Effective Dates: 09/13/2024 - Present Previous | Next

TN 52 (09-24)

SI 01110.515 Ownership in Fee Simple or Less Than Fee Simple

A. Definitions

1. FEE SIMPLE

Fee simple ownership means absolute and unqualified legal title to real property. The owner(s) has unconditional power of disposition of the property during their lifetime. Upon their death, property held in fee simple can always pass to the owner's heirs. Fee simple ownership may exist with respect to property owned jointly or solely.

2. LESS THAN FEE SIMPLE OWNERSHIP

  1. a. 

    Life Estate - A life estate confers upon one or more persons (grantees) certain rights in a property for their lifetimes or the life of some other person. A life estate is a form of legal ownership and usually created through a deed or will or by operation of law. See B. below.

  2. b. 

    Equitable ownership - An equitable ownership interest is a form of ownership that exists without legal title to property. It can exist despite another party's having legal title (or no one's having it). See C. below.

B. Policy— Life Estate

1. RIGHTS OF LIFE ESTATE OWNER

 

a. What Owner Can Do

Unless the instrument (will or deed) establishing the life estate places restrictions on the rights of the life estate owner, the owner has the right to possess, use, and obtain profits from the property and to sell their life estate interest. See SI 01140.110 on determining the value of a life estate in nonhome real property. (A life estate in home property is an excluded resource and valuation is not necessary.)

b. What Owner Cannot Do

A life estate owner owns the physical property only for the duration of the life estate. The owner generally can sell only their interest; i.e., the life estate. The owner cannot take any action concerning the interest of the remainderman.

2. REMAINDER INTEREST

a. Future Interest in Physical Property

A life estate instrument often conveys property to one person for life (life estate owner) and to one or more others (remaindermen) upon the expiration of the life estate. A remainderman has an ownership interest in the physical property but without the right to possess and use the property until termination of the life estate.

b. Sale of Remainder Interest

Unless restricted by the instrument establishing the remainder interest, the remainderman is generally free to sell their interest in the physical property even before the life estate interest expires. In such cases, the market value of the remainder interest is likely to be reduced since such a sale is subject to the life estate interest.

3. EXAMPLE

Sam, a recently deceased parent of three children, had willed to their oldest child a life estate in property which Sam had owned in fee simple. The will also designated Sam's two younger children as remaindermen. The oldest child has the right to live on the property until their death at which time, under the terms of Sam's will, the property will pass to Sam's two younger children as joint tenants.

C. POLICY — EQUITABLE OWNERSHIP INTEREST

Basically, existence of an equitable ownership interest is determined by a court of equity. However, under certain circumstances, an adjudicator can conclude that an equitable ownership interest exists and make a resources determination accordingly.

1. Unprobated Estate

For SSI purposes, an individual may have an equitable ownership interest in an unprobated estate if they:

  • •

    are an heir or relative of the deceased;

  • •

    receive income from the property; or

  • •

    have acquired rights in the property due to the death of the deceased in accordance with State intestacy laws.

SI 01120.215 contains instructions on how to determine whether an interest in an unprobated estate is a resource.

2. Trust

A trust is a right of property established by a trustor or grantor. One party (trustee) holds legal title to trust property which they manage for the benefit of another (beneficiary). The beneficiary does not have legal title but does have an equitable ownership interest.

SI 01120.200 contains instructions concerning the income and resources treatment of trusts in the SSI program.

3. Equitable Home Ownership

An individual may acquire an equitable ownership interest in their home through personal considerations or by performing certain activities such as:

  • •

    making mortgage payments or paying property taxes;

  • •

    making or paying for additions to a shelter; or

  • •

    making improvements to a shelter.

SI 01130.100C.4.. contains instructions on how to determine whether equitable ownership in home property exists.

D. REFERENCES

The following references pertain to trust situations:

  • •

    Financial institution/conservatorship accounts, SI 01140.200 -

    SI 01140.215

  • •

    Property held under a State's Uniform Gift to Minors Act,

    SI 01120.205

  • •

    Situations involving an agent acting in a fiduciary capacity on behalf of another party, SI 01120.020

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0501110515
SI 01110.515 - Ownership in Fee Simple or Less Than Fee Simple - 09/13/2024
Batch run: 12/18/2024
Rev:09/13/2024