TN 4 (12-07)

PR 08305.048 Texas

A. PR 08-021 Ability of a Child Adopted in North Carolina to Inherit Underpayment Under Texas Law (DNH Vernie P. D~, SSN ~) - REPLY

DATE: November 14, 2007

1. SYLLABUS

Does a child adopted by another during the natural parent's lifetime qualify for an underpayment due on the deceased natural parent's account? The Texas Probate Code provides that an adopted child can inherit from and through his or her natural parents. Tex. Prob. Code Ann. § 40 (2007). The United States Court of Claims acknowledged that under Texas statutes, a child who another adopts during his or her natural parent's lifetime does not lose any rights of inheritance from his or her natural parent.

2. OPINION

This memorandum is in response to your request for an opinion regarding whether a child adopted in North Carolina, while his natural mother was still living, is entitled to receive an underpayment on the account of his now deceased natural mother who died while domiciled in Texas. In our opinion, the adopted child is entitled to receive his proportion of the underpayment on the account of his deceased natural mother because the Social Security Act (Act) provides for underpayments to be paid to a deceased's survivors or heirs, and Texas law allows for an adopted child to inherit from his natural parents.

As we understand the facts, NH Vernie P. D~ (Ms. D~) gave birth to Lonnie E. D~, Jr., (Lonnie) on June 2, 1965, in Dallas, Texas. On February 5, 1976, Carl and Flora K~ (Adopting Parents) adopted Lonnie in North Carolina. The Adopting Parents changed Lonnie's name to Lonnie E. K~. On February 6, 2007, Ms. D~ died intestate while domiciled in Texas. The Social Security Administration (Agency) processed and awarded Ms. D~'s Title II disability claim after her death, resulting in an underpayment of $2,042.00. The application for Ms. D~'s underpayment lists three adult children, one of whom is Lonnie. None of these three children filed a claim for children's insurance benefits on Ms. D~'s record. At the time of Ms. D~'s death, she did not have a surviving parent entitled to monthly benefit earnings on her record or a surviving spouse.

The Act provides that when an underpaid beneficiary is deceased, payment must be made to the deceased's survivors or heirs. 42 U.S.C.A. § 404(d) (2007); see also Program Operations Manual System (POMS) General (GN) 02301.030. The Act sets forth seven groups of individuals in order of priority in which the Agency will pay the deceased's survivors or heirs. 42 U.S.C.A. § 404(d). The regulations emphasize that the Agency will distribute an underpayment to the living person or persons in the highest order of priority as follows:

(1) The deceased individual's surviving spouse as defined in section 216(c), (g), or (h) of the Act who was either:

(i) Living in the same household (as defined in § 404.347) with the deceased individual at the time of such individual's death, or

(ii) Entitled to a monthly benefit on the basis of the same earnings record as was the deceased individual for the month in with such individual died.

(2) The child or children of the deceased individual (as defined in section 216(e) or (h) of the Act) entitled to a monthly benefit on the basis of the same earnings record as was the deceased individual for the month in which such individual died (if more than one such child, in equal shares to each such child).

(3) The parent or parents of the deceased individual, entitled to a monthly benefit on the basis of the same earnings record as was the deceased individual for the month in which such individual died (if more than one such parent, in equal shares to such parent). . . .

(4) The surviving spouse of the deceased individual (as defined in section 216(c), (g), or (h) of the Act) who does not qualify under paragraph (b)(1) of this section.

(5) The child or children of the deceased individual (as defined in section 216(e) or (h) of the Act) who do not qualify under paragraph (b)(2) of this section (if more than one such child, in equal shares to each such child).

(6) The parent or parents of the deceased individual, who do not qualify under paragraph (b)(3) of this section (if more than one such parent, in equal shares to each such parent). . . .

(7) The legal representative of the estate of the deceased individual as defined in paragraph (d) of this section.

20 C.F.R. § 404.503(b) (2007). As stated above, Ms. D~ had three surviving children including Lonnie, but she did not have a surviving parent entitled to monthly benefits on her earnings or a surviving spouse. Thus, the Act and regulations provide that payment should be made to Ms. D~'s children. See 42 U.S.C.A. § 404(d); 20 C.F.R. § 404.503(b).

We must first determine whether Lonnie qualifies as Ms. D~'s child as defined in section 216(e) or (h) of the Act. The Act's definition of "child" includes "the child or legally adopted child of an individual." 42 U.S.C.A. § 416(e). Section 216(h) of the Act provides that in determining whether an applicant is the child of a fully or currently insured individual, the Commissioner shall "apply such law as would be applied in determining the devolution of intestate personal property . . . by the courts of the State in which such insured individual [was] domiciled at the time of his death . . . ." 20 U.S.C.A. § 416(h)(2)(A) (2007); see also 20 C.F.R. § 404.355(a)(1), (b)(1), (b)(4) (2007). In this case, the insured wage earner, Ms. D~, was domiciled in Texas at the time of her death. Therefore, the Agency must determine whether Lonnie could inherit Ms. D~'s personal property under Texas intestacy law. The Texas Probate Code provides that an adopted child can inherit from and through his or her natural parents. Tex. Prob. Code Ann. § 40 (2007). Indeed, the United States Court of Claims acknowledged that under Texas statutes, a child who another adopts during his or her natural parent's lifetime does not lose any rights of inheritance from his or her natural parent. See Berkey v. United States, 361 F.2d 983, 984 n.1 (Cl. Ct. 1966). Because Lonnie can inherit from his natural mother under Texas law, Lonnie is Ms. D~'s child under the Act.

