TN 11 (11-13)

PS 01805.042 Pennsylvania

A. PS 14-006 When Does Ownership of a Decedent’s Real Property Transfer to a Barbara, SSN~

DATE: October 28, 2013

1. SYLLABUS

This Regional Chief Counsel (RCC) opinion explains that in the state of Pennsylvania ownership of the decedent’s real property passes at death to the Barbara, subject to the powers granted to the executor.

It also addresses a second issue of a transfer of resources for less than fair market value.

2. OPINION

QUESTION PRESENTED

In Pennsylvania, does a Barbara [1] named in a will acquire ownership of the decedent’s real property on the date of the decedent’s death? If not, at what point does ownership pass to the Barbara?

BRIEF ANSWER

In Pennsylvania, ownership of the decedent’s real property passes at death to the Barbara, subject to the powers granted to the executor. In her capacity as the estate’s executrix, Barbara elected not to use two parcels of real property to satisfy the estate’s debts – a power granted to her by the will. Accordingly, Barbara, who is also the sole beneficiary of the estate, acquired ownership of at least two parcels of real property on December 19, 2012, the date of the decedent’s death.

BACKGROUND

On February 19, 1999, John, Jr. named Supplemental Security Income (SSI) recipient Barbara SSN~ as both the executrix (personal representative) and sole beneficiary of his estate in a validly executed will. John explicitly outlined the sequential distribution of his estate’s assets in the will. First, he directed that upon his death, the assets of his estate be used to pay “the expenses of my last illness, my just debt, [and] funeral and administrative expenses.” Second, John’s will devised “all the rest, residue, and remainder of [his] estate, real, personal and mixed, of whatsoever character and wheresoever situate[d]” to Barbara “to be hers absolutely.”

John died on December 19, 2012. Additional information is needed to determine the total assets of John’s estate as of December 19, 2012. [2] However, it is known that the estate includes at least three pieces of real property. Barbara sold two of these properties, which are collectively valued at $79,468.20, to her children for a total of $2.00. Property #1 (206 Penn Manor Road) has a fair market value of $23,814.00. Barbara transferred Property #1 to her daughter for one dollar on May 22, 2013. Property #2 (177 Archway Drive) has a fair market value of $55,564.20. Barbara transferred this property to her son on April 24, 2013, for one dollar. There is no information to indicate that Barbara used either Property #1 or #2 as her principal place of residence. Barbara’s children were not named as Barbaras in John’s will.

Barbara provided the agency with a handwritten list of the estate’s debts totaling $75,234.97. Although the fair market value of Property #1 and #2 exceed the estate’s debts, Barbara did not use this property to satisfy the estate’s outstanding debt. She did indicate, however, her intent to sell Property #3 to satisfy the estate’s debts. The estate is currently in probate, and has not yet been settled or closed.

DISCUSSION

In Pennsylvania, legal title to an individual’s real estate “shall pass at his death to his heirs or Barbaras, subject, however, to all the powers granted to the personal representative by this code and lawfully by the will[.]” 20 Pa. C.S.A. § 301(b). See also In re Holbrook’s Estate, 1 Pa. D. 259 (Pa. Orph. 1889) (“Real property is land, and, generally whatever is erected or growing upon, or affixed to land, also rights issuing out of, annexed to and exercisable within or about the same. Such property has the quality of passing, on the death of the owner, to the heir, and not the executor.”); Jones v. LaSalle Nat'l Bank (In re Jones), 2004 WL 1924888 (Bankr. E.D.Pa. Jul. 27, 2004) (“under Pennsylvania law, title to real property passed to [the decedent’s] heirs immediately upon his death”); Lavelle v. M&T Mortg. Corp., 2006 WL 2346320, *4 (E.D. Pa. Aug. 11, 2006) (“legal title to a decedent’s real estate ‘shall pass at his death to his heirs or Barbaras, subject, however, to all the powers granted to the personal representative by the code and lawfully by the will”).

