This Regional Chief Counsel (RCC) opinion examines the following question: Under the Washington Uniform Transfers to Minors Act (UTMA), at what age will the claimant’s UTMA investment account (Vanguard Account) be countable as either income or a resource for Supplemental Security Income (SSI) purposes? The RCC concludes that under Washington law, UTMA property transferred by irrevocable gift is held by a custodian until the minor reaches age 21. Thus, the agency should not count the Vanguard Account as income or as a resource for SSI eligibility until the claimant reaches age 21.

QUESTION PRESENTED

Under the Washington Uniform Transfers to Minors Act (UTMA), at what age will the claimant’s UTMA investment account (Vanguard Account) be countable as either income or a resource for Supplemental Security Income (SSI) purposes?

BRIEF ANSWER

Once the claimant turns 21. Claimant’s Vanguard Account was transferred by irrevocable gift under the UTMA. Under Washington law, UTMA property transferred by irrevocable gift is held by a custodian until the minor reaches age 21. Thus, the agency should not count the Vanguard Account as income or as a resource for SSI eligibility until the claimant reaches age 21.

SUMMARY OF FACTS

The claimant received an irrevocable gift of the Vanguard Account from a living individual in 1998. Shortly after the claimant turned 18, she applied for, and SSA granted, SSI. Claimant received SSI benefits for nearly two years, until SSA became aware of the Vanguard Account.

Soon thereafter, SSA suspended claimant’s benefits and demanded a return of the prior benefits. The agency reasoned that the Vanguard Account was a countable resource. SSA based that determination on POMS SI SEA 01120.205, which identifies the age of majority for UTMA property in Washington, and thus the age at which it could count as income or as a resource, as 18.^[1] Claimant sought reconsideration.

ANALYSIS

1. a. 

   Relevant Authority

   The Uniform Transfers to Minors Act (UTMA) permits the property of a minor to be held by a custodian until that minor reaches a designated age of majority. 39 Am. Jur. 2d Guardian and Ward § 104 (2018). When such a transfer occurs, the minor lacks ownership rights over the property. Id. Once the minor reaches the age of majority, the minor assumes ownership rights. Id.

   To be eligible for SSI, the dollar value of a claimant’s countable resources or income cannot exceed certain statutory limits. 42 U.S.C. § 1382(a)(1)(A), (B) & (3)(B); 20 C.F.R. §§ 416.202(d), 416.1201, 416.1205; accord POMS SI 01110.003(A). Under agency policy, property transferred to a minor pursuant to the UTMA is neither income nor a resource until the minor reaches the age of majority as defined by state law. See POMS SI 01120.205C, D.

   In Washington, the age of majority for property transferred under the UTMA depends on how the property was transferred to the minor. Wash. Rev. Code § 11.114.200. For property transferred by irrevocable gift or by will or trust, the age of majority is 21. Id., §§ 11.114.040, 11.114.50, 11.114.200(1)(a). For property transferred without a will or trust, the age of majority is 18. Id., §§ 11.114.060, 11.114.200(1)(b). The age of majority is also 18 for property transferred by a person who holds property for, or owes a debt to, a minor without a guardian. Id., §§ 11.114.070, 11.114.200(1)(b). Notably, the age of majority may be extended up to 25 years of age in Washington, if certain criteria are met, including that the transfer creating the custodianship occurred on or after July 1, 2007. Id., § 11.114.200(2), (3).

2. b. 

   Application of Authority

   A living individual transferred the Vanguard Account funds to a custodian as an irrevocable gift for the benefit of the claimant. Accordingly, the age of majority for this account under Washington state law is 21.^[2] Wash. Rev. Code. §§ 11.114.040, 11.114.200(1)(a). The agency should not count the Vanguard Account as income or as a resource for SSI eligibility until the claimant reaches age 21.

CONCLUSION

Claimant’s Vanguard Account funds were transferred by irrevocable gift under the UTMA. Under Washington law, UTMA property transferred by irrevocable gift is held in custody until the minor reaches age 21. Thus, the agency should not count the Vanguard Account funds as income or as a resource for SSI eligibility until the claimant reaches age 21.

