SI ATL01110.516 Equitable Life Estate In Home Property

A. General

An individual who has a life estate interest in property will usually have a deed, will, or other written document which shows his ownership interest.

However, a life estate or other interest in land may exist even in the absence of a written document. Although every state in our region requires that the sale of land or interest in land must be in writing, the states usually recognize exceptions to this requirement if certain factors are present. These factors are not exactly the same in all states and are not always weighted equally. But it is generally true that an oral or informal agreement to transfer any interest in land creates an ownership interest if the individual claiming ownership (1) proves that he has possession of the land, (2) has made partial payment of the purchase price and (3) has made valuable improvements on the property.

Most SSI situations involving equitable life estates occur when the SSI individual sells property to someone else and both parties agree they intended for the seller to retain a life estate interest, despite the fact that it was not mentioned in the deed. An agreement by the parties eliminates the need to establish any of the requirements outlined above.

If an SSI recipient alleges a life estate interest in property (real or personal) based on an oral or informal agreement (this includes written or notarized statements that are not recorded), one must develop whether an equitable life estate exists. If the existence of an equitable life estate is based on one of the two situations discussed in B below, the determination may be made in the district/branch office. All other cases must be referred to the Assistant Regional Commissioner, Programs, ATTN: Assistance Programs Branch, for an opinion from the regional attorney.

B. Cases to be handled by the district/branch office

The district/branch office may determine, for the purposes of SSI eligibility, that an ownership interest in the form of a life estate exists if all of the conditions in 1 or 2 exist.

  1. a. The owner of record (individual shown as owner on court records, usually the buyer) agrees that a life estate was orally or informally created on behalf of the SSI individual or that the transferor (seller) orally reserved a life estate; and

    b. The SSI recipient lives on the property; and

    c. The SSI recipient once owned the property, transferred it to someone else and alleges he retained a life estate.

    Example:

    John Jones bought a 10-acre farm in 1939. In 1972 he deeded the property to his daughter. He and his daughter both allege that they intended for Mr. Jones to retain a life estate interest in the property. Mr. Jones has lived on the property since 1939. The district office can determine that Mr. Jones has a life estate interest in the property.

  2. a. The owner of record agrees that a life estate was created on behalf of the SSI individual; and

    b. The SSI individual lives on the property; and

    c. The SSI individual purchases the property and gives it to someone else, either relative or non-relative (in which case the evidence of ownership will usually show the other person as the owner).

    Example:

    Mary Joiner bought a 3-bedroom home in 1970. She wanted her friend, June, to have the house when she died, so June was shown as the owner of the property on the deed. Both June and Mary state that Mary intended to live in the house until her death and that June wouldn't completely own the property until Mary's death. The district office can determine that Mary has a life estate interest in the property.

C. Development

Obtain a SSA-795 from each party involved in the transaction stating the intent of the parties regarding a life estate at the time of transfer and the conditions of the transfer. A life estate does exist if there is no evidence to the contrary and all the criteria listed in B1 or B2 above are met.

If it is not possible to obtain a statement from a party to the informal agreement (because he is dead or will not cooperate) or all the conditions in B.1 or B.2 are not present and evidence of a life estate interest is needed for living arrangement or support and maintenance development, send the case to the Assistant Regional Commissioner, Programs, ATTN: Assistance Programs Branch, for an opinion from the regional attorney.


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