent intent” in order to confer ownership rights on the individual providing the purchase money. Ind. Code Ann. § 30 – 1 – 9 – 8. Indiana courts have also noted that, for a trust to arise under this exception, the following elements must be present: (1) the parties must have made an agreement, (2) the agreement must have been made before title to the property was acquired, (3) there must have been valuable consideration for the agreement, (4) the transaction must be free from fraud, and (5) the proof must be clear and unequivocal. See Koehler , 121 N.E. at 455-56. Here, the fourth element does not appear to be met. Specifically, by claimant’s own admission, she sought to indirectly purchase her house under her daughter’s name to avoid her creditors. Thus, we believe that an Indiana court would find the transaction under the circumstances in this case to be “fraudulent” for purposes of Ind. Code Ann. § 30–1–9–8. Consequently, under Ind. Code Ann. § 30–1–9–6, no resulting trust was established in favor of claimant.

We also note that under the Uniform Fraudulent Transfer Act, a transfer made by a debtor is voidable as to a creditor if the debtor made the transfer with actual intent to hinder, delay, or defraud a creditor. See Ind. Code Ann. § 32–18–2–14(a)(1). And one factor for determining the debtor’s intent is whether the debtor concealed assets from creditors. See Ind. Code Ann. § 32–18–2–14(b)(6). Here, the evidence shows that is exactly what claimant did when she arranged to buy her house in her daughter’s name. As such, these provisions provide additional support that claimant’s transfer under the circumstances in this case was “fraudulent” and “voidable” under Indiana law.

Thus, we believe that an Indiana court reviewing the matter and apprised of the full facts would conclude that a resulting trust was not established, i.e. , claimant did not retain an equitable property interest in the property purchased with her funds. Accordingly, we believe claimant does not have any ownership interest in the property, such that it is neither her “home” nor a resource to her for SSI purposes. See 20 C.F.R. §§ 416.1201(a), 416.1212(a); POMS SI 01110.100B.1, SI 01130.100A.1.

B. Transfer of Resources

In addition, we note that the $30,000.00 that claimant received in her divorce settlement was income in the month of receipt and a resource beginning the following month until she gifted it to her daughters in July 2019. See 20 C.F.R. §§ 416.1102, 416.1123(a), 416.1201(a), 416.1207(d). As a result, the cash transferred to her daughters must be evaluated under the transfer of resource rules. See POMS SI 01150.001. Under these rules, transferring ownership of a resource for less than fair market value can result in a period of ineligibility for SSI. See POMS SI 01150.001A. Accordingly, it should be determined (1) whether the transfer was valid, (2) whether claimant received fair market value for the transferred resource, and (3) whether any exception to the period of ineligibility applies. See POMS SI 01150.003A.2-4; see also 42 U.S.C. § 1382b(c); 20 C.F.R. § 416.1246(a)(1).

Here, it appears that claimant’s transfer of the $30,000.00 to her two daughters was valid. Claimant and her two daughters all stated that claimant gave each of her daughters $15,000.00 as gifts. Under the POMS, giving away cash may constitute a transaction that results in a valid transfer. See POMS SI 01150.001B.3.

Next, for purposes of determining whether claimant received fair market value for the transferred resource, the compensation provided may include in-kind support and maintenance (ISM). See POMS SI 01150.005B.2; see also 20 C.F.R. § 416.1246(c) (compensation can include food and shelter received at or after the time of the transfer in exchange for the resource if the compensation was provided pursuant to a binding [i.e., legally enforceable] agreement at the time of the transfer). The value of the compensation received is based on the agreement and expectations at the time of transfer. See POMS SI 01150.005C.1. In particular, compensation received in the form of ISM is valued at its full current market value multiplied by the length of time for which it is to be provided under the agreement. See POMS SI 01150.005C.3.b.

Here, under the facts presented, the claimant and her daughter agreed that the daughter would use claimant’s money to buy a house for claimant to live in. In other words, in exchange for the transferred resource, the daughter would provide ISM to claimant for life. In that case, the total value of ISM for the life of the eligible individual should be determined using POMS SI 01150.005F. See POMS SI 01150.005D.3.c. POMS SI 01150.005F requires the adjudicator to determine the yearly current market value of the ISM and multiply it by the average “years of life remaining” based on the individual’s age at the time of the transfer. See also POMS SI 01150.005D.3.c.

