PR 07215.010 District of Columbia
A. PR 00-036 SSI and Property of Minors
DATE: May 10, 1999
In Region III (Philadelphia), a minor may hold title to property in the States of Pennsylvania, Delaware, Virginia, West Virginia, and the District of Columbia. A minor also may hold title to property in the State of Maryland, unless he/she has a guardian.
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.
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.
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
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.
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.
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.
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."