TN 13 (12-17)

A. PS 17-055 Title XVI - Ownership Interest in Property

Date: February 24, 2017

1. Syllabus

This Regional Chief Counsel (RCC) opinion examines Puerto Rico intestacy laws to determine whether a Supplemental Security Income (SSI) claimant has an ownership interest in a property that would constitute a countable resource for SSI purposes. The RCC concluded that, under Puerto Rico law, it is unlikely the claimant has an ownership interest in the property. Three years of residence after her mother’s death, with the permission of the other potential co-heirs, is sufficient to establish dominion and constitute tacit acceptance of her inheritance. Therefore, the claimant has no ownership right in the property. However, even if the claimant had an ownership interest in the property, the property is not a resource for SSI purposes since the claimant cannot legally transfer that interest to anyone.

2.  Opinion

QUESTION PRESENTED

Whether M~ (Claimant), an applicant for Supplemental Security Income (SSI) payments, has an ownership interest in property located in V~, Puerto Rico that would constitute a resource.

OPINION

Under Puerto Rico law, it is unlikely that the Claimant has an ownership interest in the property located in V~, Puerto Rico. However, even if the Claimant had an ownership interest in the property, the property is not a resource for SSI purposes since the Claimant cannot legally transfer that interest to anyone.

BACKGROUND

The Claimant applied for SSI on July XX, 2015. In connection with her application, the Claimant stated that her mother, C~ (C~), died in 2011 without executing a will. C~ had three children – the Claimant, I~, and M2~. According to the Claimant, C~ was never married.

At the time C~ died, C~ and the Claimant lived together in a house owned by C~, mailing address V~, Puerto Rico. According to the Claimant, after C~ died, her siblings “allowed” the Claimant to continue living in the house because she was the only sibling that did not have a house of her own. The Claimant’s siblings did not live in the house, but managed the property in question. According to the Claimant, I~ maintained the property (i.e. mowing the lawn, etc.) while M2~ paid the property taxes and other fees. Both siblings continued to receive mail at the property. The Claimant continued to live in this house after her mother died until she moved to Nebraska on June XX, 2014, after which the property was left vacant. The property reportedly does not produce any income. The Claimant reported that neither she nor her siblings have done anything to change the ownership of the property.

The Claimant provided a certificate from Centro de Recaudacion de Ingresos Municipales (CRIM) in Puerto Rico showing that there was no property under her name in V~, Puerto Rico as of October 2014.

ANALYSIS

A. Applicable Social Security Laws, Regulations, and Policy

Under the Social Security Act (Act), to be eligible for SSI, a claimant must show that she does not exceed permitted income and resource amounts, among other requirements. 42 U.S.C. § 1382(a); 20 C.F.R. § 416.202. Inherited real property can be counted as a resource, if the individual owns and could convert the property to cash to be used for her support and maintenance. 20 C.F.R. §§ 416.1201(a)(1), (a)(4). Program Operations Manual (POMS) SI 01110.100B.1. Any property that does not meet this criteria is not a resource even though it may be an asset. POMS SI 01110.100B.3 (stating as an example that an individual who has an ownership interest in property but is not legally able to transfer that interest to anyone does not have a resource).

An individual can be considered to have an ownership interest in an unprobated estate, which may then be a potential resource, if (1) documents, such as a will or court records, indicate that the individual is an heir to the property of the deceased; or (2) the individual has use of the property or receives income from it; or (3) documents establish, or the individual alleges, a relationship between herself and the deceased which, under state intestacy laws, awards the individual a share in the distribution of the deceased’s property; and (4) the inheritance, use of income, and distributions are uncontested. POMS SI 01120.215A.2. Here, the Claimant has not indicated that the potential inheritance property at issue, her mother’s house, is contested. POMS SI 01120.215A.2. While it does not appear that there is a will to establish that she is an heir to her mother’s house, or that she has use of the house or receives income from it, the Claimant is related to the decedent. POMS SI 01120.215A.2. Therefore, we must look to Puerto Rico intestacy law to determine whether the Claimant would be entitled to a share of the property.

Additionally, once an ownership interest is established, it should be determined whether there are other owners and, if so, whether the individual needs their consent to sell her share of the property. POMS SI 01120.215B.2. If the individual is the sole owner or if the other owners give needed consent to sell, the property is the individual’s resource. POMS SI 01120.215B.3. If other owners withhold consent and that consent is necessary to sale, the property is not a resource until the estate has been through probate. Id. When there is a legal bar to sale of a property, the Social Security Administration (SSA or agency) does not require an individual to undertake litigation in order to accomplish sale or access, and the property will not be considered a resource. POMS SI 01120.010.

