This Regional Chief Counsel (RCC) opinion provides a summary of state laws pertaining to conservatorship accounts (or blocked accounts) in the states in Region IX (Arizona, California, Hawaii, and Nevada). This opinion does not discuss conservatorship accounts in the Region IX territories.

Region IX states generally provide that funds in a conservatorship account are available for the care, support, and maintenance of the conservatee, unless a court order provides otherwise. Therefore, such funds are a countable resource for purposes of determining the conservatee’s eligibility for SSI.

QUESTION

You asked whether funds in a conservatorship account in the Region IX states (Arizona, California, Hawaii, and Nevada)^[1] are available for a conservatee’s support and maintenance.

SHORT ANSWER

Funds in conservatorship account in the Region IX states are generally available for a conservatee’s support and maintenance.

OVERVIEW

Every aged, blind, or disabled individual who is determined to be eligible on the basis of his or her income and resources shall receive supplemental security income (SSI). See Social Security Act § 1602; 42 U.S.C. § 1381a; 20 C.F.R. § 416.202. Resources, for purposes of SSI eligibility, consist of any real or personal property an individual owns, has the right to convert to cash, and is not legally restricted from using for his or her own support and maintenance. 20 C.F.R. § 416.1201(a); Program Operations Manual System (POMS) SI 01110.100.B.1.

An individual’s resources can include funds held in financial institution accounts, such as a checking or a savings account. Funds held in a financial institution account are an individual's resource if the individual owns the account and can use the funds for his or her support and maintenance. 20 C.F.R. § 416.1208(a).

A conservatorship account is a financial account “in which a person or institution has been appointed by a court to manage and preserve the assets of an individual which are held in the account .” POMS SI 01140.215.A. SSA treats the terms “conservatorship account” and “blocked account” as synonymous. Id.

Generally, if state law requires that funds in a conservatorship account be made available for the care and maintenance of an individual, SSA assumes, absent evidence to the contrary, that funds in a conservatorship account are available for this purpose. POMS SI 01140.215.B. The funds would therefore be the individual’s resource. Id. This would remain true despite a requirement that the individual must petition a court to access the funds. Id.; see also POMS SI 01120.010.C.3.

Evidence sufficient to rebut the assumption that the funds in a blocked account are available for the individual’s support and maintenance includes, but is not limited to, restrictive language in a court order regarding accessing the funds, as well as state or local practices and procedural rules for the withdrawal of funds. POMS SI 01140.215.B.2.

ARIZONA

Arizona does not have statutory provisions directly related to a court’s establishment of a blocked account to protect the interests of a minor or incapacitated person. However, Arizona Rules of Probate Procedure provide guidelines for a court’s establishment of a conservatorship account. See Ariz. R. Prob. P. 22(C). Specifically, every order appointing a conservator or personal representative must plainly state any restrictions on the conservator’s authority to manage the assets of the conservatee’s estate. Id. Unless otherwise ordered by the court, if a restriction affects the conservator’s ability to manage estate assets, the letters of conservatorship must state that, “Funds shall be deposited into an interest-bearing, federally insured restricted account at a financial institution engaged in business in [A]rizona. No withdrawals of principal or interest may be made without certified order of the superior court.” Id. This court rule appears to anticipate an Arizona court exercising authority to establish a blocked account for the benefit of a conservatee, with the sole restriction that the conservator must obtain the court’s approval prior to making a withdrawal from the account.

Additionally, Arizona has statutory provisions governing the general powers and duties of a conservator. Arizona law permits a court to appoint an individual or corporation to serve as a conservator of the estate of a minor or incapacitated person. See Ariz. Rev. Stat. §§ 14-5401, 14‑5410. A conservator may spend or distribute income or principal of the estate for the support, education, and care of the minor or incapacitated person without court authorization. Ariz. Rev. Stat. § 14-5425(A). In making a determination to spend money from the estate, a conservator must consider the size of the estate, the standard of living of the protected person, and any outside financial sources for the support of the protected person. Id.