In the event it is determined that claimant did not receive fair market value for the transferred resource, it does not appear that any of the exceptions to the period of ineligibility applies. See POMS SI 01150.003A.4, SI 01150.121-01150.125. In that event, the adjudicator should compute the period of ineligibility pursuant to POMS SI 01150.111, as well as determine whether the undue hardship exception applies. See POMS SI 01150.003A.5-6.

CONCLUSION

For the foregoing reasons, we believe that an Indiana court presented with the facts of this matter would conclude that claimant did not retain any equitable ownership of the property purchased with her money by her daughter because, by claimant’s own admission, the property was purchased with intent to keep the money from her creditors. Therefore, it is neither her “home” nor a resource to her for SSI purposes. However, we recommend evaluating the money that claimant transferred to her daughters under the transfer of resource rules to determine whether claimant received fair market value from the transfer.

Indiana Law states that unless there is evidence to the contrary, when a husband and wife enter into a written contract to purchase real-estate that purchase is entered into as tenancy in the entirety. Therefore, land in question may not be sold unless both parties consent to the sale to it.

You have forwarded a question from the Atlanta Region asking whether a warranty deed conveying property in the State of Indiana to a husband and wife automatically creates a tenancy by the entirety, absent language to the contrary. For the following reasons, we believe that it does.

FACTS

On September 14, 1999, a corporate warranty deed was executed conveying real property in the State of Indiana to Kenneth J. R~ and Lorrie R~, husband and wife, for $10. The deed does not specify whether Mr. and Mrs. R~ took the land as a joint tenancy, a tenancy in common, or a tenancy in the entirety. Mrs. R~, who is a deemor for an SSI disabled child, is now separated from her spouse.

DISCUSSION

The parent of a disabled child is subject to resource limitations in order for the disabled child to receive SSI. POMS SI 01110.530(B)(2), 01330.200(A). A resource includes any real property that an individual has the right, authority, or power to convert to cash. POMS SI 01110.100(B)(1). Conversely, any real property that an individual does not have the right, authority, or power to convert to cash is not a resource. POMS SI 01110.100(B)(3).

POMS SI CHI0110.510(B) states that a husband and wife who own real property in Indiana as a tenancy in the entirety cannot transfer their ownership interest in the property without the consent of the other spouse. But the POMS does not indicate what is the default type of ownership when the type of ownership is not specified in the real estate contract. Indiana statutory law provides the answer to this question. The Indiana Code states that a written contract in which a husband and wife purchase real estate creates an estate by the entireties, unless the contract expressly creates a tenancy in common, or unless it appears from the tenor of the contract that the contract was intended to create a tenancy in common. Ind. Code § 32-17-3-1 (2005). Here, as the contract neither expressly creates a tenancy in common, and it does not appear from the tenor of the contract that the contract was intended to create a tenancy in common, under the Indiana statute, the contract created a tenancy in the entirety. The current statute is consistent with Indiana common law. Davis v. Clark, 26 Ind. 424 (1866). Thus, as the contract created a tenancy in the entirety, Mrs. R~ is unable to transfer her ownership interest in the property without the consent of Mr. R~. POMS SI CHI0110.510(B).

CONCLUSION

In conclusion, a warranty deed conveying property in the State of Indiana to a husband and wife automatically creates a tenancy by the entirety, absent evidence to the contrary.

State law in most Region V states prevents formal and informal loan agreements entered into with minors from being enforceable against the minor parties. Each state has specific exceptions that may apply depending on the circumstances surrounding the loan agreement. For example, minors that have been emancipated by the court may enter into valid loan agreements in some states, and loans for necessities may be enforceable depending on state law. All states in Region V have specific laws regarding the ratification of a loan upon a minor attaining age of majority (age 18 in all states in Region V). Loans entered into with a minor must be examined closely to determine whether ratification has occurred and the loan is, therefore, enforceable.

You asked for an opinion on whether loan agreements entered into by minors - whether formal or informal - are enforceable in the six states in Region V. In each of the six states in Region V, a contract, including a loan, entered into with a minor (defined as an individual who has not reached the age of eighteen) is generally voidable by the minor party, but not by the party who is of the age of majority. Such agreements, therefore, are not enforceable against minors, regardless of whether the loan contract is a formal, written agreement. However, some exceptions apply. Below is a general discussion of our conclusions and an outline of the particular rules for each state in Region V.