This opinion identifies the essential elements of equitable ownership interest in the State of Washington. In this case the parties were reluctant to provide access to the property mortgage records and have provided no convincing evidence that could have established an equitable ownership interest. The opinion is instructive in defining how the individual could proceed to establish such equitable ownership interest by providing the necessary evidence such as proof of mortgage payments, for example.

QUESTION PRESENTED

Whether an individual has established that she retained an equitable home ownership interest in real property she deeded to her daughter as a gift.

SHORT ANSWER

No. Based on the information presented, the individual does not have an equitable ownership interest in the property she deeded to her daughter.

SUMMARY OF EVIDENCE

Ms. N. resides in a property located in Pierce County, Washington (hereinafter “the property”). According to Ms. N., she inherited the property from her father and quitclaim deeds executed and recorded in 2001 indicate that Ms. N. received the property as a gift. However, a later real estate excise tax affidavit indicates that Ms. N. purchased the property for more than $34,000.

Nevertheless, in April 2008, Ms. N. executed and recorded a statutory warranty deed conveying the property to her daughter, Ms. K., as a gift. The Pierce County assessor’s office confirmed that Ms. N. is listed as the taxpayer for the property prior to the April 2008 recording date, and Ms. K. is listed as the taxpayer thereafter. Property taxes were paid for the first half of 2008 and for the first half of 2009, but taxes for the second half of 2008 are currently overdue. It is not clear who paid the property taxes in 2008 and 2009.

According to Ms. N., she deeded the property to her daughter to avoid probate, but considers herself the owner of the property because she lives there and pays the mortgage. She submitted a letter from her bank mortgage holder dated March 18, 2009, and an unsigned loan modification agreement that indicate that she is a named mortgage holder on the property with an existing principal balance of more than $84,000. Ms. N. reported that she made mortgage payments until October 2008, but has since defaulted on the loan and is presently in foreclosure. However, she refused to sign an SSA-4641 form authorizing the mortgage holder to release her account records to SSA and has not produced any other evidence to show that she made mortgage payments after deeding the property to her daughter. Ms. N.’s daughter, Ms. K., has not responded to correspondence concerning ownership of the property.

ANALYSIS

In Washington, a “resulting trust” arises when a person conveys a property’s legal title to another under circumstances that reasonably show the person did not intend for the grantee to have a beneficial interest in the property. Thor v. McDearmid, 63 Wn.App. 193, 205 (1991). Thus, where property is purchased by one person but placed in the name of another, the person with legal title is presumed to hold it subject to the equitable ownership interest of the purchaser, absent evidence of contrary intent. In re Estate of Spadoni, 71 Wn.2d 820, 822 (1967). This presumption is similar to the agency policy recognizing that an equitable ownership interest can result in real property, despite title being held by another party, through personal considerations or from making mortgage payments. Program Operations Manual System SI 01110.515(A)(2)(b), SI 01110.5155(C)(3), SI 01130.100(B)(1)(e).

Ms. N. has failed to present evidence to establish that she has an equitable ownership interest in the property under Washington law. She alleges an ownership interest based on holding a mortgage and residing on the property, but has not produced any evidence that she made any mortgage payments after deeding the property to her daughter. She has refused to authorize the release of account records from her mortgage holder and has not produced copies of cancelled checks or bank statements.

Moreover, even if she produced such evidence, Ms. N. must still overcome another presumption under Washington law. Where there is a close family relationship between the parties, a transfer of title to real property without consideration (i.e., without payment of money) is a gift, rather than a conveyance that would create a resulting trust. In re Estate of Cunningham, 19 Wn.2d 589, 592 (1943) (a gift, rather than a resulting trust, will be presumed when the person taking legal title is “a natural object of the purchaser’s bounty”). The agency has not received any information from Ms. N. or her daughter to determine whether this legal presumption would apply. Further information documenting the intent of the parties in the transfer of this property is necessary in order to answer this question.