Here, ownership of all three properties passed to Barbara as the sole Barbara on December 19, 2012 – the date of John’s death. This ownership, however, was subject to her power as the estate’s personal representative. Because the will authorized Barbara in her capacity as personal representative to pay the estate’s debts, she could elect to liquidate any of the real property if necessary to pay outstanding debts. However, Barbara elected not to use Property #1 and Property #2 (collectively valued at $79,468.20) to satisfy the estate’s $75,234.47 debt. Accordingly, she acquired unencumbered ownership of Property #1 and Property #2 at the time of John’s death. [3]

A secondary issue exists because Barbara subsequently transferred Property #1 and Property #2 for $2.00 -- $79,466.20 below fair market value. These transfers were not completed in accordance with the regulations. See 20 C.F.R. § 416.1240 (outlining the procedures to dispose of resources). “If an individual fails to dispose of the resources as prescribed in . . . this section, regardless of the efforts he or she makes to dispose of them, the resources will be counted at their current market value and the individual will be ineligible due to excess resources.” 20 C.F.R. § 416.1240(c). “An individual (or eligible spouse) who gives away or sells a nonexcluded resource for less than fair market value for the purpose of establishing SSI or Medicaid eligibility will be charged with the difference between the fair market value of the resource and the amount of compensation received.” 20 C.F.R. § 416.4216(a). [4] An investigation into why Barbara transferred these properties for such a minimal amount may be appropriate.

CONCLUSION

We conclude that Barbara acquired ownership of Property #1 and Property #2 on December 12, 2012. [5]

Nora Koch

Acting Regional Chief Counsel,

By:__________________________

Shannon Petty

Assistant Regional Counsel

B. PS 05-120 Equitable Ownership of Real Property in Pennsylvania

DATE: March 30, 2005

1. SYLLABUS

The SSI beneficiary was the common-law wife of the decndent when he purchased the property, in question, on March 30, 1979. According to the information in the file, her name is on the deed. GN 00305.075 states that Pennsylvania recognizes common-law marriages that took place on or before January 1, 2005. Pennsylvania Law states that property purchased by a married person is the property of both memebers of the couple. It does not matter if one or both members of the couple purchase the property. This property can not be given away or sold unless both members of the couple agree to the transaction. If one member of the couple dies, the other member of the couple retains suvivorship rights as the owner of the property. Because of survivorship rights, a third party cannot claim the property, even if it is willed to him by the deceased member of the couple. Based on the laws of Pennsyvania, the property belongs to the SSI recipient. Therefore, if the beneficiary is not resding on the property, it is a countable resource for her.

2. OPINION

QUESTION PRESENTED

You have requested an opinion as to the nature of the ownership rights that can be asserted, if any, by the surviving common law wife and daughter of a deceased individual who previously owned the property in question jointly as marital property with his surviving common law wife.

SUMMARY

The deed to the property in question, shows that on March 30, 1979, the property was conveyed to "Charles and Cynthia, his wife." Charles died in October 2000. Cynthia, who has since become know as Cynthia, states that she and Charles were married at common law at the time when they purchased this property.

However, Cynthia has denied that she was ever on the deed to the property and has indicated that Charles intended to leave the property to their daughter Corinea. While it appears that no estate was ever probated for Charles, Corinea has apparently lived in the property since Charles's death in October 2000 and has assumed payment of the mortgage and other bills.

DISCUSSION

Pennsylvania is a state that continues to recognize a specific form of co-ownership of property that can only exist between a husband and wife called Tenancy by the Entireties. Annot. Estates by Entirety in Property, 64 A.L.R. 2d 8 (1959). In Pennsylvania, a Tenancy by the Entireties exists between a husband and wife who own property together even in the absence of a manifested intention that they took the property in that manner. See Bove v. Bove, 394 Pa. 627, 629-30, 149 A.2d 67, 68-69 (1959). Thus, if a deed in Pennsylvania is silent as to the type of tenancy shared by a husband and wife, it is presumed that the co-ownership is a Tenancy by the Entireties. See Margarite v. Ewald, 252 Pa. Super. 244, 248, 381 A. 2d 480, 482 (1977); Heather v. Lucas 367 Pa. 296, 298-300, 80 A.2d 749, 751-52 (1951). The Pennsylvania Supreme Court has held that this special type of co-ownership applies equally to the ownership of property by married couples who have been married only at common law without a formal religious or civil ceremony of any kind. See Sterret v. Sterret, 401 Pa. 583, 585-87, 166 A.2d 1,2-3 (1960). The primary characteristic of ownership as Tenants by the Entireties is the indestructible right of survivorship. Essentially the right of survivorship between Tenants by the Entireties cannot be defeated by any attempted transfer of the property by one spouse independently to a third party by will or bequest.See Clingerman v. Sadowski, 513 Pa. 179, 183-85, 519 A.2d 378, 381-83 (1986); In re G~'s Estate, 431 Pa. 108, 112-13, 244 A.2d 27, 29-30 (1968).