Therefore, under Arizona law, funds a conservator holds for a minor or incapacitated person are generally available for the conservatee’s support and maintenance. A court may order a conservator to deposit funds in federally insured account, and restrict the conservator’s ability to withdraw those funds without the court’s approval. However, requiring court authorization to access the account does not rebut the presumption that the account funds are available for the conservatee’s support and maintenance. See POMS SI 01140.215.B.

Accordingly, absent a court order with restrictive language to the contrary, funds in an Arizona conservatorship account are a countable resource to the conservatee.

CALIFORNIA

California has statutory provisions specifically related to a court’s establishment of a blocked account to protect the funds a minor or person with disability.

Under California law, a guardian or conservator can compromise or settle a claim involving a ward or conservatee. Cal. Prob. Code § 2500(a)(1). In such situations, the deciding court can direct all or part of the settlement funds be deposited in an insured account subject to withdrawal only with court authorization. Cal. Prob. Code §§ 3602(b), 3602(c)(1), 3611(b); see also Christensen v. Superior Court of Orange County, 193 Cal. App. 3d 139, 142 (Cal. Ct. App. 1987) (when a court orders a minors’ compromised funds deposited in a bank account, the statute places only one restriction on such accounts: the court's approval is needed before the funds may be withdrawn). Additionally, upon the application of a guardian or conservator, a court may order that money and personal property belonging to the estate of the ward or conservatee deposited in an insured account with a financial institution be subject to withdrawal only upon authorization of the court. Cal. Prob. Code §§ 2453, 2456. Other than requiring court authorization, California statutory provisions place no further restrictions on the guardian or conservator’s use of the funds for the ward or conservatee’s support and maintenance.

More generally, California has statutory provisions governing the power and duties of a guardian or conservator of the estate of a minor or person with a disability. Pursuant to California Probate Code section 2420, a guardian or conservator of the estate shall apply the income from the estate, so far as necessary, to the comfortable and suitable support, maintenance and education of the ward or conservatee. The guardian or conservator may deposit money belonging to the estate in an insured account in a financial institution. Cal. Prob. Code § 2453. Unless otherwise indicated by a court order, this money may be withdrawn without court authorization. Id.

Therefore, under California law, the only restriction on a conservator’s use of funds held in a blocked account is the requirement that the conservator obtain court approval prior to accessing those funds. Requiring court authorization does not rebut the agency’s assumption that the account’s funds are available for the conservatee’s support and maintenance. See POMS SI 01140.215.B . Further, statutory provisions governing the power and duties of a conservator generally support use of estate funds for the support and maintenance of the conservatee.

Thus, under California law, absent a court order to the contrary, funds held in a blocked account are a countable resource to the conservatee.

HAWAII

Hawaii does not have statutory provisions directly related to a court’s establishment of a blocked account to protect the interests of a minor or incapacitated person. However, Hawaii Probate Rule 107(c), which governs conservatorship investment accounts, requires a conservator, unless otherwise ordered by the court, to establish two accounts for conservatorship funds. Haw. Prob. Rule 107(c). Funds dedicated to court-approved regular expenses of the conservatee are to be deposited in a federally-insured account in the name of the conservator and requires only the conservator’s signature withdrawal. Id. The rest of the funds must be deposited in a federally-insured account in the name of the conservator but that requires the signature of both conservator and the conservator’s attorney for withdrawal. Id. Requiring the signature of the conservator’s attorney appears to be an additional procedure for safeguarding the interests of the conservatee, but is not an outright restriction on how the conservator expends or disburses the withdrawn funds.

More generally, under Hawaii law, a court may appoint a conservator to manage the estate and financial affairs of a minor or incapacitated adult. See Haw. Rev. Stat. § 560:5-401. Unless otherwise limited by the court, the conservator has power to collect, hold and retain assets of the conservatee’s estate, including depositing money in a financial institution. See Haw. Rev. Stat. §§ 560:5-425(b)(1), (6). A conservator may also expend or distribute income or principal of the estate, without further court authorization, for the support, care, education, health and welfare of the conservatee, unless otherwise specified in the order of appointment. Haw. Rev. Stat. § 560:5-427(a).

Therefore, under Hawaii law, unless a court orders otherwise, a conservator may generally use estate funds, held in a financial account, for the conservatee’s support and maintenance. Accordingly, absent a court order to the contrary, estate funds held by the conservator in a financial account are a countable resource to the conservatee.