DISCUSSION

Assets are a resource for SSI purposes if the individual owns them and can convert them to cash for her support and maintenance. If the individual has the right, authority, or power to liquidate the property, it is a resource. Loan proceeds and payments and loan agreements may be considered a resource or income to the borrower and lender, and the rules for determining when a loan counts as a resource vary based on whether the underlying loan agreement is a bona fide loan. In order to constitute a bona fide loan, a loan must be enforceable under state law. You have asked whether a loan agreement entered into with a minor is enforceable under state law.

In all Region V states, minors generally lack the legal capacity to contract. The age of majority is eighteen in all Region V states. Loan agreements entered into with a minor, whether formal, written agreements or otherwise, therefore, are not enforceable under state law, because they are voidable at the option of the minor party. Certain exceptions apply, however, and some loans entered into with minors are enforceable. For example, if a minor takes out a loan for the purchase of necessities, the loan will be enforceable under state law. Additionally, in some states in Region V, a minor's loan is enforceable if the minor fraudulently represented that he was of the age of majority when he took out the loan. Further, a minor may ratify or disaffirm a loan upon attaining the age of majority; ratification renders the loan enforceable. The states in Region V generally require a clear, intentional act to constitute ratification. Some states in Region V dictate that a loan will be deemed ratified where a minor fails to disaffirm the loan within a reasonable time after attaining the age of majority.

The six states in Region V follow essentially similar rules regarding the enforceability of loans to which a minor is a party. However, some slight differences exist. Below we have outlined the particular rules for each state in Region V. Please use these outlines in drafting your POMS Regional Supplement. Our office would be happy to review your draft guidelines.

Illinois

Age of Majority

In Illinois, the age of a majority is eighteen.

General Rule

A loan agreement with a minor is not enforceable because the loan agreement is voidable by the minor party.

Exceptions

A minor who has been emancipated by court order may enter valid loan contracts, which are thus enforceable.

A loan with a minor is enforceable if it is entered into for the purpose of obtaining necessities; necessities includes items such as food, clothing, lodging, and education, but typically does not include automobiles, even if used to earn a living.

Ratification

A loan agreement becomes enforceable against a minor party if the minor, upon reaching the age of majority, ratifies the loan agreement. Illinois law allows a minor to either ratify a contract with an intentional act after reaching the age of majority, or to disaffirm the contract within a reasonable time or within the statute of limitations applicable to the type of loan at issue. Acts which may constitute ratification include making payments on a loan, or causing a loan contract to be recorded. In Illinois, if a minor fails to ratify a loan agreement upon attaining age of majority, the loan may nonetheless be deemed ratified, and thereby rendered enforceable against the minor, if he fails to disaffirm the loan agreement within any applicable statute of limitations. If you cannot clearly determine whether a disaffirmance has occurred within a reasonable time or within an applicable statute of limitations, please request a legal opinion from OGC.

Indiana

Age of Majority

In Indiana, the age of majority is eighteen.

General Rule

Any loan entered into with a minor is not enforceable because the loan contract is voidable at the minor's option. A minor may void his contract at any time prior to, or upon attaining, the age of majority. Whether emancipation affects the minor's right to disaffirm his contracts depends upon the scope of the emancipation. If you cannot clearly determine whether a minor's emancipation affects his ability to enter valid loan contracts, please consult OGC for a legal opinion.

Exceptions

A loan entered into by a minor who represented in writing that he was eighteen or over in obtaining the loan is enforceable.

Loans by minors for necessities are enforceable, so long as the minor is not living at home or otherwise being supported by his parents. Necessities include items such as food, clothing, lodging, medical services, and education as well as such provisions provided for the minor's spouse, but generally do not include automobiles. Medical services are considered necessities regardless of whether a minor is living at home or being supported by his parents.

Ratification

A minor may ratify a loan contract upon reaching the age of majority, rendering the loan enforceable. Ratification is not presumed, or deemed, to occur unless there is some affirmative act. A ratifying act may be done without the minor having explicit knowledge that his acts constitute a ratification or that he was not otherwise liable. However, ratification induced by fraud or undue influence is not valid and will not render a loan agreement enforceable. Whether a valid ratification has occurred depends on the facts of particular case, but the ratification should be in proportion to the nature of the original transaction. For example, if a minor party, after reaching the age of majority, agrees to pay, or makes a payment on, a simple loan which he entered into by himself while a minor, ratification has occurred.

