You asked us whether interests in two parcels of real estate held in joint tenancy
by Fred K~ and several other individuals was a resource to Fred K~ for SSI purposes.
You also asked how the equity value of the properties should be computed in light
of a lien encumbering both properties that was filed by the Clay County Office of
Public Aid for assistance paid to another joint tenant. For the reasons set forth
below, we believe that both parcels give rise to resources for Fred K~.
In 1967, Clarence and Lenora M. K~ executed a quit claim deed to a six-acre parcel
of land in Flora, Illinois, subject to a life estate reserved for themselves, transferring
the property to Fred and Orvil K~ as joint tenants and not tenants in common ("Tract
On the same day, C.E. K~ and Lenora M. K~, executed a quit claim deed to a twenty-acre
parcel of land in Flora, Illinois, transferring the property to Leslie K~, Fred K~
and Orvil K~ as joint tenants and not tenants in common ("Tract 2). The transfer of
Tract 2 was subject to a prior conveyance of a life estate in a five-acre tract of
the property from C.E. K~ and Lenora M. K~ to Leslie K~.
Clarence and Lenora K~ are now deceased.
Orvil K~ is now residing in Flora Healthcare Center and is receiving Social Security
benefits. In 1996, the Clay County Department of Public Aid filed liens against Orvil
K~'s interests in both properties for all assistance paid to on behalf of Orvil K~,
under Article III and/or Article V of the Illinois Public Assistance Code. According
to Linda R~, an employee of the Public Aid office, the amount of the lien has continued
to accrue since 1996. Ms. R~ indicated that the group care costs, which exceeded $132,000
in December 2004, exceed the value of the properties. The amount of the lien will
continue to accrue until Orvil K~ passes away or leaves the nursing home.
Leslie K~ continues to reside on Tract 2 and has been paying all the taxes on that
property. Megan P~, a Claims Representative from the Effingham, Illinois, Field Office,
interviewed Fred K~'s guardian, Robert K~, and determined that sale of Tract 2 would
cause a hardship for Leslie K~ because the property was his principal place of residence
and he had no other place to live.
The regulations provide that:
resources means 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.
If the individual has the right, authority or power to liquidate the property or his
or her share of the property, it is considered a resource . . . .
20 C.F.R. § 416.1201(a). Therefore, if an individual is able to obtain funds or convert
property to cash to be used for his support and maintenance, such funds or property
are to be included as resources for purposes of SSI eligibility determinations. Further,
the sale or exchange of a resource does not result in income to a claimant. Rather,
it is considered a different form of resource. POMS SI 01110.600(B)(4) ("If an individual sells, exchanges, or replaces a resource, what he/she receives
in return is not income. It is a different form of resource.").
In determining whether an individual has a right, authority or power to liquidate
the property, we must first ascertain the interest the individual holds in the property.
1. Tract 1
In this case, because Clarence K~ and Lenora K~ retained a life estate in Tract 1,
the deed transferring this property initially gave Fred K~ and Orvil K~ a joint tenancy
in the remainder interest in Tract 1. Upon the death of the survivor of Clarence K~
and Lenora K~, Fred K~'s and Orvil K~'s interest in the property was no longer subject
to a life estate; their interest was converted to an ownership interest in the property
as joint tenants. Accordingly, we must determine whether a joint tenant has to right
to liquidate his property.
Joint tenancy means Fred K~ and Orvil K~ share an undivided interest in the entire
property. See Minonk State Bank v. Grassman, 432 N.E. 2d 386, 388 (Ill. App. Ct. 1982). Another feature of the joint tenancy
is the right of the survivor of the joint tenants to take the entire estate upon the
death of a joint tenant. See Harms v. Sprague, 473 N.E. 2d 930, 934 (Ill. 1985). In Illinois, it is well established that a joint
tenant can unilaterally sever the joint tenancy by conveying his interest in the property,
with or without the consent or permission of other joint tenants. See e.g. Harms, 473 N.E. 2d at 932; Olney Trust Bank v. Pitts, 558 N.E.2d 398, 400-01 (Ill. App. Ct. 1990); Minonk, 432 N.E. 2d at 390. Thus, because Fred K~ retains the right to sell his interest
in Tract 1 with or without the consent of Orvil K~, it is a resource. 20 C.F.R. §
2. Tract 2
The deed transferring title to Tract 2 reserved a life estate in a five-acre tract
of the property (Tract 2a) for Leslie K~, leaving Leslie K~, Fred K~ and Orvil K~
a joint tenancy in the remainder interest. While Fred K~ retains the right to sell
his remainder interest in Tract 2a, any purchaser's right to possession will not be
realized until Leslie K~ passes. This interest in Tract 2a is a resource, but should
be valued accordingly.
