TN 5 (01-13)
PS 01815.036 North Carolina
A. PS 13-035 Whether a Life Estate Constitutes an Ownership Interest – North Carolina
DATE: December 21, 2012
This opinion examines whether a life estate interest constitutes an “ownership interest” for determining whether the property meets our definition of a “home.” The opinion states that the recipient and her husband’s life estate interest in the property appears legally sufficient under North Carolina law and therefore qualifies as an “ownership interest.” Since the property in question meets our definition of a home, we may apply one of the intent to return exceptions in SI 01130.1005.B, and continue to exclude the property while the recipient lives in an institution, and her husband lives on the property.
You asked whether a life estate interest retained by an SSI recipient and her husband in property they transferred to their daughter is an “ownership interest” for determining whether the property is a “home” for SSI eligibility purposes where Recipient is institutionalized and her husband continues to live on the property.
The life estate interest retained by the SSI recipient and her husband is an “ownership interest” for determining whether the property is a “home” for SSI eligibility purposes.
Mary (Recipient) currently receives SSI. Recipient and her husband live in North Carolina. In July 2007, Recipient and her husband conveyed their property to their daughter using a North Carolina General Warranty deed. The deed specified that Recipient and her husband conveyed their “remainder interest in the subject property” to their daughter and retained a “life estate interest in the same.” Recipient now lives in an institution and her spouse still lives on the property.
Under the Social Security Act (Act), a disabled individual may receive SSI if his or her income and resources do not exceed certain limits. See Act § 1611(a); 20 C.F.R. § 416.202(c), (d) (2012). In determining the resources of an individual (and his or her eligible spouse, if any), the Social Security Administration (Agency) generally must exclude the individual’s home. See Act § 1613(a)(1); 20 C.F.R. §§ 416.1210(a), 416.1212(b). “A home is any property in which an individual (and spouse, if any) has an ownership interest and which serves as the individual’s principal place of residence.” 20 C.F.R. § 416.1212(a) (emphasis added). However, when an individual (and spouse, if any) moves out of his or her “home” without the intent to return, the “home” becomes a countable resource because it is no longer the individual’s principal place of residence. 20 C.F.R. § 416.1212(c). “If an individual leaves his or her home to live in an institution, [the Agency] still consider[s] the home to be the individual’s principal place of residence, irrespective of the individual’s intent to return, as long as the spouse . . . of the eligible individual continues to live there.” Id. (emphasis added).
Thus, if the Agency determines property meets the regulatory definition of “home,” the Agency must exclude the individual’s home when the individual leaves the home if one of the exceptions to the principal-place-of-residence requirement applies. Neither the regulations cited above, nor the related Program Operations Manual System (POMS) provisions, addressed below, suggest that an “intent to return” determination turns on the type of ownership interest an SSI recipient has in property that otherwise meets the regulatory definition of “home.”
We turn first to whether North Carolina permitted Recipient and her husband to create a life estate in themselves with a remainder interest to their daughter. The information provided indicates Recipient and her husband have real property in North Carolina and are North Carolina residents. Therefore, we look to North Carolina law to determine if Recipient and her husband could and did properly create a life estate in real property with a remainder interest to their daughter. See Cannuni v. Schweiker, 740 F.2d 260, 264 (3d Cir. 1984) (discussing significance of ownership interest in property and variance in state laws with respect to ownership). The language in the General Warranty Deed establishes that Recipient and her husband have a life estate in the property, a property interest under North Carolina law. Life estates are often created by will or by reservation in a deed conveying real property. See e.g. Brinkley v. Day, 362 S.E.2d 587, 589 (N.C. Ct. App. 1987); Durham v. Creech, 231 S.E.2d 163, 167 (N.C. Ct. App. 1977). North Carolina does not require technical words of conveyance to establish a life estate. See B~, 362 S.E.2d at 589. For instance, a testator can create a life estate for her daughters by providing that her home should be “retained as a house for the girls so long as they (or any one of them) desire (or desires) to live in it regularly.” In re Estate of H~, 301 S.E.2d 720, 650, 652 (N.C. Ct. App. 1983); see also Baggett v. Jackson, 76 S.E. 86, 88 (N.C. 1912) (finding that grantee took an estate in remainder after the death of the husband and the wife where deed by husband and wife conveyed land in fee to wife’s son but provided that “We do except our lifetime on said land.”). Although the deed here is silent as to the rights retained by Recipient and her husband based on their life estate, a life estate vests the life tenant with the right to use and possess the property during his or her lifetime. See B~, 362 S.E.2d at 589. Recipient and her husband’s life estate interest in the property appears legally sufficient under North Carolina law and therefore qualifies as an “ownership interest” under 20 C.F.R. § 416.1212(a).
POMS SI 01130.100 requires the individual to have an ownership interest in property for the Agency to consider the property a home. A life estate meets the definition of an ownership interest because a life estate in a home is a form of legal ownership. See POMS SI 01110.515 (A)(2). Unless a will or a deed establishes that the life estate places restrictions on the life estate owner’s rights, then the owner has the right to possess, use, and obtain profits from the property and sell his or her life estate interest. See POMS SI 01100.515(B)(1)(a). In this case, one of the intent to return exceptions would apply here because Recipient lives in an institution and her spouse still lives on the property. See 20 C.F.R. § 416.1212(c); POMS SI 01130.100(B)(5).
For the foregoing reasons, we conclude Recipient and her husband have a life estate in the property and their life estate is an “ownership interest” under the home exclusion.
Mary Ann Sloan
Regional Chief Counsel
Assistant Regional Counsel
Any further reference to 20 C.F.R. is to the 2012 version.