PR 07215.048 Texas
A. PR 02-110 Purchase of Property by Representative Payees on Behalf of Minor Children in Texas REPLY ~
DATE: July 10, 2002
Texas State law does not prohibit a minor from acquiring real or personal property in his or her own name. In addition, Texas State law does not prohibit a representative payee from investing in real estate. In this case, it is determined that the purchase of real estate by the parent representative payee on behalf of the minor child qualifies as a prudent investment under the "prudent man" rule.
This memorandum is in response to your request for our opinion as to whether or not a minor is permitted to own property in the State of Texas. You have requested that we determine whether or not the proposed purchase of real estate by the representative payee qualifies as a prudent investment under the prudent man rule. Further, if this is considered to be a prudent investment, you have requested that we determine whether or not Texas State law permits the property to be titled showing the child as owner. For the reasons discussed below, we believe that there are no statutory restrictions on the ownership of property by minors in the State of Texas, and that the purchase of real estate by the representative payee qualifies as a prudent investment under the prudent man rule.
A child Social Security beneficiary (C1) received a retroactive payment of over $100,000. The child's mother is the representative payee and is a realtor. The mother, as representative payee, wishes to use $84,000 from the retroactive payment to invest in a house for the purpose of renovating and selling it.
In our opinion, a minor is capable of holding title to property in Texas. Although no statute specifically addresses the abilities of those younger than eighteen to own property, there appears to be no restrictions under Texas law on the ability of minors under the age of eighteen to own property. Moreover, case law in Texas implies that a minor has the ability to own or acquire property without such restrictions because there are cases involving a minor's ownership interest in property which do not question the right of the minor to own the property. See Johnson v. Morton, 67 S.W. 790 (Tex. Civ. App. 1902) (minors granted property in a deed); Milner v. McDaniel, 36 S.W. 2d 992, 993 (Tex. 1931) (minor can take title to the homestead property unburdened by the claims of creditors of the decedent's estate except those specified by the Texas Constitution and Statute); Snyder v. Allstate Insurance Co., 485 S.W. 2d. 769 (Tex. 1972) (title of car in the name of the minor and the minor considered owner of car). There appears to be no restriction as to the age of the minor or the types of property that can be held by a minor; therefore, it is our opinion a minor can own property in Texas.
In addressing whether or not the purchase of real estate would be a prudent investment, Texas has no special provisions for investments by parent payees of minor children. Therefore, we look to the rules applying to the investments of trust estates by trustees. Generally, there are no specific types of investments that are considered appropriate or inappropriate under Texas Law. Rather, trustees are permitted to acquire any type of investments or property that persons of ordinary prudence, discretion, or intelligence acquire or retain for their own account. See Tex. Prop. Code Ann. § 113.056 (Vernon 1995). In addition, a trustee may manage the trust property and invest and reinvest in property of any character on the conditions and for the lengths of time, as the trustee considers proper, notwithstanding that the time may extend beyond the term of the trust. Id. at § 113.006. Absent limiting provisions in the instrument creating the trust, the trustee of an express trust is given authority to exchange and invest property of the trust. Humane Soc. of Austin and Travis County v. Austin National Bank, 831 S.W.29 574 (sup. 1975) cert. denied, 425 U.S. 976 (1976).
However, these provisions do not confer unlimited power on the trustee. Texas law requires that the trustee "exercise judgment and care under circumstances then prevailing that persons of ordinary prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds." Tex. Prop. Code Ann. § 113.056(a). They are to consider the probable income from as well as the probable increase in value and the safety of their capital. Id. Determinations of whether trustees have exercised prudence are made taking into consideration all of the assets of the trust over which the trustee had management and control, rather than a single investment. Id. Within these limits, a trustee "may acquire and retain every kind of property and every kind of investment that persons of ordinary prudence, discretion, and intelligence acquire or retain for their own account." Id. at § 113.056(b).