Michigan

Age of Majority

The age of majority in Michigan is eighteen.

General Rule

A loan agreement with a minor is not enforceable because minors lack the legal capacity to contract and their contracts are voidable. Emancipation of a minor does not affect this general rule. However, if you have evidence of a minor's emancipation that indicates the minor may enter a valid contract, please request a legal opinion from OGC regarding whether that minor's loan is enforceable.

Exceptions

If a minor willfully misrepresented his age to obtain a loan, and if the misrepresentation was either made in writing in a separate instrument or admitted in open court, the loan is enforceable against the minor party. Such a loan may not be disaffirmed by the minor upon attaining the age of majority.

Loan agreements entered into by minors for the purchase of necessities are enforceable under state law. Necessities include items such as clothing and books for education.

Ratification

A loan is rendered enforceable in Michigan if a minor ratifies the loan with an affirmative act upon reaching the age of majority. Ratification consists of making a distinct acknowledgement of a loan contract and indicating an intention to be bound by it, for example by writing a letter acknowledging one's loan and promising to pay it. A minor may also disaffirm his loan upon attaining the age of majority. Silence may be sufficient to constitute ratification only where it would be inequitable to permit the defense of infancy. If a question arises as to whether a loan has been ratified based on silence, or a failure to disaffirm, please request a legal opinion from OGC.

Minnesota

Age of Majority

The age of majority in Minnesota is eighteen.

General Rule

Any loan agreement with a minor which has not been fully executed (performed) is not enforceable. A minor who enters a loan agreement by fraud may still disaffirm the contract. If you are presented with evidence of emancipation, or other evidence showing that a minor's loan obligation may be authorized by law, please consult with OGC for a legal opinion regarding whether the loan is enforceable.

Exceptions

A loan a minor enters for the purchase of necessities, however, is enforceable. Necessities includes items such as food, clothing, and lodging, but not transportation expenses.

Ratification

A minor party may affirm his loan by a ratifying act upon reaching the age of majority; the loan is then enforceable in Minnesota. A ratification consists of some word, act, or deed that indicates an intention to be bound by the loan. A minor also may disaffirm his loan within a reasonable time after attaining the age of majority. In Minnesota, unlike in the other states in Region V, a minor is required to return the proceeds of a loan in order to disaffirm the loan. If the minor does not actively disaffirm within a reasonable time of attaining majority, the loan will be considered ratified. The fact that a minor may be unaware of his right to disaffirm will not absolve him of his duty to act promptly in disaffirming the loan in order to avoid liability. If you cannot clearly determine whether a loan has been disaffirmed within a reasonable time, please request a legal opinion from OGC regarding whether the loan is enforceable.

Ohio

Age of Majority

In Ohio, the age of majority is eighteen.

General Rule

A loan entered into with a minor is not enforceable because the loan is voidable at the minor's option. If you are presented with evidence of emancipation, or other evidence showing that a minor's loan obligation may be authorized by law, please consult with OGC for a legal opinion regarding whether the loan is enforceable.

Exceptions

Loans entered into with a minor for the purchase of necessities are enforceable. To be enforceable, however, such loan contracts must be fair and reasonable, and must be made by the non-minor party in good faith and without knowledge of the minor's lack of capacity to contract. Necessities include "food, medicine, clothing, shelter, or personal services usually considered reasonably essential for the preservation and enjoyment of life."

Ratification

If a minor does not disaffirm his loan or other contract within a reasonable time after reaching the age of majority, ratification may be inferred from his voluntary actions, regardless of whether he had a definite intent to ratify the contract. For example, a minor who makes payments on a car loan and uses the car after reaching the age of majority is considered to have ratified his loan contract. In such a case, the loan agreement would then be rendered enforceable under state law. If you cannot clearly ascertain whether a loan has been disaffirmed by the minor upon reaching the age of majority, please request an opinion from OGC regarding whether the loan is enforceable under state law.

Wisconsin

Age of Majority

The age of majority in Wisconsin is eighteen.

General Rule

A loan entered into with a minor is not enforceable because it is voidable at the minor's option. This rule does not change depending on whether the minor is emancipated.