NEVADA

Nevada has statutory provisions specifically related to a court’s establishment of a blocked account for money a minor receives through compromise or settlement of a legal claim.

In a situation where a minor has a disputed claim against a third person, a parent or guardian has the right to compromise the claim. Nev. Rev. Stat. § 41.200(1). If a Nevada court approves the compromise, the court must direct the money to be paid to the parent or guardian. Nev. Rev. Stat. § 41.200(4). Upon receiving the money from the compromise, the parent or guardian “shall establish a blocked financial investment for the benefit of the minor with the proceeds of the compromise.” Nev. Rev. Stat. § 41.200(5). The beneficiary of this blocked account may access it either by a court order or by certification that the beneficiary has reached 18 years. Nev. Rev. Stat. § 41.200(6).

More generally, a Nevada court may appoint a guardian of the estate or of the person, or a guardian of the estate and of the person, of a minor or incapacitated person. Nev. Rev. Stat. §§ 159A.0487, 159.0487. A guardian of the estate has the duty to protect and manage the estate in the best interest of the minor or incapacitated person. Nev. Rev. Stat. §§ 159A.083, 159.083. Additionally, the guardian of the estate shall apply estate funds for the proper care, maintenance, education, and support of the minor or incapacitated person. Id.

Therefore, under Nevada law, except where a court orders the establishment of a blocked account for money a minor receives through compromise of a legal claim, a guardian has the power to expend or distribute estate funds for the support and maintenance of a minor or incapacitated person. Even where a court orders the guardian to create a blocked account for a minor, the guardian can access the account funds with the court’s approval. The agency does not consider the need for such court approval as rebutting the assumption that account funds are available for the minor’s support and maintenance. See POMS SI 01140.215.B.

Accordingly, absent a court order to the contrary, money a guardian holds for a minor or incapacitated person in a financial account is a countable resource.

CONCLUSION

Region IX states generally provide that funds in a conservatorship account are available for the care, support, and maintenance of the conservatee, unless a court order provides otherwise. Therefore, such funds are a countable resource for purposes of determining the conservatee’s eligibility for SSI.

This RCC examines whether ownership of Chinese real property constitutes a resource for supplemental security income (SSI) eligibility purposes, where the individual claims that such property is not freely transferable. Individuals cannot privately own land in China, but may obtain transferrable land-use rights. The individual submitted a certificate to SSA that lists him as the sole owner of a house in China and lists the State as the owner of the land, and also indicates that the land-use right has been assigned.  Chinese law permits individuals to privately own residential houses and apartments built on state-owned land. Based on the documents he submitted to the agency, the individual owns a house and has been assigned a renewable land-use right to the underlying land.  Because his property interest is freely transferable and may be converted to cash, it constitutes a resource for purposes of SSI.

QUESTIONS

You asked whether X~’s ownership of Chinese real property constitutes a resource for supplemental security income (SSI) eligibility purposes, where X~ claims that such property is not freely transferable.

SHORT ANSWER

Yes. X~ is able to sell or otherwise transfer his ownership interest in Chinese real property. Accordingly, that property constitutes a resource for purposes of SSI eligibility.

BACKGROUND

On January 12, 2012, X~ and Y~ applied for SSI as a married couple. X~ and Y~ were both born in China, but currently reside in California and are naturalized United States Citizens. On July 10, 2012, the agency denied X~ and Y~’s application for SSI, finding that their total resources exceeded the statutory Limit. Specifically, X~ admitted that his father transferred ownership of a house to him in 1985. X~ stated that the house’s value was approximately $16,000. X~ and Y~ testified that they do not intend to return to China to live in the house.

On September 5, 2012, X~ requested reconsideration. On October 31, 2012, X~ submitted additional information. Specifically, in an October 31, 2012 statement, X~ claimed that his eight siblings were co-owners of the house his father transferred to him in 1985. He identified the address of the house as ~~ ~~~, Nansha Residential Committee, Jun’An Town, Shunde District, Foshan City, China. Additionally, X~ submitted September 5, 2012 statements from his mother and sister. X~’s mother, then 95 years old and Living in the house, asserted that all nine of her children are co-owners of the property located at ~~~ ~~~. Likewise, X~’s sister represented that she has an ownership and residential right in the property.

