PR 01605.026 Minnesota
A. PR 04-138 Effect of Divorce on Stepchild Relationship for Purposes of Distributing DIB after Death Underpayment - Donald R. W~, ~; your reference S2D7B53
DATE: February 9, 1994
Stepchildren are entitled to share in any UP under section 404(d) if they meet the definition of a child at the time of the NH's death. Section 416(e) includes in the definition of "child" a stepchild who has been such stepchild for not less than 9 months immediately preceding the day on which the insured died. Additionally, a child cannot become entitled to benefits based upon the record of a former stepparent divorced from the child's parent, unless entitlement can be established within the retroactive life of the application at a point before the divorce. When the claimant's entitlement to child's benefits ended and his mother subsequently divorced the NH, the claimant was no longer the insured's stepchild for Social Security purposes.
This is in reference to your June 18, 1993 inquiry concerning whether Robie L~, a former stepchild of the number holder, should be considered a "child" entitled to any portion of an underpayment of disability benefits of approximately $64,000 due the deceased number holder, his former step-father. We conclude that Robie should not be considered a child for the purpose of receiving a portion of his former step-father's underpayment.
The number holder, Donald W~, married Robie L~'s mother, Sharon K. L~, in January 1965. Robie therefore became Mr. W~' stepchild at that time. In January 1969, Brian W~, the natural child of Donald and Sharon W~, was born. Donald and Sharon W~ were divorced on July 3, 1984.
In April 1984, prior to his divorce, Mr. W~ applied for a period of disability and disability insurance benefits (DIB), and in May 1984, also before his divorce, he applied for Supplemental Security Income (SSI). His applications were denied at that time, but were subsequently reopened and reconsidered in light of a court decision in a class-action suit. In October 1992, he was found disabled and awarded benefits on his 1984 applications. This entitled him to a substantial underpayment. Unfortunately, however, Mr. W~ passed away in November 1992 before the payment was made.
When an individual dies before a payment due under title II is paid, payment of the amount due is made in order of priority to persons described in 42 U.S.C. § 404(d). You have indicated that Mr. W~' child or children would be the highest in order of priority under the statute in this case. The statute provides that, when no individual is entitled to benefits on the deceased number holder's account at the time of his death, and there is no surviving spouse, an underpayment is paid "to the person or persons, if any, determined by the Secretary to be the child or children of the deceased individual (and, in case there is more than one such child, in equal parts to each such child)." 42 U.S.C. § 404(d)(5); see also 20 C.F.R. § 404.503(b)(5) (1993); Program Operations Manual System (POMS) GN § 02301.030(A)(1). While Brian clearly is Mr. W~' child under this provision, you inquired whether Robie, as Mr. W~' former stepchild, is entitled to a share of the underpayment.
The regulations and the POMS explain that the "child or children of the deceased individual" for the purposes of determining who is entitled to an underpayment should be determined pursuant to 42 U.S.C. § 416(e) and (h). See 20 C.F.R. § 404.503(b)(5); POMS GN § 02301.030(B)(2). Under section 416(h), an individual may establish child status under the Act if he would be entitled to inherit the number holder's personal property under the laws of the state in which the number holder was domiciled at the time of his death. This provision is not helpful to Robie, however, as he would not be entitled to inherit any property from Mr. W~' estate under Minnesota law, the state in which Mr. W~ was domiciled when he died, even if he had been Mr. W~' stepchild at the time of Mr. W~' death. See Minn. Stat. Ann. §§ 524.1-201(3), 524.2-103 (West Supp. 1992-93)./ Section 416(e) includes in the definition of "child" "a stepchild who has been such stepchild for not less than one year immediately preceding the day on which application for child's insurance benefits is filed or (if the insured individual is deceased) not less than nine months immediately preceding the day on which such individual died." Neither the regulations nor the POMS, however, specify at what point in time child status is determined when distributing an underpayment after the number holder's death.
Robie apparently met the statutory definition of a child when Mr. W~ filed his application for DIB and for collateral child's benefits for Robie in 1984, as Robie had been Mr. W~' stepchild for at least a year prior to the application. Indeed, Robie received child's benefits as a step-child on that application until March 1984, when he was age nineteen and no longer a full-time student./ If Robie had not attained the age of majority, however, his eligibility for child's benefits on Mr. W~' account would have continued even after his mother divorced Mr. W~. See Florio v. Richardson, 469 F.2d 803 (2d Cir. 1972); Social Security Ruling (SSR) 73-26c (Cum. Ed. 1971-75) (adopting F~ as a Social Security Ruling); POMS GN § 00306.230(A)(3)(b). Had his benefits so continued until Mr. W~' death, Robie would have been entitled to receive at least a portion of Mr. W~' underpayment as a child entitled to monthly benefits on Mr. W~' account. See 42 U.S.C. § 404(d)(2). Thus, but for Robie's age, he would have continued to meet the eligibility requirements and would have been entitled to a portion of the underpayment. The POMS indicates that age is not relevant when determining a child's eligibility for an underpayment. See POMS GN §§ 02301.030(B)(2), 02301.055(B)(2). Therefore, if eligibility for the underpayment on Mr. W~' application for disability benefits could be determined by and at the time of Robie's prior application for collateral child's benefits, Robie could arguably be entitled to a portion of the underpayment on his former step-father's application for disability benefits.
We believe the better approach is to determine child status at the time of the number holder's death. While section 404(d) of the Act gives preference to spouses, children, and parents of the number holder who are entitled to benefits on the deceased number holder's account, this preference is given only if the individual is entitled to such benefits in the month in which the number holder died. Furthermore, section 404(d) requires an individual to survive the number holder in order to be eligible to obtain the underpayment. This suggests that Congress was concerned with determining eligibility to receive an underpayment at the time of the number holder's death, and not at some prior date.
The legislative history of section 404(d) also supports this result. Prior to the current provisions of section 404(d), underpayments due a deceased beneficiary could be paid only to a surviving spouse or to the legal representative of the number holder's estate. See S. Rep. No. 744, 90th Cong., 1st Sess. (1967), reprinted in 1967 U.S.C.C.A.N. 2834, 2930. Congress amended the statute, however, because the difficulty and expense of appointing an administrator in order to receive and distribute the underpayment was prohibitive in many cases, especially when the underpayment was the only asset in the estate or the amount of the underpayment was small. See id. The priorities listed in current section 404(d) therefore were intended to provide a practical substitute for paying the underpayment to the deceased number holder's estate for distribution. This strongly suggests that Congress intended that status and eligibility to receive any underpayment be determined as of the date of the number holder's death.
Stepchildren are entitled to share in any underpayment under § 404(d) if they meet the definition of a child at the time of the number holder's death. See Social Security Ruling (SSR) 70-3 (Cum. Ed. 1966-70)./ Robie, however, did not meet that test at the time of Mr. W~' death, as he had not been Mr. W~' stepchild for at least nine months prior to that date. The POMS explain that "[a] child cannot become entitled to benefits based upon the [earning's record] of a former stepparent divorced from the child's natural parent (unless entitlement can be established within the retroactive life of the application at a point before the divorce)." POMS GN § 00306.230(A)(3)(b). When Robie's entitlement to child's benefits ended and his mother subsequently divorced Mr. W~, Robie was no longer Mr. W~' stepchild for Social Security purposes. He cannot rely on that former status to establish child status at the time of Mr. W~' death. Robie therefore is not entitled to share in the underpayment with Brian.
Donna M. W~
Chief Counsel, Region V
Assistant Regional Counsel