Exceptions

Loans to minors for the purpose of purchasing necessities are enforceable in Wisconsin. What constitutes necessities includes those items necessary for the minor's personal care and maintenance, but does not usually include cars.

Ratification

A minor may ratify a contract upon reaching the age of majority, and such ratification may be express or implied, as long as the intention to be bound by the contract is "clearly manifested." While ratification does not require express knowledge of the voidable act [or contract], it does require knowledge of "all material facts relating to the act." Thus, ratification may consist of simply being aware of one's interest in, and continuing to enjoy the benefits of, a loan contract entered into while a minor. Ratification renders the loan enforceable.

CONCLUSION

As discussed above, loans entered into with minors generally are not enforceable against the minor parties. Some exceptions apply, and certain loans of minors, such as those for necessities or those where a minor fraudulently misrepresents his age, may be enforceable, depending on the law of the minor's state. Further, a minor may ratify a loan upon attaining the age of majority, at which point the loan is rendered enforceable. Some states in Region V will deem ratification to occur if the minor fails to disaffirm his loan within a reasonable time upon attaining majority. If you cannot clearly determine whether a particular loan has been ratified and is thereby rendered enforceable, please request a legal opinion from OGC.

This opinion addresses whether an individual may make a gift or transfer of money, or other property, to a minor under state of Indiana's adoption of the Uniform Gifts to Minors Act. An analysis of the Indiana Code reveals that it does not restrict the transfer of a transferor's own property to his or her own self as custodian for the benefit of a minor

This is with reference to your inquiry as to whether an individual may make a gift or transfer of money, or other property, to a minor under the Indiana's adoption of the Uniform Gifts to Minors Act. For the following reasons, we are of the opinion that this is permissible under Indiana State law.

The Uniform Gifts to Minors Act (UGMA) was originally approved by the National Conference of Commissioners on Uniform State Laws in 1956. Since that time the UGMA has been amended three times: in 1965, 1966, and again in 1983. Many states, including Indiana, substantially revised their versions of the UGMA following the enactment of the 1966 UGMA. Many states greatly expanded the kinds of property that could be made the subject of a gift under the Act. As a consequence, the National Conference of Commissioners on Uniform State Laws again revised the UGMA in 1983, allowing any kind of property, real or personal, tangible or intangible, to be made the subject of a transfer to a custodian for the benefits of a minor. See Uniform Transfers to Minors Act 1983 Act, Uniform Laws Annon., historical notes (West 1994). Because the revisions allowed for a wider variety of transfers, the Uniform Law was renamed the Uniform Transfers to Minors Act in 1983 to indicate the wider sweep of the Act. id.

Indiana repealed its 1966 Gifts to Minors Act in 1989 with P.L. 267-1989 and enacted its Uniform Transfers to Minors Act, Ind. Ann. Code 30-2-8.5-1 to 30-2-8.5-40. Section 30-2-8.5-18 of the Indiana Code provides for the nomination of a custodian by a transferror. The Indiana Code provides that "[c]ustodial property is created and a transfer is made if: . . . . money is paid or delivered to a broker or financial institution for credit to an account in the name of: . . . the transferor . . . followed by the words 'as custodian for (name of minor) under the Indiana Uniform Transfers to Minors act.'" Ind. Code Ann. § 30-2-8.5-24 (a)(2)(A). The Indiana Code makes similar provision for the transfer of uncertified securities, certified securities, ownership of a life or endowment insurance policy, an irrevocable exercise of a power of appointment, an irrevocable present right to future payment, interest in real property, or a certificate of title to tangible personal property. Ind. Code Ann. 30-2-8.5-24. The Indiana Code does not restrict the transfer of a transferor's own property to his or her own self as custodian for the benefit of a minor.