X~ also provided a certificate issued by the Nansha Community Residential Committee, ^[2] dated November 16, 2011. According to the certificate, X~ was the original resident of the house located at ~~~ ~~~ . The certificate also stated that X~’s parents and siblings have lived in the house permanently, and X~ is prohibited from selling this house to others. ^[3] On November 26, 2012, the agency denied X~’s request for reconsideration and he requested a hearing on January 8, 2013. The ALJ held a hearing on February 21, 2014. An attorney represented the couple at the administrative hearing and X~ testified on his own behalf.

On August 27, 2014, in response to your request, X~ submitted a Property Rights Certificate with a registration date of January 17, 2006, showing that he owns property at ~~~ ~~, Nansha Residential Committee, Jun’An Town, Shunde District, Foshan City, China. ^[4] X~ made no prior mention to this official property record, nor did he explain his failure to produce this record prior to the agency’s request. The certificate lists X~ as the sole owner of the house. The certificate lists the State as the owner of the land, and indicates that the land-use right has been assigned.

Applicable Law

Federal Law

To be eligible for SSI payments, claimants must prove they are at least 65 years of age, or blind, or disabled with limited income and limited resources and legally residing in one of the 50 states, the District of Columbia, or the Northern Mariana Islands. See Social Security Act §§ 1602, 1611; 20 C.F.R. § 416.202.

A resource, for SSI purposes, includes assets that an individual owns and could convert to cash and use for food or shelter, including real property. See Social Security Act § 1613; 20 C.F.R § 416.1201(a). If the individual has the right or power to liquidate the property or his share of the property, it is a resource. See 20 C.F.R. § 416.1201(a)(1). If an individual disposes of his or her resource for less than fair market value, he or she becomes ineligible for SSI benefits for 36 months. See Social Security Act § 1613(c)(1)(A); Program Operations Manual System (POMS) SI 01150.001.C.3; SI 01150.003. The limit for countable resources is $2,000 for an individual and $3,000 for a couple. See Social Security Act § 1611(a)(3); 20 C.F.R. § 416.1205; POMS SI 01110.003.A.2.

Although the agency considers real property a resource, an individual’s principle place of residence, regardless of value, is an excluded resource (the home exclusion). See Social Security Act § 1613(a)(1); 20 C.F.R. §§ 416.1210(a), 416.1212; POMS SI 01130.100. Property ceases to be the principle place of residence as of the date that the individual left it with no intention of returning. See 20 C.F.R. § 416.1212(c); POMS SI 01130.100.B.

Similar to the home exclusion exception, the agency also excludes the value of an individual’s ownership interest in jointly owned real property if the sale of the property would cause undue hardship, due to loss of housing, to a co-owner (the undue hardship exception). See Social Security Act § 1613(b)(2)(A); POMS SI 01130.130.

The People’s Republic of China ^[5] The People’s Republic of China (PRC or China) provides for the protection of private property in its 1982 Constitution and 2004 amendments. See Zhang, Laney, China: Real Property Law, the Law library of Congress, Global Legal Research Center (October 2014), 1-2. Article 13 of the PRC Constitution provides that “[c]itizens’ lawful private property is inviolable.” Id. at 1.

The PRC Property Rights Law, which became effective on October 1, 2007, addresses the establishment, alteration, transfer, and elimination of property-related ownership rights, and the registration and delivery of movable and real property rights. Id. at 2.

According to the PRC Constitution and Property Rights Law, individuals cannot privately own land and natural resources in China. Id. at 3. Instead, the state owns urban land and collectives own rural and suburban land. Id. However, individuals can obtain a right to use land. The land-use right allows the right-holder to legally possess, use, and benefit from property owned by another (whether the state or a collective). Id.

