QUESTION
You have asked whether a transfer of resources by an applicant for Supplemental Security
Income (SSI) constitutes a transfer for less than fair market value, or is excludable
as a valid contract for services.
OPINION
The contract is not a valid contract for services nor does the contract establish
that the services to be exchanged constitute fair market value for the resources purportedly
transferred.
BACKGROUND
Based on the information provided, we understand the facts to be as follows: Ann filed
an application for SSI on behalf of her uncle, David (Applicant). Applicant is a resident
of a nursing home in St. Petersburg, Florida, and has no spouse. He was born in 1940
and is presently seventy-two years old. On January 29, 2013, Applicant appointed his
niece, an attorney residing in New Jersey, to be his representative for purposes of
obtaining SSI. On February 19, 2013, the Social Security Administration (SSA) selected
Applicant’s niece as his representative payee. That same day, Applicant’s niece faxed
the agency documentation of Applicant’s assets, including a mutual fund account valued
at $25,265.06 and an IRA valued at $12,266.68.
Applicant’s niece advised SSA that she had transferred approximately $37,000 of Applicant’s
assets, the sums in the mutual fund and IRA, to herself, pursuant to a “Contract for
Services.” Applicant purportedly entered into this contract with his niece on January
29, 2013.
The one-page contract states Applicant’s niece will perform the following services
for Applicant: “act as a Power of Attorney; serve as a Health Care Representative;
serve as a representative for Social Security; serve as a representative for Medicare/Medicaid;
communicate with any and all doctors and/or other hospital/facility representatives
on behalf of [Applicant]; and communicate with social services regarding living arrangements
for [Applicant].” The contract states Applicant’s life expectancy is 12.1 years. It
further states that the consideration for the services Applicant’s niece is to render
is payment of $20.00 per hour. The contract states Applicant’s niece is anticipated
to provide services, on average, six hours per week. It states Applicant is paying
his niece for services rendered and the payment should not be construed as a gift.
The contract was executed by Applicant in Pinellas County, Florida, before a notary
public. Applicant’s niece did not sign the contract.
DISCUSSION
SSI is a general public assistance program for aged, blind, or disabled individuals
who meet certain income and resource restrictions and other eligibility requirements.
See Social Security Act (Act) §§ 1602, 1611(a); 20 C.F.R. §§ 416.110, 416.202 (2012).
[5] “Resources” include 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
and maintenance. See Act § 1613; 20 C.F.R. § 416.1201(a). The Act and regulations establish the dollar
amount that an individual’s nonexcluded resources cannot exceed. See Act § 1611(a)(1)(B); 20 C.F.R. § 416.1205(a).
An individual’s eligibility for SSI may depend or be conditioned on the disposal,
at fair market value, of resources that exceed the resource limitations, and the failure
to dispose of property in an appropriate manner may render the individual ineligible
for SSI. See Act § 1613(b)(1); 20 C.F.R. § 416.1240. An individual who gives away or sells a nonexcluded
resource for less than fair market value is ineligible for SSI for a prescribed period.
See Act § 1613(c)(1)(A)(i). Resource transfers for less than fair market value made after
December 14, 1999, may result in a period of ineligibility of up to thirty-six months.
See Act § 1613(c)(1)(A)(ii)(I); Program Operations Manual System (POMS) SI 01150.001(A), (C)(3); POMS SI 01150.110(A). The agency evaluates transfers of cash for services based on the current market
value (CMV) of the services and the frequency and duration of the services under the
agreement. See POMS SI
01150.005.
A valid transfer of resources is based on a legally binding agreement. If a transfer
is not valid, the individual still owns the property, and the property counts as a
resource for SSI purposes. See POMS SI 01150.001 (B)(1). Accordingly, the validity of the contract is of primary importance.
Applicant executed the contract in Florida. Florida courts follow the general principle
that the place where the contract is made governs the validity, interpretation and
obligations of a contract . See Jemco, Inc. v. United Parcel Service, Inc., 400 So. 2d 499, 501 (Fla. Dist. Ct. App. 1981). Therefore, Florida law governs the
construction of the contract.
Florida law provides that a valid contract is based on an offer, acceptance and exchange
of consideration. See Med-Star Central, Inc. v. Psychiatric Hospitals of Hernando County, Inc., 639 So. 2d 636, 637 (Fla. Dist. Ct. App. 1994). Acceptance of the contract may be
shown by signing it. See Consolidated Resources Healthcare Fund I, Ltd. v. Fenelus, 853 So. 2d 500, 503 (Fla. Dist. Ct. App. 2003) (“the object of a signature is to
show mutuality or assent”). Assent may also be shown by the acts or performance of
the party. Id. (citing Gateway Cable T.V., Inc., v. Vikoa Construction Corp., 253 So.2d 461, 463 (Fla. Dist. Ct. App. 1971)).
