TN 4 (06-09)
PS 01810.041 Oregon
A. PS 09-099 When Does Inherited Property Become a Resource under Title XVI
DATE: January 22, 2009
This decision clarifies when an inheritance counts as a resource. In this case the inheritance was not immediately available to the SSI recipient. Federal regulations state that an inheritance is considered unearned income at the earliest of when received, credited to an account or set aside for the individual. An inheritance is a "resource" in the month following the month in which the inheritance met the definition of income. The laws of the state of Oregon provide that the executor or administrator has a temporary right of possession until the closing of probate and payment of debts to creditors and others. Finally, the Regional Chief Counsel concluded that in this case the SSI recipient had not received her inheritance until she received her portion of the estate in the form of checks a few months after the death of her mother.
When does the inheritance of the Supplemental Security Income (SSI) eligible individual, S.W., count as a resource for SSI purposes?
The inheritance of S.W. in this case counts as a resource for SSI purposes February 2008 ($2,000.00) and April 2008 ($22,000.00).
The recipient, S.W., lives in Idaho. Her mother, J.S., a resident of Oregon, died in November 2007. For purposes of this opinion, it was presumed that J.S. was a resident of Oregon since she resided in a nursing home in Oregon since January 2006. J.S. left an estate of $100,000.00 in liquid bank assets. There was no evidence that the estate had any outstanding debt at the time of her death. J.S. left a will devising the estate in equal shares to S.W. and her three siblings. The will was not probated, but the estate was distributed by S.W.'s brother, J.R. J.R. used his discretion when he distributed the bank assets. There is no evidence that S.W. had access or use of the estate until she received a check for about $2,000.00 in January of 2008 and a second check in the amount of $22,000.00 in March 2008. No documents were provided to substantiate the amount of the checks. The issue is whether the $24,000.00 qualified as income in November 2007, the date of the mother's death, or in January or March 2008, when S.W. actually received the inheritance distribution.
1. Federal Law
Regulations promulgated under the Act provide that an aged, blind, or disabled individual with no spouse is eligible for benefits under Title XVI if her nonexcludable resources do not exceed $2,000.00 as of January 1, 1989. 20 C.F.R. § 416.1205(c). A resource, for SSI purposes, includes assets that an individual owns and could convert to cash to be used for her support and maintenance. 20 C.F.R. § 416.1201(a). If the individual has the right or power to liquidate the property or her share of the property, it is a resource. 20 C.F.R. § 416.1201(a)(1). An inheritance is considered unearned income 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).
2. Oregon State Law
Oregon Revised Statute Title 12 § 114.215 provides that "Upon the death of a decedent, title to the property of the decedent vests … [i]n the persons to whom it is devised by the will of the decedent, subject to support of spouse and children, rights of creditors, right of the surviving spouse to elect against the will, administration and sale by the personal representative." In other words, Oregon law provides that a decedent's property passes at once to those entitled to it, whether under a will or by intestate succession, subject only to a temporary right of possession in the executor or administrator, under the supervision and control of the probate court, for purposes of administration of the estate. An heir may assign or otherwise alienate 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, any distribution is subject to the rights of creditors and others.
3. Agency Policy
Under Program Operations Manual Systems (POMS) SI 01120.215(B)(2), an individual is deemed to have an "ownership interest" in an unprobated estate if: (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 is entitled to a share of the property under state intestacy laws; and the inheritance, use of income, and distributions are uncontested. POMS SI 01120.215(B)(2). The inheritance is income in the first month that it has value and can be used. POMS SI 00830.550(A)(2). Further, to establish when inheritance is received in the absence of regional instruction, assume the individual derives no income until the earliest of the date the individual alleges receiving the inheritance or the date the estate is closed. POMS SI 00830.550(B)(2). An inheritance is a "resource" in the month following the month in which the inheritance met the definition of income. POMS SI 01120.215(B)(3).
In this case, there was no probate of the estate of J.S. Pursuant to Oregon law, J.R. made distributions to S.W. subject to rights of creditors and other parties. The bank assets were not available to S.W. until she received the distribution in January and March 2008. The only way for S.W. to enforce her interests in the estate was to seek control of the estate by the probate court. Therefore, S.W.'s distribution was subject to diminishment in order to pay other parties and she could not use the inheritance until she received the distributions in January and March 2008. The language in the SSI resource definition, 20 C.F.R. § 416.1201(a), indicates that the resources must be currently available. Perera v. Schweiker, 560 F. Supp. 385, 388, (W.D. Cal. 1983). Further, until an item or right has value (i.e., 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).
Here, S.W.'s right to receive her share of the estate vested immediately upon her mother's death, in November 2007. However, that right was subject to the rights of creditors and the administration of the estate. Until the proceeds of the estate were actually distributed, it would have been uncertain what S.W.'s share of the estate would be after the estate's debts were paid. Because of the difficulty in determining the value of S.W.'s share of the inheritance while the assets were still subject to diminution before distribution, we believe that the best course is assume, based on POMS SI 00830.550B, that an individual derives no income until the earliest of either the date the individual alleges receipt of the inheritance or close of probate proceedings. In this case, S.W. received her share of the unprobated estate in January 2008 ($2,000.00) and March 2008 ($22,000.00). Applying POMS SI 00830.215(B)(2), $2,000.00 of her inheritance should have counted as income in January 2008 and as a resource in February 2008, and $22,000.00 of her inheritance should have counted as income in March 2008 and as a resource in April 2008.
This opinion is limited to the specific facts of the case. Whether ownership interest in inheritance will be income and a resource to the SSI eligible individual will vary depending upon the character of the property of the estate.