B. Puerto Rico Law

The Puerto Rico Civil Code establishes the order and manner in which the intestate share of an estate must be distributed. 31 L.P.R.A. § 2081 et seq.; see POMS SI NY01110.515A. When a decedent dies intestate, the decedent’s immediate heirs are her descending direct line, with the relative nearest in the degree excluding the most remote in most cases. 31 L.P.R.A. §§ 2607, 2641. Legitimate and acknowledged illegitimate children and their issue succeed their deceased parent without distinction of sex, age, or even if they are from different marriages and relationships. 31 L.P.R.A. § 2642. The children of the deceased also inherit in equal shares. 31 L.P.R.A. §§ 2607, 2643.

Here, C~’s immediate heirs appear to be the Claimant and her two siblings, which we assume were all acknowledged by C~. The Claimant and her siblings, though, did not automatically inherit the property at issue at the moment of C~’s death. Rather, the Claimant and her siblings only received a call to potentially inherit the property or, seen another way, a right to accept or reject their inheritance. See 31 L.P.R.A. § 2085; POMS SI NY01120.215.A.3; Rivera Rivera v. Monge Rivera, 117 D.P.R. 464, 471-72 (P.R. 1986) (English translation not available) (noting that heirs only receive a call to inherit until they accept or reject the inheritance). Under the Civil Code, an individual cannot actually acquire her inheritance until she accepts her inheritance. 31 L.P.R.A. §§ 2773, 2781; POMS SI NY01120.215.A.3; Rivera Rivera, 117 D.P.R. at 471-72; see also B.B.V.A. c. Latinamericana, 164 D.P.R. 689, 695 (P.R. 2005) (English translation not available). Until an individual accepts an inheritance, the delivery of an inheritance, with all its rights and obligations, is held in suspension, or essentially frozen in time. See Rivera Rivera, 117 D.P.R. at 474.

An individual can accept an inheritance either 1) purely and simply, or 2) after first conducting an inventory of the inheritance. 31 L.P.R.A. § 2780. A pure and simple acceptance may be expressed or implied. 31 L.P.R.A. § 2781. An express acceptance is one that is made in a public or private instrument. 31 L.P.R.A. § 2781. On the other hand, an implied acceptance, also called a tacit acceptance, is one “made by acts which necessarily imply a wish to accept, or acts which no one should have a right to execute except in the capacity of an heir.” 31 L.P.R.A § 2781; see also Caballero Jimenez v. Merced Caballero, No. EAC2004-0652, 2008 WL 833515, at *7 (P.R. Cir. Feb. 20, 2008) (English translation not available). According to the Civil Code, acts that involve the mere preservation of the inheritance, or provisional administration or managing of inheritance property, do not constitute acceptance of an inheritance, and do not convert a person potentially called to be an heir into an actual heir. 31 L.P.R.A. § 2781; see Sucn. Maldonado v. Sucn. Maldonado, 166 D.P.R. 154, 179, 2005 WL 3056492 (P.R. 2005) (noting that in Rodríguez v. Ubides Vda. de Font, 58 D.P.R. 252 (1941) the Court had found that making an inventory of the inheritance, paying inheritance tax, and receiving rent on inheritance property did not in and of themselves constitute acceptance of an inheritance).

As an example, the Civil Code states that an inheritance is considered tacitly accepted when 1) the heir sells, gives, or assigns her right to a stranger, to all her coheirs, or to one of them; 2) when she renounces it, even gratuitously, for the benefit of one or more of her coheirs; 3) or when she renounces it for consideration in favor of all her coheirs. 31 L.P.R.A. § 2782; see Sucn. Maldonado v. Sucn. Maldonado, 166 D.P.R. at 179; Gonzalez Campos v. Gonzalez Mezerene, 139 D.P.R. 228, 248-49 (P.R. 1995) (English translation not available) (noting that 31 L.P.R.A. § 2782 consists of examples of tacit acceptance). The assignment, repudiation, and renunciation of hereditary rights, though, must be memorialized in a public document. 31 L.P.R.A. § 3453(4); see Caballero Jimenez, 2008 WL 833515, at *7 (finding that the acts of assignment, repudiation, and renunciation laid out in 31 L.P.R.A. § 2782 must be memorialized in a public document according to 31 L.P.R.A. § 3453). Where there are multiple heirs, each has the right to accept or reject independently of the other. 31 L.P.R.A. § 2789. Once an heir has accepted or disclaimed her inheritance, it is irrevocable. 31 L.P.R.A. § 2779. If the inheritance is accepted, whether expressly or tacitly, the possession of the hereditary property is understood as transferred to the heir without interruption and from the moment of death of the decedent. 31 L.P.R.A. §§ 1443, 2772; Rivera Rivera, 117 D.P.R. at 482. The repudiation of an inheritance must be made in a public or authentic instrument, or in writing presented to the Court of First Instance. 31 L.P.R.A. § 2790. Any person who rejects an inheritance in a valid manner is considered as never to have possessed the same. 31 L.P.R.A. §§ 1443, 2772.