In urban areas, the state grants or allocates land-use rights to land users. Id. For granted land-use rights, land users pay the state granting fees for a certain number of years. Id. Currently, land may be used for residential purposes for up to seventy years. Id. at 4. When the term for the right to use land for residential purposes expires, the term automatically renews. Id. If the land owner dies prior to the expiration of the seventy year or renewal term, the land-use right passes to the owner’s heirs. ^[6] China’s Assignment Regulations provide that land users may transfer their land-use rights to others through sale, exchange, gift, mortgage, or lease. Id. at 4. When transferred, the land-use right and the right to structures on top of the land (home ownership) transfer simultaneously. Id.

In transferring real estate rights, the new owner obtains the land-use rights only for the period equivalent to the original assigned term minus the number of years the original owner has used the land. Id. at 5. However, as discussed above, a residential land-use right term will automatically renew upon expiration. Id.

ANALYSIS

According to the 2006 Property Rights Certificate, X~ owns a house located at ~~~ ~~in Foshan City, China, identified as an urban area. Although X~ does not own the land upon which the house is situated, it appears that the State has assigned him land-use rights, which renew automatically every 70 years. Per the PRC Constitution and Property Rights Law, X~ may sell or otherwise legally transfer these property rights. ^[7] Thus, because X~ has an ownership interest in real property, which he could sell or otherwise convert into cash, that property is a countable resource. ^[8] See 20 C.F.R. § 416.1201(a); POMS SI 01110.100.B.1.

Furthermore, the property does not qualify as an excluded resource under the home exclusion rule because the house is not currently X~’s principle place of residence nor does he intend on returning to it.

Although X~, his family, and the Nansha Community Residential Committee claim that, per cultural tradition, X~’s siblings and parents are co-owners of the property, they fail to provide any legal documents to confirm this claim. Moreover, the Property Rights Law provides that land-use rights must be registered with local government land authorities at or above the county level; these authorities issue certificates to affirm these rights. See Zhang, Laney, China: Real Property Law, at 5. Thus, the Property Rights Certificate, identifying X~ as the sole owner, appears to be dispositive.

Despite their allegations to the contrary, the agency has not received evidence showing that X~’s family members have any registered legal interest in the property, and Chinese law does not recognize family ownership arising from cultural traditions of an “ancestral home.” ^[9] Moreover, X~’s failure to produce the property rights certificate prior to August 2014 suggests that his prior allegations of co-ownership may have merely been an attempt for X~ to evade the implications of sole ownership. Therefore, because the 2006 Property Rights Certificate lists X~ as sole owner of the property, the property’s sale cannot cause any undue hardship on co-owners, and the undue hardship exception does not apply.

CONCLUSION

Individuals cannot privately own land in China but may obtain transferable land-use rights. In addition, Chinese law permits individuals to privately own residential houses and apartments built on state-owned land. Based on the documents he submitted to the agency, X~ owns a house and has been assigned a renewable land-use right to the underlying land. Because X~’s property interest is freely transferable and may be converted to cash, it constitutes a resource for purposes of SSI.

This issue is whether life insurance purchased as a viatical investment, and the individually-held account set up as part of the investment, and any withdrawals made from that account are treated as income or resources to the claimant for SSI purposes.

In this case, the claimant invested $25,000 in a life settlement contract. Of this total, $17,606.00 is not accessible to the claimant. This part of the claimant's investment is not a resource. The death benefit will not be paid until the insured dies and there is no established secondary market for viatical investments. When the viator dies, the claimant will receive the death benefit, which may be considered unearned income.

The claimant elected monthly payments from the trust account. The claimant can withdraw any or all funds from this trust account and use them for her support or maintenance. Therefore, the account is a countable resource for SSI purposes

The claimant filed a claim for Supplemental Security Income (SSI) payments. More than a year before she filed the claim, she invested in a life settlement investment (or viatical investment) with a monthly income option. You requested information about viatical investments and guidance on how to treat the individually-held account set up as part of the investment and any withdrawals made from that account. We will first explain viatical investments and then discuss the specifics of the claimant's investment.