We should note that this practice has been viewed with dissatisfaction by the Internal Revenue Service. In a case involving a New York resident's transfer of securities to himself as custodian for his minor daughter, the United States Tax Court ruled that the securities were includable in his gross estate for tax purposes where he died prior to his daughter having reached the age of majority. The Court reasoned that the decedent had a legal obligation to support his daughter and that, as a custodian, he retained the right to use the income from the custodial property to discharge his legal obligation to support her. The Court alternatively reasoned that the property was includable in his gross estate since, as a custodian, he had the right as well as the power to pay over income and principal to his daughter at any time and thereby "terminate" the custodial arrangement. Estate of Chrysler v. Commissioner, 44 T.C. 55 (U.S. Tax Ct. 1965).*/ Although the decision of the Court was reversed on an unrelated basis, see Chrysler v. Commissioner, 361 F.2d 508 (2nd Cir. 1966), the court's rationale was reasserted in the case of Stuit v. Commissioner of Internal Revenue, 54 T.C. 580 (U.S. Tax Ct. 1970), where the United States Tax Court found that the value of securities which were transferred by a Illinois decedent to a minor under its UGMA was includable in the decedent's gross estate since, as custodian, he had the right as well as the power to pay over income and principal to his minor daughter, the beneficiary of the gift, at any time. id.

Thus, according to the Court, the decedent had the power to "terminate" the custodial arrangement. id. This rationale was upheld on appeal by Stuit v. Commissioner, 452 F.2d 190 (7th Cir. 1971). Furthermore, the National Conference of Commissioners on Uniform State Laws has recognized the unfavorable precedent and stated that "[i]n view of [Rev. Rul. 59-357] and [Chrysler], it is undesirable for a donor to act as a custodian for his own gift under either the Model or the Uniform Act." Uniform Transfers to Minors Act 1983 Act, Uniform Laws Annon., historical notes (West 1994).

Given the broad nature of your inquiry as to whether a transfer of property may be made under Indiana State law where the transferor names himself as the custodian of the property in question, we must answer the question in the affirmative. There is nothing on the face of Indiana's adoption of the 1983 Uniform Transfers to Minors Act which prohibits such a transaction. Given the unfavorable treatment of such arrangements by the Internal revenue Service, however, a more definitive statement cannot be made on the basis of the facts presented. Such arrangements, however, are not per se invalid.

Donna M. W~

Chief Counsel, Region V

By---------------

Duane N. B~

Assistant Regional Counsel

This opinion addresses the Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA); specifically at what age custodial property must be turned over to a minor. This opinion affects the States in the Chicago region. The policy varies from State to State.

This is with reference to your Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA) regional transmittal. In our July 3, 1996 opinion, we provided advice regarding the correct age at which custodial property must be turned over to a minor under Wisconsin's UTMA provisions. Wis. Stat. Ann. §§ 880.61 to 880.72 (West 1991 & Supp. 1995). Your inquiry asks that we generally review the regional transmittal and specifically review the interpretation of Wisconsin's UTMA provisions as set forth in the transmittal.

Many states, including Wisconsin, substantially revised their versions of the UGMA in order to expand the kinds of property that could be made the subject of a gift under the Act. Of the states discussed in the regional transmittal, only Michigan appears to have retained its UGMA provisions rather than adopt UTMA provisions.

In Wisconsin, for custodianships established after April 8, 1988, minors assume control of assets held on their behalf depending on how the UTMA custodianship was established. Section 880.625 (transfers by gift or exercise of power of appointment) and section 880.63 (transfers by will or trust) custodianships end at age 21. Section 880.635 (other transfers by fiduciaries) and section 880.64 (transfers by obligors) custodianships end at age 18. Wis. Stat. Ann. § 880.705 (West 1991 & Supp. 1995).

The UTMA provisions of Illinois and Minnesota by and large make similar distinctions. In Illinois, for custodianships established after July 1, 1986, section 5 (transfer by gift or exercise of power of appointment) and section 6 (authorized transfers, including by will or trust) custodianships end at age 21. Section 7 (other transfers by fiduciaries) and section 8 (transfers by other obligors) custodianships end at age 18. 760 Ill. Comp. Stat. Ann. 20/21 (West 1992 & Supp. 1996); 755 Ill. Comp. Stat. Ann. 5/11-1 (West 1992 & Supp. 1996).

Minnesota provides that for custodianships established before January 1, 1986, minors assume control of assets at age 18. Minn. Stat. Ann. § 527.04(4) (West 1975); Minn. Stat. Ann. § 527.42(b) (West Supp. 1996). But, for custodianships established on or after January 1, 1986, section 527.24 (transfers by gift or exercise of power of appointment) and section 527.25 (transfers authorized by will or trust) custodianships end at age 21. Section 527.26 (other transfers by fiduciaries and conservators) and section 527.27 (transfers by obligors) custodianships end at age 18. Minn. Stat. Ann. § 527.40 (West 1975 & Supp. 1996).