The remaining fifteen-acre parcel of Tract 2 (Tract 2b) is not subject to a life estate.
Thus, Leslie K~, Fred K~ and Orvil K~ share an undivided interest in Tract 2b. As
explained above, Fred K~ retains the right to sell his one-third interest in Tract
2b with or without the consent of Leslie K~ or Orvil K~, and it is a resource. 20
C.F.R. § 416.1201(a)(1).
B. Excludable Resources
The POMS provides that jointly held property that cannot be sold without undue hardship
will be excluded from an individual's countable resources for SSI purposes. See POMS
SI 01110.210.B. Undue hardship results if a co-owner (1) uses the property as his principal place
of residence; (2) would have to move if the property were sold; and (3) has no other
readily available housing. POMS SI 01130.130.A.2.
Claims representative Megan P~ ascertained that Leslie K~, who is now eighty-two years
old, has been residing on the "west part" of Tract 2 for several years, that this
is his principal place of residence, that he has no other place to live, and that
selling the property would force him to move. Thus, he appears to meet the undue hardship
requirements, and the property on which Leslie resides should be excluded as a countable
resource to Fred K~ for as long as Leslie continues to live on the property. Id.
However, because it is unclear whether Leslie K~ is residing on all of Tract 2 or
only the five acres described herein as Tract 2a, before determining which tract of
land is an excludable resource, the Agency should seek to clarify this information.
If it is only the five acres, Fred's remainder interest in Tract 2a and his one-third
interest in Tract 2b would be a resource. If Leslie is residing on some other portion
of the twenty acres, then a determination must be made whether severance of the joint
tenancy in Tract 2b followed by a partitioning into thirds would work an undue hardship
on Leslie. If not, then Fred's one-third interest in tract 2b and his one-third remainder
interest in Tract 2a are resources. If so, then only Fred's one-third remainder interest
in Tract 2a would be a resource.
C. The Public Aid Lien
We do not believe that the public aid lien encumbering Orvil K~'s interest in the
properties affects the value of Fred K~'s interest in the property. Under Illinois
law, a lien or mortgage encumbering one joint tenant's interest in the property cannot
be enforced against a second joint tenant's interest in the property if the second
joint tenant was not a party to the transaction creating the lien. See Harms, 473 N.E. 2d at 934 ("the property right of the mortgaging joint tenant is extinguished
at the moment of his death. While John H~ was alive, the mortgage existed as a lien
on his interest in the joint tenancy"). Although Illinois cases do not appear to address
whether liens created pursuant to public aid statute would likewise be restricted
to the property interest of the joint tenant/debtor, the relevant state statute governing
public aid liens indicates that such liens would generally not attach to property
that would not remain in the estate of the debtor after his death. See 305 Ill. Comp. Stat. 5/5-13 (public aid lien may be enforced against property remaining
in "estate" of public aid recipient).
Given these considerations, in computing the equity value of Fred K~'s interest in
the property, the Agency need not take into consideration the public aid lien encumbering
Orvil K~'s interest in the property.
For these reasons, we believe that Fred K~ has a present salable ownership interest
as a joint tenant in Tract 1 that constitutes a resource for SSI purposes.
We also believe that Fred K~ has a present salable ownership interest as a joint tenant
in Tract 2b. His interest in Tract 2a consists of a remainder shared jointly with
Orvil K~ and Leslie K~ that Fred K~, and this is a resource. Whether Fred K~'s interest
in Tract 2b is considered an excludable resource depends Leslie's living situation,
as discussed above.