The contract at issue provides for services to be performed over Applicant’s lifetime,
stated to be 12.1 years. Under Florida law, a contract for services that cannot be
performed within one year is not enforceable unless signed by the person who must
perform the services.
No action shall be brought ... upon any agreement that is not to be performed within
the space of 1 year from the making thereof ... unless the agreement or promise upon
which such action shall be brought, or some note or memorandum thereof shall be in
writing and signed by the party to be charged therewith or by some other person by
her or him thereunto lawfully authorized.
Fla. Stat. Ann. § 725.01 (West 2012). Applicant’s niece did not sign the contract,
therefore, it is unenforceable against her as it cannot be performed within one year.
Fla. Stat. Ann. § 725.01 (West 2012). The doctrine of partial performance under a
contract may cure the lack of a valid writing in some circumstances, but under Florida
law, partial performance of a contract for personal services does not cure its invalidity.
See Johnson v. Edwards, 569 So. 2d 928, 929 (Fla. Dist. Ct. App. 1990). Therefore, the fact that Applicant’s
niece performed some services for Applicant, such as filing his SSI application, does
not cure the lack of a valid contract. As the contract is unenforceable it does not
constitute a valid transfer of resources, and Applicant remains the owner of the property
purportedly transferred. See POMS SI 01150.001 (B)(1). [6]
Even if the contract were a legally binding agreement and constituted a valid transfer
of resources, Applicant’s niece has presented no evidence of the fair market value
of the services she is to render. The contract submitted by Applicant’s niece presents
little detail of the services she is to provide and no explanation of how she will
provide them to Applicant in Florida while she maintains her residence in New Jersey.
It does not appear probable that Applicant’s niece will be aware of Applicant’s needs
and able to communicate on his behalf with doctors and facilities in Florida while
she remains in New Jersey. By comparison, in R~, the contract set out in great detail the services the daughter would provide in person. R~, 193 S.W. 3d at 840-41. (“The Contract set out duties of the [daughter] such as preparation
of nutritious, appropriate meals, house cleaning and laundry; assistance with grooming,
bathing, dressing, and personal shopping, including purchase of clothing, toiletries
and other personal items; assistance with purchasing hobby, entertainment or other
goods for R~'s use and enjoyment, taking into account R~'s ability to pay for such items; monitoring of R~'s physical and mental condition and nutritional needs in cooperation with health
care providers; arranging for transportation to health care providers and to the physician
of R~'s choice, as well as arranging for assessment, services and treatment by appropriate
health care providers for R~; assisting R~ in carrying out the instructions and directives of R~'s health care providers; arranging for social services by social service personnel
as needed; visiting at least weekly and encouraging social interaction; arranging
for outings and walks, if reasonable and feasible for R~; and interacting with and/or assisting any agent of R~ in interacting with health professionals, long-term care facility administrators,
social service personnel, insurance companies, and government workers in order to
safeguard R~'s rights, benefits, or other resources as needed.”)
The contract states Applicant’s niece will provide, on average, approximately six
hours per week of services to Applicant, but does not set forth the basis for this
average. If she provided six hours of services per week, that would amount to three
hundred twelve hours per year. Making an occasional phone call or sending an occasional
e-mail from New Jersey would not likely require three hundred twelve hours per year.
Without a reasoned basis for the estimated number of hours of services, it appears
the number was selected at random. By comparison, in R~, the daughter made three to four sixty-mile round trips weekly to attend to her mother.
Id. at 843. Thus, while the contract recites the frequency and duration of the services
to be provided, Applicant’s niece has not established that this estimate is accurate.
Further, the contract recites that Applicant has an average life expectancy of 12.1
years. However, the life expectancy table in POMS SI 01150.005 governs the calculation of the value of compensation of services for life. The life
expectancy for a 72-year-old male set forth in POMS SI 01150.005 is 11.24 years. The contract’s use of a longer life expectancy than that set forth
in POMS renders the estimated duration of the contract inaccurate, and would also
impact the hourly rate. Thus, the contract is inaccurate. Applicant has not established
it requires payment of fair market value for the services to be rendered.
CONCLUSION
Because Applicant’s niece did not sign the personal services contract, which anticipates
she will provide services for more than one year, the contract is unenforceable under
Florida law and is not valid. Moreover, the contract does not include sufficient detail
of the services to be provided, does not provide any support for the number of hours
of services to be provided, explain how Applicant’s niece could provide the services
to Applicant from a remote location and uses an incorrect life expectancy for Applicant.
Applicant has not established the services to be exchanged constitute fair market
value for the resources allegedly transferred.
Sincerely,
Mary Ann Sloan
Regional Chief Counsel
By: ______________
Megan E. Gideon
Assistant Regional Counsel