In Indiana, for custodianships established after July 1, 1989,minors assume control of assets at age 21. Ind. Code Ann. § 30-2-8.5-35 (West 1994 & Supp. 1996). Ohio provides that, for custodianships established on or after May 7, 1986, custodial property is to be delivered or paid over to the minor at age 21, unless the donor or transferor, in a written instrument, provided that the custodian was to deliver or pay over the property to the minor at a different age between 18 and 21. Ohio Rev. Code Ann. § 1339.34(D)(1), (2) (Anderson 1993 & Supp. 1995).*/

Michigan, which has not adopted UTMA provisions, has UGMA provisions, which provide that custodial property is to be delivered or paid over to a minor at age 18. Mich. Comp. Laws Ann. § 554.454(4) (West 1988 & Supp. 1996).

Thomas W. C~

Chief Counsel, Region V

Under Indiana law, funds in a blocked account are assumed to be available for a minor's support and maintenance. Thus, they are a resource for SSI purposes.

You asked whether the funds held in a restricted account should be treated as a countable resource for the purpose of determining Sonya L. G~'s SSI eligibility. We have reviewed the account documents as well as the arguments offered by claimant's attorney in his June 22, 1999, letter. For the following reasons, we conclude that the funds held in the restricted account should be presumed to be a countable resource.

FACTS

In April 1990, Georgia C~ settled a personal injury lawsuit on behalf of Sonya L. G~, a minor. Ms. C~ is the court-appointed guardian for Sonya's estate. Sonya's proceeds from the lawsuit ($17,500) were deposited in a certificate of deposit in the name of Ms. C~ as guardian for Sonya. The deposit agreement states "NO WITHDRAWALS EXCEPT BY COURT ORDER."

The court order authorizing the settlement does not mention the restricted account. Other than requiring a court order, neither the court documents nor the deposit certificate reflect additional restrictions on the withdrawal of funds.

DISCUSSION

For SSI purposes, a resource includes cash or other liquid assets, or any real or personal property that an individual owns and could convert to cash to be used for her support and maintenance. 20 C.F.R. § 416.1201(a). Here, Sonya has funds in a bank account, but withdrawals are allowed only with a written court order. The POMS refers to this arrangement as a "conservatorship account" or a "blocked account." See POMS SI 01140.215(A)(1), (A)(3); see also Blocked Accounts as SSI Resources OGC-V (Lowes) to Washington (8/3/89). Generally, we assume funds in a blocked account to be a resource if state law would require that the funds be made available for the individual's care and maintenance. POMS SI 01140.214(B)(1). This is true even where the individual must petition a court to withdraw funds. Id.

In Indiana, the guardian of a minor "has all of the responsibilities and authority of a parent." I.C. 29-3-8-1(a). In addition, where parental income and property are insufficient to support a minor, the guardian "shall apply the guardianship income and, to the extent the guardianship income is insufficient, the principal of the guardianship property to the minor's current needs for support . . ." I.C. 29-3-8-1(a)(3). Since the guardian of a minor is responsible for the minor's support, and is required to spend the minor's funds for his support where parental support is unavailable, we presume (absent evidence to the contrary) that funds held in a blocked account will be available for the minor's support and maintenance. Thus, funds held in an Indiana blocked account are generally considered a resource for SSI purposes. See POMS SI 01140.215(B)(1). This assumption applies, absent evidence to the contrary. Id.

Sonya's attorney, contends that the funds in the account should not be considered a countable resource. He first claims that the funds are not accessible because only the guardian (not Sonya) can petition the court to withdraw funds. This restriction does not preclude the funds from being counted as a resource. The guardian is an agent authorized (and required under state law) to act on Sonya's behalf. We consider that an individual has free access to a resource, even if that access is only possible through an agent. See POMS SI 01120.010(C)(1).

The attorney also argues that, pursuant to the provisions of I.C. 29-3-8-1(a)(3), the court would permit withdrawals from the blocked account only if "the available parental income and property are insufficient to fulfill the parental obligation of support to the minor." Thus, he concludes the court would not permit the withdrawal of funds for Sonya's support and maintenance. Here, however, they have not asked the court to release the funds.