CONCLUSION

Based upon the evidence currently available, Ms. N. has failed to establish that she has an equitable ownership interest in the property. However, if Ms. N. provides evidence she made mortgage payments after deeding the property to her daughter and submits evidence of the parties’ intent with respect to each party’s ownership of the property, the agency could make an appropriate determination concerning Ms. N.’s ownership interest, if any.

 

QUESTION PRESENTED

Whether an individual has established that she retained an equitable home ownership interest in real property she deeded to her daughter as a gift.

SHORT ANSWER

No. Based on the information presented, the individual does not have an equitable ownership interest in the property she deeded to her daughter.

SUMMARY OF EVIDENCE

Ms. N. resides in a property located in Pierce County, Washington (hereinafter “the property”). According to Ms. N., she inherited the property from her father and quitclaim deeds executed and recorded in 2001 indicate that Ms. N. received the property as a gift. However, a later real estate excise tax affidavit indicates that Ms. N. purchased the property for more than $34,000.

Nevertheless, in April 2008, Ms. N. executed and recorded a statutory warranty deed conveying the property to her daughter, Ms. K., as a gift. The Pierce County assessor’s office confirmed that Ms. N. is listed as the taxpayer for the property prior to the April 2008 recording date, and Ms. K. is listed as the taxpayer thereafter. Property taxes were paid for the first half of 2008 and for the first half of 2009, but taxes for the second half of 2008 are currently overdue. It is not clear who paid the property taxes in 2008 and 2009.

According to Ms. N., she deeded the property to her daughter to avoid probate, but considers herself the owner of the property because she lives there and pays the mortgage. She submitted a letter from her bank mortgage holder dated March 18, 2009, and an unsigned loan modification agreement that indicate that she is a named mortgage holder on the property with an existing principal balance of more than $84,000. Ms. N. reported that she made mortgage payments until October 2008, but has since defaulted on the loan and is presently in foreclosure. However, she refused to sign an SSA-4641 form authorizing the mortgage holder to release her account records to SSA and has not produced any other evidence to show that she made mortgage payments after deeding the property to her daughter. Ms. N.’s daughter, Ms. K., has not responded to correspondence concerning ownership of the property.

ANALYSIS

In Washington, a “resulting trust” arises when a person conveys a property’s legal title to another under circumstances that reasonably show the person did not intend for the grantee to have a beneficial interest in the property. Thor v. McDearmid, 63 Wn.App. 193, 205 (1991). Thus, where property is purchased by one person but placed in the name of another, the person with legal title is presumed to hold it subject to the equitable ownership interest of the purchaser, absent evidence of contrary intent. In re Estate of Spadoni, 71 Wn.2d 820, 822 (1967). This presumption is similar to the agency policy recognizing that an equitable ownership interest can result in real property, despite title being held by another party, through personal considerations or from making mortgage payments. Program Operations Manual System SI 01110.515(A)(2)(b), SI 01110.5155(C)(3), SI 01130.100(B)(1)(e).

Ms. N. has failed to present evidence to establish that she has an equitable ownership interest in the property under Washington law. She alleges an ownership interest based on holding a mortgage and residing on the property, but has not produced any evidence that she made any mortgage payments after deeding the property to her daughter. She has refused to authorize the release of account records from her mortgage holder and has not produced copies of cancelled checks or bank statements.

Moreover, even if she produced such evidence, Ms. N. must still overcome another presumption under Washington law. Where there is a close family relationship between the parties, a transfer of title to real property without consideration (i.e., without payment of money) is a gift, rather than a conveyance that would create a resulting trust. In re Estate of Cunningham, 19 Wn.2d 589, 592 (1943) (a gift, rather than a resulting trust, will be presumed when the person taking legal title is “a natural object of the purchaser’s bounty”). The agency has not received any information from Ms. N. or her daughter to determine whether this legal presumption would apply. Further information documenting the intent of the parties in the transfer of this property is necessary in order to answer this question.