In summary, we have found no law in the state of Texas that would prohibit a minor from acquiring real or personal property in his or her own name. Additionally, Texas law does not prohibit a representative payee from investing in real estate, and considering the representative payee's experience as a realtor, we believe that this investment would be prudent under the laws of the state of Texas.
Tina M. W~
Regional Chief Counsel
Cicely S. J~
Assistant Regional Counsel
B. PR 00-027 Request for Formal Legal Opinion Regarding Purchase of Property by Representative Payees on Behalf of Minor Children in Texas
DATE: January 15, 1999
In Region VI (Dallas), a minor in the State of Texas can hold both real and personal property in his or her name.
This memorandum is in response to your request for our opinion on whether Texas law permits a minor to hold title to real and personal property and how the property should be titled. You asked us to address the following issues:
1. Does the State permit a minor to hold title to real property or personal property such as an automobile?
2. If so, are there any restrictions as to the age of the minor or the types of property that can be held?
3. Are there any specific requirements on how the property should/must be titled to show the minor as the titleholder?
4. If a State does not permit a minor to hold title to property, or does not permit the property to be titled/registered in the minor's name, what is the preferred method(s) of titling the property to reflect or protect the minor's interest in the property and satisfy SSA's regulatory requirements?
Your request for this information has arisen because the review of previously terminated SSI childhood disability cases, and other cases involving appeals, have allowed minors to receive large retroactive benefits checks. Inquiries have been received in regional offices from the parents and payees as to whether the minors can purchase property, both realty and personalty. As explained more fully below, in Texas, the minor can hold personal and real property in his or her name, though this ownership does not seem absolute in terms of the minor's ability to exercise control over the property.
At the outset, it should be noted that Texas case law and statutes on the subject of titling are not well developed. One probable reason for this dearth of authority is the minor's status as a person lacking full legal capacity. The Texas Supreme Court recently stated that, "[t]raditionally, the interests of minors, incompetents, and other helpless persons were viewed in law as substantially similar, and both the substantive law and the rules of procedure accord them comparable treatment." Ruiz v. Conoco, Inc., 868 S.W.2d 752, 755 (Tex. 1993). Texas law recognizes a variety of limitations and protections for children. See Byrd v. Woodruff, 891 S.W.2d 689, 704 (Tex. App.—Dallas 1994, no writ) (minors do not have capacity to employ an attorney); Kargar v. Sorrentino, 788 S.W.2d 189, 191 (Tex. App.—Houston [14th Dist.] 1990, no writ) (cannot enter into a binding contract); 1993 Tex. Att'y Gen. Op. No. 93-61 (parents have a right to children's earnings); 1985 Tex. Att'y Gen. Op. No. JM-359 (discussing age requirements for marriage and stating "The premise underlying the common law of infancy and various minimum age requirements is that children lack the requisite facilities to participate in certain activities and to make certain decisions, the intended effect of such laws is to prevent as far as possible the evils which would arise from the imbecility and inexperience to which every man is subject on his entrance into the world").
This recognized reduced capacity to participate in adult endeavors, coupled with an understandable reduced opportunity for ownership, has resulted in a very small body of authority in Texas. However, Texas case law recognizes that minors may own both realty and personalty, though their ownership is coupled with the capacity to repudiate any contract they may make relating to the disposal of that property. See Kargar v. Sorrentino, 788 S.W.2d 189, 190-91 (Tex. App. Houston -[14th Dist.] 1990, no writ) (repudiation of contract to buy personalty); McGill v. Reed, 64 S.W.2d 358, 359 (Tex. App.—Texarkana 1933, no writ) (voidable deed to real property). Examination of Texas case law and statutes has revealed no special titling requirements for property owned by minors or significant restrictions on the type of property that may be owned by a minor.l/ As Texas law contains no restrictions on the ownership of realty or personalty by a minor, your fourth question does not require analysis.
1/A minor may not own an insurance policy prior to age fourteen. See Tex. Ins. Code Ann. Art. 3-49-2 (Vernon 1997).