We must next determine whether Lonnie occupies the same level priority as Ms. D~'s two other adult children. Under the statutory level of priority for underpayments the Act and regulations set forth, a deceased number holder's children can occupy either the second or the fifth level of priority. 42 U.S.C.A. § 404(d)(2), (d)(5); 20 C.F.R. § 404.503(b)(2), (b)(5). A child or children would fall under the second level of priority if, in the month Ms. D~ died, one or more of her children was entitled to monthly benefits on the basis of the same wages and self-employment income as Ms. D~. 42 U.S.C.A. § 404(d)(2); 20 C.F.R. § 404.503(b)(2). Under these circumstances, the Agency should pay such a child the entire amount of the underpayment or, if there is more than one such child, in equal parts to each such child. Id. Ms. D~'s children would fall under the fifth level of priority if none of Ms. D~'s children were entitled to monthly benefits on her income. 42 U.S.C.A. § 404(d)(5); 20 C.F.R.§ 404.503(b)(5). Under these circumstances, the Agency should pay each such child in equal parts. Id. Consequently, the relevant inquiry is what priority level Ms. D~'s children occupied.

A child entitled to benefits at the second level of priority must meet certain threshold requirements: (1) the child must have applied for benefits; (2) the child must have been unmarried at the time of the application; and (3) the child must either be under the age of eighteen (nineteen if a full-time student), or be disabled prior to the age of twenty-two. See 20 U.S.C.A. § 402(d)(1) (2007); 20 C.F.R. § 404.350. In the case at hand, neither Lonnie nor Ms. D~'s other two children had filed an application for child's insurance benefits, all of the children were over the age of nineteen, and there is no evidence that any of the children were under a disability prior to age twenty-two. Because none of the children met the threshold requirements at the time of Ms. D~'s death, the remaining requirements at the second level of priority are irrelevant, and none of the children fall under the second level of priority. See 42 U.S.C.A. § 404(d)(2); 20 C.F.R. § 404.503(b)(2). Ms. D~'s three children fall under the fifth level of priority because they meet the Act's definition of a child, and they do not qualify under the second level of priority. 42 U.S.C.A. § 404(d)(5); 20 C.F.R. § 404.503(b)(5). Thus, the Agency should pay Ms. D~'s three children, including Lonnie, in equal parts.

For the above reasons, we believe that Lonnie is entitled to receive his proportion of Ms. D~'s underpayment because Texas law allows for an adopted child to inherit from his natural parents.

In summary, we believe that the wage earner validly adopted Ms. C~ as her daughter under state law and that Ms. C~ is, therefore, entitled to receive the underpayment due the deceased wage earner.

Tina M. W~
Regional Chief Counsel

By: ____________________
Anne L. H~
Assistant Regional Counsel

B. PR 05-087 Would a Texas Adoption of an Adult Meet the Definition of a Child for Payment of Underpayment (NH Allison H~: SSN ~)--REPLY

DATE: February 1, 2005

1. SYLLABUS

Texas recognizes the validity of adult adoptions. Tex. Fam. Code Ann. § 162.501. To be adopted, an adult must consent in writing. Tex. Fam. Code Ann. § 162.504. Both the petitioner and the adult to be adopted must attend the adoption hearing, which is to be held in the county of the petitioner's residence. Tex. Fam. Code Ann. § 162.505. The court shall grant the adoption if it finds that the legal requirements are met. Tex. Fam. Code Ann. § 162.506.

Under the Texas adult adoption statute, the adopted adult is entitled to inherit from and through the adoptive parents as though the adopted adult were the biological child of the adoptive parents. Tex. Fam. Code Ann. § 162.507 (b). Thus, an adult adopted in Texas is deemed to be the child of the wage earner. 20 C.F.R. § 404.356.

2. OPINION

The purpose of this memorandum is to respond to your request for our opinion regarding the validity of the wage earner's adoption of Terri C~, an adult, and whether that adoption qualifies Ms. C~ as a "child" entitled to receive an underpayment due the deceased wage earner. After reviewing the facts and relevant law, we believe that Ms. C~'s adoption is valid and that she is entitled to receive the underpayment due the wage earner.

As we understand the facts, the wage earner filed for Title II disability benefits in October 2002. She died on November 9, 2002, while domiciled in Midland, Texas. Her application was approved with an onset date of September 28, 2001, and a date of entitlement of March 2002. An underpayment of $8,216.00 exists for March through October 2002.