Because of the unique nature of ownership of property as Tenants by the Entireties, including the absolutely indestructible right of survivorship, it is impossible for a third party to make any claim of ownership or inheritance rights against property owned by a married couple in Pennsylvania.

This makes property owned by Tenants by the Entireties impervious to attack even from an individual asserting a right to equitable ownership of the marital property.

Although courts have typically been willing to recognize claims of equitable title to property where no actual legal title exists, such claims can arise in only two circumstances. First, an individual can claim equitable title to property where the property has been conveyed to that individual by an enforceable agreement of sale and where the only action yet to be taken to complete the sale is actual delivery of the deed. See Pivirotto v. City of Pittsburgh, 515 Pa. 246, 250-51, 528 A. 2d 125, 127-28 (1987). For this to be applicable to the transfer of property owned by Tenants by the Entireties, both husband and wife must have been parties to the agreement of sale. Second, an individual can claim equitable title to property in cases where he or she can show that he or she has a legitimate claim of entitlement to actual legal title of that property that goes beyond a mere need or expectation to obtain it. See Francini v. Town of Farmington, 558 F. Supp. 151, 154-56 (D. Conn. 1982). In this situation, a claim to equitable title cannot be sustained against property owned by Tenants by the Entireties because, as stated, the nature of this type of joint ownership prevents any third party from asserting a legitimate claim of entitlement to actual legal title.

In this case, because Charles and Cynthia were married at common law, they owned the property in question as Tenants by the Entireties even though the deed to the property does not specifically indicate the type of tenancy involved. Pursuant to the legal provisions discussed above, when Charles died, Cynthia became the sole owner of the property through operation of the right of survivorship. Thus, regardless of Cynthia's claims that Charles intended to leave the property to Corinea, Charles was without the power to dispose of the marital property unilaterally. Similarly, the fact that Corinea has acted as the owner of the property since Charles's death does not give her an equitable right to ownership of the property because she had no legal entitlement to inherit property held by Charles and Cynthia as Tenants by the Entireties. Corinea's actions in paying the mortgage and other bills after Charles's death were not sufficient to give her a legitimate ownership interest. If Cynthia wishes to give the property to Corinea she cannot simply act as though it passed directly from Charles to Corinea in light of the terms of the deed at the time of Charles's death. Instead, if Cynthia chooses to pass ownership to Corinea, as is her option now that she is the sole surviving title holder, she must do so by gift or sale. Accordingly, Cynthia holds both legal and equitable title to the property in question, and Corinea has no ownership interest of any kind.

CONCLUSION

It is our opinion that, Cynthia is both the legal and equitable owner of the property. Corinea has no ownership interest in the property of any kind.

Donna L. Calvert

Regional Chief Counsel, Region III

By:__________________________

Amy E. Nalence

Assistant Regional Counsel


Footnotes:

[1]

A Barbara is the recipient of property by will. Black’s Law Dictionary (9th ed. 2009).

[2]

The Office of General Counsel (OGC) spoke with the Westmoreland County Register of Wills, and confirmed that an accounting of John’s estate had not been filed. We also contacted Gregory, the attorney of record, to obtain a list of the estate’s total assets and liabilities on the date of John’s death. As of the date of this opinion, Gregory had not responded to OGC’s request.

[3]

Although Barbara also has as an ownership interest in Property #3, she has indicated her intent to sell this property to satisfy the estate’s debts. Assuming that the estate has insufficient assets to satisfy its debts, this is a permissible exercise of Barbara’s power as personal representative.

[4]

“Transfer of a resource for less than fair market value is presumed to have been made for the purpose of establishing SSI or Medicaid eligibility unless the individual (or eligible spouse) furnishes convincing evidence that the resource was transferred exclusively for some other reason.” 20 C.F.R. § 416.4216(e).

[5]

Please note that Barbara was named the sole beneficiary of John’s real and personal property. Thus, any remaining real or personal property after the estate is settled would also transfer to Barbara.


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PS 01805.042 - Pennsylvania - 04/28/2005
Batch run: 11/13/2013
Rev:04/28/2005