CONCLUSION

Based upon the evidence currently available, Ms. N. has failed to establish that she has an equitable ownership interest in the property. However, if Ms. N. provides evidence she made mortgage payments after deeding the property to her daughter and submits evidence of the parties’ intent with respect to each party’s ownership of the property, the agency could make an appropriate determination concerning Ms. N.’s ownership interest, if any.

 

This guide provided by the Seattle Regional Chief Counsel covers the inheritance laws in the Tenth Region for Supplemental Security Income purposes. Although in all four states of this region inheritances begin at the moment of death, the amount of the inheritance is subject to other complicating factors.

QUESTION PRESENTED

When is an inheritance considered “received” by an heir in the states of Alaska, Idaho, Oregon, and Washington for purposes of counting it as income or a resource for Supplemental Security Income (SSI) eligibility? The purpose of this question is to establish and publish regional instructions to explain individual state laws pertaining to when an inheritance is “received.”

ANSWER

An inheritance is considered “received” by an heir in the states of Alaska, Idaho, Oregon, and Washington upon the decedent’s death. However, we advise against implementing regional instructions for all cases, because the value of an inheritance “received” may vary greatly until the individual actually receives the item(s) or the date the estate is closed. We therefore advise that in cases where an individual’s interest may be too speculative, you may assume that the individual derives no income until the earliest of either the date the individual alleges receipt of the inheritance or the date the estate is closed. The Office of the General Counsel is available to provide advice in analyzing fact-specific cases.

ANALYSIS

1. Federal Law: Income and Resources

The Social Security Act (Act) provides that an aged, blind, or disabled individual with a limited income, as set forth under SSI regulations, is eligible for benefits under Title XVI if his or her nonexcludable resources do not exceed $2,000 (or $3,000 if married) as of January 1, 1989. 42 U.S.C. § 1382(a); 20 C.F.R. §§ 416.1110, 416.1205(a), (c).

For SSI purposes, “income,” which may be earned or unearned, is defined as anything an individual receives in cash or in kind that he or she can use to meet the individual’s needs for food and shelter. 20 C.F.R. §§ 416.1102, 416.1110, 416.1120. A resource is defined as “cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance.” 20 C.F.R. § 416.1201(a). If a property right cannot be liquidated, it is not considered a resource. 20 C.F.R. § 416.1201(a)(1). In summary, income is “received” and can be used to meet an individual’s needs for “food and shelter”; a resource is “owned” and can be used for “support and maintenance.”

Except for amounts spent on the deceased person’s last illness and burial that are spent by the end of the month following receipt, death benefits (including inheritances) are considered unearned income upon receipt. 20 C.F.R. §§ 416.1102, 416.1121(e), (g). Unearned income is counted at the earliest of when it is received, credited to the individual’s account, or set aside for the individual’s use. 20 C.F.R. § 416.1123(a). Death benefits (including inheritances) are considered to be resources the month following the month in which they meet the definition of income. 20 C.F.R. § 416.1201(a)(4), Program Operations Manual Systems (POMS) SI 01120.215A(1).

Until an item or right has a value—that is, it can be used to meet the individual’s need for food or shelter—it is neither income nor a resource. POMS SI 00830.550(A)(2). If an individual was unaware of his or her ownership of an asset, the asset is not a resource during the period in which the individual was unaware of ownership. POMS SI 01110.117(A).

An individual is deemed to have an “ownership interest” in an unprobated estate, for purposes of treating it as a resource, if the inheritance, use of income, and distributions are uncontested and: (1) documents, such as a will or court records, indicate that the individual is an heir to the property of the deceased; (2) the individual has use of the property or receives income from it; or (3) the individual is related to the decedent such that he or she is entitled to a share of the property under state intestacy laws. POMS SI 01120.215(B)(2). To establish when the inheritance is received in the absence of regional instruction, it is assumed the individual derives no income until the earliest of: (1) the date the individual alleges receiving the inheritance; or (2) the date the estate is closed. POMS SI 00830.550(B)(2).

2. State Laws

The laws of Alaska, Idaho, Oregon, and Washington provide that a decedent’s property passes at death to those entitled to it, whether under a will or by intestate succession. An heir may assign or otherwise alienate his or her interest in the estate, although transfer of possession of that interest must await final closing of any probate action covering the estate. In the absence of probate, distribution is subject to the rights of creditors and others.

