PR 07215.052 Virginia
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).
An additional provision of the Virginia Code further supports our position that a minor may hold title to property in Virginia. According to Virginia law, an "infant" is presumed to be a "person under a disability." Va. Code Ann. § 8.01-2(6) (b) (Michie 1998). Virginia circuit courts may, in the exercise of their equity jurisdiction, order the sale, exchange, lease, encumbrance, or other disposition of the property of an infant upon competent evidence that such disposition will promote the interests of the minor owner. Va. Code Ann. § 8.01-68 (Michie 1998). The proceeds of such sale or other disposition will be invested at the discretion of the court for the use and benefit of the minor. Va. Code Ann. § 8.01-76 (Michie 1998). Therefore, a minor may hold, but have limited control over, property in Virginia.
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.
V. Virginia: A. Minors Although Neither Case Law Nor Statutes Clearly Indicate Whether Minors Can Have Title to Property, We Believe, Based on C.J.S., that the Better View is that They Can.
The "Guardian and Ward" statutes generally provide that a guardian of a minor's estate shall have "the possession, care, and management of his estate, real and personal, and out of the proceeds of such estate shall provide for his maintenance and education." Va. Code Ann. Sec. 31-8 (Michie 1992). While the guardian has possession of the minor's property, there is no evidence of the guardian's obtaining title to the property.
An unrelated provision in Title 11, Contracts, appears to limit a minor's ability to enter binding contracts to purchase real or personal property or otherwise transact with regard to such property. Section 11-8 describes the special abilities of persons under eighteen years of age who abide by the statute and qualify for a guaranty of credit under various federal laws. These minors can "contract for and purchase any real or personal property with respect to (the loan), execute the note or other evidence of the loan indebtedness and . . . secure the debt by the execution of a deed of trust or chattel mortgage, or other instrument, upon the real or personal property." Va. Code Ann. Sec. 11-8 (Michie 1989).
If the minor does so contract, he is bound by "such contracts or other instruments entered into as though he or she were of full age." Va. Code Ann. Sec. 11-8 (emphasis added). This could imply that under normal circumstances and absent specific authority to do so, a minor would not be able to contract to purchase real or personal property or to execute instruments to secure the resulting debt. This in turn would prevent them from holding title.
However, the C.J.S. analysis above may also apply in Virginia. That is, rather than barring minors from transacting regarding property, section 11-8 may simply acknowledge that minors outside the purview of the statute can disaffirm contracts. These minors would have title to property until they disaffirmed the contract under which they purchased it. Thus, section 11-8 does not necessarily indicate that minors generally cannot hold title to property.
The statutes do not clearly indicate that a minor can hold title to property. However, as was the case in Delaware, if we read the statutes in light of C.J.S.'s general provision that minors can hold title to property, the statutes become consistent. Since the statutes do not clearly indicate otherwise, and since there is no case law either way, we believe the best conclusion is that minors can hold title to property in Virginia. B. Incompetents Case Law Establishes that Ownership of the Incompetent's Property Remains with the Incompetent.
Like the District of Columbia, Virginia appoints both guardians, to manage the ongoing maintenance of the incompetent, and "fiduciaries", to manage the incompetent's property. Neither the guardianship provisions nor the fiduciary provisions indicate that title vests in the guardian or fiduciary. Va. Code Ann. Sec. 37.1-128.01 to -147 (Michie 1990 & Supp. 1992). However, case law clearly establishes that title remains in the incompetent. Shands v. Shands, 175 Va. 156, 7 S.E. 2d 112, (1940) states that "(t)he ownership of the property remains in the incompetent; its management alone is transferred to another for preservation and such wise expenditure as may be most beneficial to the incompetent owner." Id. at 113. A line of cases has adopted this holding, the most recent being Layton v. Pribble, 200 Va. 405, 105 S.E. 2d 864, 867 (1958).
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."