We disagree with the attorney's interpretation of I.C. 29-3-8-1(a)(3), which states:

[t]o the extent the available parental income and property are insufficient to fulfill the parental obligation of support to the minor, [the guardian] shall apply the guardianship income and, to the extent the guardianship income is insufficient, the principal of the guardianship property to the minor's current needs for support, and protect and conserve that portion of the minor's property that is in excess of the minor's current needs . . .

I.C. 29-3-8-1(a)(3).

From the introductory clause ("to the extent the available parental income and property are insufficient"), the attorney assumes that the guardian is prohibited from using the minor's own funds for her support if parental support is available. However, the statutory language itself does not suggest such a prohibition, nor should it be interpreted as such.

The above language is found in a section of the statute that enumerates the responsibilities of a guardian, I.C. 29-3-8-1. Subsection (a)(3) merely describes a circumstance where a guardian is required to act in a certain way: where parental property is insufficient to support the minor, the guardian is required to use the minor's own funds for her current support needs.

This interpretation is reinforced by other sections of I.C. 29-3-8, which specifically grant the guardian of a minor power to use the minor's own funds for the minor's support.

Pursuant to I.C. 29-3-8-2, the guardian of a minor "may exercise all of the powers required to perform the guardian's responsibilities," including specific powers with respect to managing guardianship property. I.C. 29-3-8-2(8). Among the specific powers enumerated, a guardian has the power to pay to the person or entity having custody of the minor "a reasonable amount" for the minor's support. I.C. 29-3-8-4(6). In determining a reasonable amount, I.C. 29-3-8-4(6)(C) provides that "due regard" be given to whether other funds are available for the minor's support, among other factors. In addition, a guardian also has the power to distribute guardianship property "as the guardian believes to be in the best interest of the [minor]." I.C. 29-3-8-4(7). This includes the power to make payments to a guardian, custodian, or adult relative of the minor and to expend money directly for the minor's benefit. Id.

These provisions suggest that a guardian has broad power to expend guardianship property in the minor's best interest, limited only by the responsibility to conserve guardianship property that exceeds the minor's current needs. I.C. 29-3-8-1(a)(3), 29-3-8-3(3). A guardian is specifically authorized to pay a reasonable amount from the minor's own funds for the minor's support, giving only "due regard" to other available support. Yet, the attorney contends that, where parental support is available, I.C. 29-3-8-1(a)(3) prohibits expenditure of the minor's own funds for the minor's support. This contention conflicts with the provisions described above, which expressly authorize such expenditures. Had the legislature intended an absolute prohibition on the use of guardianship property for the minor's support in certain circumstances, we think the powers of the guardian would have been so limited.

Therefore, we assume that funds are available for Sonya's support and maintenance, absence evidence to the contrary. Based on the facts available to us, there is no such contrary evidence. The court order authorizing the personal injury claim settlement does not mandate that the settlement proceeds be placed in a restricted account, and it does not preclude their use for support or maintenance. We presume the funds were placed in a restricted account pursuant to Marian County Probate Rules (Sonya's personal injury claim was settled in Marian County). Other than requiring a court order, the Probate Rules, court documents and deposit certificate do not reflect additional restrictions on the withdrawal of funds. Thus, currently no evidence contradicts the assumption that the funds in the blocked account would be available for Sonya's care and maintenance. POMS SI 01140.215(B)(2).

The field office may wish to inquire about whether Ms. C~ has ever petitioned the court to withdraw funds, and under what circumstances the petitions were granted or denied. We recommend the field office follow the POMS guidelines in this regard. See POMS SI 01140.215(B)(3), POMS SI 01140.215(C); see also White v. Apfel, 167 F.3d 369 (7th Cir. 1999) (presumption that funds in blocked account were available was successfully rebutted by probate court's denial of petition for release of funds).

CONCLUSION

Sonya has funds in a "blocked" account, since withdrawals are allowed only with a written court order. Indiana law does not appear to prohibit withdrawals for Sonya's care and maintenance. Rather, Indiana law would require that the funds be made available for Sonya's care and maintenance. Therefore, we assume the funds in a blocked account are a resource absent evidence to the contrary. Given the information available, there is no such contrary evidence. Thus, the funds in the blocked account should be considered a resource for SSI purposes. POMS SI 01140.215.