Ms. C~, who was born in 1962, has applied to receive the underpayment due the wage earner. A Fax Cover Sheet attached to your request for our opinion indicates that Ms. C~ and the wage earner had the same residence address. Ms. C~ has submitted a "Final Order of Adoption of Adult" from the Midland County, Texas, State District Court, dated May 17, 2002. The order of adoption indicates that Ms. C~ and the wage earner were present at the adoption hearing, that Ms. C~ provided written consent to the adoption, that all legal requirements were met, that the adoption was granted, and that Ms. C~ "is henceforth the daughter of Petitioner, Allison H~, for all purposes."

As you know, underpayments due deceased beneficiaries are to be paid based on a statutory priority list. 42 U.S.C. § 404.503 (d), 20 C.F.R. § 404.503 (b). The first category on the priority list is a surviving spouse who was either living with the wage earner or entitled to monthly benefits on the wage earner's account. 42 U.S.C. § 404.503 (d)(1), 20 C.F.R. § 404.503 (b)(1). Next in priority are children or parents who were entitled to benefits on the wage earner's account. 42 U.S.C. § 404.503 (d)(2-3), 20 C.F.R. § 404.503 (b)(2-3) . Next are surviving spouses who were not qualified under subsection (d)(1). 42 U.S.C. § 404.503 (d)(4), 20 C.F.R. § 404.503 (b)(4). Next is the category in question here, children of the wage earner, as defined in section 216(e) or (h) of the Social Security Act (the Act), who do not meet the criteria in subsection (d)(2). 42 U.S.C. § 404.503 (d)(5), 20 C.F.R. § 404.503 (b)(4).

You have indicated that no survivors of higher statutory preference are eligible for the underpayment due the wage earner. Accordingly, if Ms. C~ qualifies as the wage earner's "child," she will be entitled to the underpayment. 42 U.S.C. § 404.503 (d)(5), 20 C.F.R. § 404.503 (b)(5).

The term "child" includes a legally adopted child. Social Security Act, § 216 (e)(1), as amended, 42 U.S.C. § 416 (e)(1); 20 C.F.R. §§ 404.354, 404.356. In determining whether a child is the wage earner's legally adopted child, we apply the laws of the State where the adoption took place. An applicant who would have the same status relative to taking intestate personal property as a child is deemed to be the child of the wage earner. 42 U.S.C. § 416 (h)(2)(A).

Texas recognizes the validity of adult adoptions. Tex. Fam. Code Ann. § 162.501. To be adopted, an adult must consent in writing. Tex. Fam. Code Ann. § 162.504. Both the petitioner and the adult to be adopted must attend the adoption hearing, which is to be held in the county of the petitioner's residence. Tex. Fam. Code Ann. § 162.505. The court shall grant the adoption if it finds that the legal requirements are met. Tex. Fam. Code Ann. § 162.506.

Under the Texas adult adoption statute, the adopted adult is entitled to inherit from and through the adoptive parents as though the adopted adult were the biological child of the adoptive parents. Tex. Fam. Code Ann. § 162.507 (b). Thus, an adult adopted in Texas is deemed to be the child of the wage earner. 20 C.F.R. § 404.356.

The Midland County District Court entered a "Final Order of Adoption of Adult" dated May 17, 2002. The order of adoption indicates that Ms. C~ and the wage earner were present at the adoption hearing, that Ms. C~ provided written consent to the adoption, that all legal requirements were met, that the adoption was granted, and that Ms. C~ "is henceforth the daughter of Petitioner, Allison H~, for all purposes." This Order meets the requirements of the Texas Family Code sections discussed above. Thus, it appears to be consistent with state law.

The Commissioner is not bound by the decision of a state trial court in a proceeding to which she was not a party. However, in adopting Gray v. Richardson, 474 F.2d 1370 (6th Cir. 1973), Social Security Ruling (SSR) 83-37c states that the Commissioner will accept an adjudication of a state trial court where the following prerequisites are met (1) an issue in a claim for Social Security benefits has been determined by a state court of competent jurisdiction; (2) the issue was genuinely contested before the state court by parties with opposing interests; (3) the issue falls within the general category of domestic relations law; and (4) the resolution by the state trial court is consistent with the law enunciated by the highest court in the state. Not all of the above conditions are met in this case, because the issue was not genuinely contested by parties with opposing interests, as all parties agreed to the adoption.

Because all four prerequisites of Gray v. Richardson were not met, the Agency would not be bound by SSR 83-37c to accept the court's adoption decree. Nonetheless, we believe that the Agency should accept the adoption decree as valid, given your statement that there are no other entitled survivors eligible for payment, because we have no reason to believe that the one unmet prerequisite is material in this case. The Texas adult adoption statute mandates that the court shall grant the adoption if it finds that the requirements are met. Tex. Fam. Code Ann. § 162.506. Thus, absent evidence contradicting the court's findings that all legal requirements were met, we do not believe there is any basis to question the court's order.

In summary, we believe that the wage earner validly adopted Ms. C~ as her daughter under state law and that Ms. C~ is, therefore, entitled to receive the underpayment due the deceased wage earner.

Tina M. W~
Regional Chief Counsel

By: ____________________
Brenda M. L~
Assistant Regional Counsel


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PR 08305.048 - Texas - 06/05/2008
Batch run: 01/27/2009
Rev:06/05/2008