In a typical viatical investment, the viator assigns his or her life insurance policy to a viatical settlement broker in exchange for a lump-sum cash payment in an amount less than the death benefit. An investor purchases the viatical settlement based on the estimated life expectancy of the viator, who usually has a life-threatening or catastrophic illness or condition that prompts the need for immediate cash. In essence, the investor puts up the money that is paid to the viator. The investor also becomes an irrevocable beneficiary on the permanent records for that death benefit, and receives the death benefit when the viator dies. The death benefit should be more than just the investment principal. If the viator lives beyond his or her estimated life-expectancy, the investor may have to pay additional premiums to maintain the policy.

Another key feature of the viatical investment is the fixed rate of return the investor will receive on his or her total investment. If the investor elects to receive a monthly income option, this will yield a lower return; no monthly income option will yield a higher return. See, e.g., <http://www.sec.gov/ answers/viaticalsettle.htm>; http:/www.insurance.ca.gov/0100-consumers/0100-insurance-guides/0200-life-series/viatical.

Here, the claimant invested $25,000 in a life settlement contract with a 48-monthly income option through Nationwide Consultants, Inc. Of her total investment, $17,606.00 was "invested" in a 36-month life expectancy policy. The claimant is the irrevocable beneficiary on this policy, and is expected to receive her investment principal of $25,000 upon the death of the insured person (who was not named in the agreement). Premiums on this life expectancy policy will be paid by an escrow company for the estimated life expectancy (36 months) plus 12 months.

According to the Monthly Income Agreement, the claimant elected the monthly income option, which will provide her a 7.6% fixed rate return. Using the remaining investment amount ($7,394.00), Nationwide Consultants established the monthly income option by depositing an amount equal to 48 payments of $158.33 into a trust account at Ford Motor Credit/Northern Trust Company. Each month for 48 months, $158.33 is paid out of the trust account to the claimant, and these payments will continue even if the viator dies before the full 48-monthly income option is satisfied. The claimant is allowed to withdraw funds from this trust account "in any increments, up to the entire balance, without penalty or surrender charges."

Assuming that monthly payments specified in the Monthly Income Agreement have been paid to the claimant on the first of each month since April 2005, there have been at most eighteen payments of $158.33, totaling $2,849.94. Assuming she has not withdrawn any additional amounts from the trust account, the remaining balance in the trust account is $4,544.06.

DISCUSSION

An aged, blind, or disabled individual with no eligible spouse is eligible for SSI payments if his or her nonexcludable resources do not exceed $2,000 after January 1, 1989, and all other eligibility requirements are met. 20 C.F.R. §§ 416.1205(a) and (c). The regulations define resources as cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for his or her support or maintenance. 20 C.F.R. § 416.1201(a). If the individual has the right, authority or power to liquidate the property, it is considered a resource. 20 C.F.R. § 416.1201(a). If a property right cannot be liquidated, the property will not be considered a resource. Id.

Liquid resources are cash or other property that generally can be converted to cash within 20 days. Examples of resources that are ordinarily liquid are stocks, bonds, mutual fund shares, promissory notes, mortgages, life insurance policies, financial institution accounts (including savings, checking, and time deposits, also known as certificates of deposit) and similar items. Liquid resources, other than cash, are evaluated according to the individual's equity in the resources. 20 C.F.R. § 416.1201(b); Program Operations Manual System (POMS) SI 01110.300(A).

The portion of the claimant's investment that established the 36-month life expectancy policy ($17,606.00) is not accessible to the claimant. The death benefit on that policy will not be paid until the insured dies, and there is no established secondary market for viatical investments. See NASAA Guidelines Regarding Viatical Investments, 12A Blue Sky Law Appendix H § VIII.C.2.i. Accordingly, this part of the claimant's investment is not a countable resource. When the viator dies, the claimant will receive the death benefit, which may be considered unearned income. 20 C.F.R. § 416.1121(e).

The Monthly Income Agreement gives claimant the right to withdraw at any time the entire balance of the trust account established for purposes of the monthly income option. Because she can withdraw from this account and use the funds for her support or maintenance, the account is a countable resource. See 20 C.F.R. § 416.1208 (funds held in financial institution accounts are countable resources); POMS SI 01140.200(A)(5). Because the monthly payments of $158.33 come from the trust account, which is a countable resource, any portion of such payments that the claimant has retained is also a countable resource. See 20 C.F.R.§ 416.1103(c).