A. Alaska State Law

Alaska has adopted the Uniform Probate Code. Alaska Stat. § 13.06.005 (2009). Under Alaska law, a decedent’s real and personal property passes and has value to the heir at the time of the decedent’s death, regardless of whether there was a will or the decedent died intestate. Alaska Stat. § 13.16.005 (2009). The inheritance is subject to any homestead allowance, exempt property and family allowance, rights of creditors, the elective share of the surviving spouse, and administration. Id. Immediately upon the decedent’s death, title to the property is in the heirs. Sheehan v. Estate of Gamberg, 677 P.2d 254 (Alaska 1984). This is not dependent on the existence of a will, probating of the will, or completion of probate.

B. Idaho State Law

Idaho, which is a community property state, has adopted the Uniform Probate Code. Idaho Code Ann. § 15-1-101 (2009). Under Idaho law, a decedent’s real and personal separate property passes and has value to the heir at the time of the decedent’s death, regardless of whether there was a will or the decedent died intestate. Idaho Code Ann. § 15-3-101 (2009). The inheritance is subject to any rights to a homestead allowance, exempt property and family allowances, renunciation to rights of creditors, elective share of the surviving spouse, and administration. Id.

C. Oregon State Law

In Oregon, upon the death of a decedent, title to the property of the decedent vests in the decedent’s heirs, “subject to support of spouse and children, rights of creditors, right of the surviving spouse to elect against the will [if any], administration and sale by the personal representative.” Or. Rev. Stat. Ann. Title 12 § 114.215(1) (2009). Upon the death of the decedent, the title of his or her real property passes to the heirs, subject only to the right of the administrator to possession for payment of debts. In re Witherill’s Estate, 166 P.2d 129 (Or. 1946).

D. Washington State Law Washington is a community property state, which recognizes both spouses and domestic partners. Wash. Rev. Code Ann. § 26.16.150 (2009). Upon the death of a decedent, a one-half share of the community property is to be confirmed to the surviving spouse or surviving domestic partner; the other one-half is subject to testamentary disposition or intestate succession. Wash. Rev. Code Ann. § 11.02.070 (2009). The whole of the community property is subject to probate administration, including “payment of obligations and debts of the community, the award in lieu of homestead, the allowance for family support, and any other matter for which the community property would be responsible or liable if the decedent were living.” Id. Upon the death of the decedent, title to real property vests in the heirs immediately. Wash. Rev. Code Ann. § 11.04.250, 11.04.290 (2009). Subject to community property rights, nonprobate assets specifically referred to by will vest immediately upon the death of the owner. Wash. Rev. Code Ann. §§ 11.11.020(1), 11.11.060 (2009). An intestate interest is created only upon the death of the decedent. Matter of Estate of Baird, 933 P.2d 1031, 1035 (Wash. 1997).

CONCLUSION

The states of Alaska, Idaho, Oregon, and Washington all provide that an individual receives an inheritance at the moment of the decedent’s death. We note, however, that determining the value of the inheritance as of the date of the decedent’s death may pose some challenges. Any distribution of the inheritance is subject to diminution due to claims of creditors; exempt property and family allowances; rights of the surviving spouse to elect against the will or, in community property states (Washington and Idaho), the rights to an elective share by a surviving spouse or the surviving domestic partner in Washington. As a result, valuing the share of the inheritance while the assets are still subject to diminution before distribution may be difficult, if not impossible in some cases. “Until an item or right has a value (i.e., it can be used to meet the heir’s need for food or shelter)” it is neither income nor a resource. POMS SI 00830.550(A)(2). Where an individual’s interest may be too speculative, you may wish to assume that an individual receives the inheritance at the earliest of the date the individual alleges receipt of it or the date the estate is closed. POMS SI 00830.550(B)(2). An analysis of the date of receipt of an inheritance will depend on the specific facts of each case, and advice from the Office of the General Counsel is available on a case-by-case basis.