Here, there is no evidence indicating that the Claimant has repudiated her inheritance. There is similarly no evidence that she has expressly accepted her inheritance. However, there is a question as to whether she has tacitly accepted her inheritance. Though there is no evidence that she has engaged in any of the acts described in 31 L.P.R.A. § 2782 as acts of tacit acceptance, some may argue that the Claimant tacitly accepted by living in her mother’s house after her mother’s death. There is caselaw suggesting that an heir can tacitly accept an inheritance by entering into possession of the property, or exercising authority or dominion over the property if, among other things, the heir exclusively possesses that property in the capacity of owner without interruption in a public and peaceful manner for 30 years. Sucn. Maldonado, 166 D.P.R. at 180 (citing 31 L.P.R.A. §§ 1462, 5262, 5280). However, if an heir possesses a property by “mere tolerance,” or with permission or agreement of the other coheirs, then the heir does not possess the property as an owner. See Sucn. Maldonado, 166 D.P.R. at 186. Possession by mere tolerance of the owner is of no effect for establishing possession. 31 L.P.R.A. § 5263. Also, possession is interrupted naturally when it ceases for more than one year. 31 L.P.R.A. § 5265.

In this case, the Claimant lived in the house for approximately only three years after her mother’s death. Moreover, according to the Claimant, her siblings “tolerated” or “allowed” her to live in her mother’s home because she was the only sibling without a house. A Puerto Rico court’s analysis would be very fact-specific and turn on whether, in this context, the Claimant’s actions could be seen as those only an heir could take. See Rodriguez v. Ubides Vda. Font, 58 D.P.R. at 259 (citing 31 L.P.R.A. § 2781 in explaining that determining whether tacit acceptance has occurred is a fact-specific analysis that requires considering context and inferring the potential heir’s intent). It seems unlikely that a Puerto Rico court would find that three years of residence post C~’s death, with the permission of the other potential co-heirs, after which Claimant moved to another state, is sufficient to establish dominion. If it cannot be construed that the Claimant has accepted her inheritance by continuing to live in her mother’s home after her mother’s death, then the Claimant has no ownership right. POMS SI NY01120.215 (“the inheritance would not be considered income…before the individual actually accepted the inheritance”).

However, even assuming that the Claimant’s actions constitute tacit acceptance and she has an ownership right in the inheritance, her ownership right cannot be counted as a resource. Prior to the partition of an inheritance, an heir can only give or sell her “abstract participation” in the inheritance, as opposed to an actual concrete good, unless the other heirs have also accepted the inheritance and consented to the sale. See Popular Mortgage v. Ruperto Lopez, 2013 WL 5596009 at *5 (P.R. Cir. Aug. 27, 2013) (English translation not available) (holding that sale was void where other coheirs had not accepted inheritance and not consented to sale); Garcia Cruz v. Garcia Cruz, No. EAC2008-0244, 2012 WL 6217037, at *4 (P.R. Cir. Oct. 31, 2012) (English translation not available) (noting that when there are multiple heirs, until there is a partition action, no one heir has a concrete right over the property). Here, the Claimant has not stated that her siblings have tacitly accepted their inheritance, and the actions of the Claimant’s siblings as to the maintenance of the home and payment of taxes likely do not constitute tacit acceptance. 31 L.P.R.A. § 2781 (providing that mere preservation of the inheritance, or provisional administration or managing of inheritance property, do not constitute acceptance of an inheritance, and do not convert a person potentially called to be an heir into an actual heir); see Rodríguez v. Ubides Vda. de Font, 58 D.P.R. at 259.

Plaintiff and her siblings could be forced to state whether they accept or reject their inheritance. Puerto Rico law recognizes that silence from an individual who is called to inherit, as to whether she accepts or rejects her inheritance, can lead to many years of uncertainty as to anyone else, including creditors, who may have an interest in the inheritance. B.B.V.A. c. Latinamericana, 164 D.P.R. at 696. To alleviate this uncertainty, the Civil Code provides that an interested third party can go to the Puerto Rico Court of First Instance to force an heir to state whether she accepts or rejects an inheritance, within a period of 30 days. 31 L.P.R.A. § 2787; B.B.V.A. c. Latinamericana, 164 D.P.R. at 696. If the heir does not declare her intent either way, it will be assumed that she accepts the inheritance. Id. After that, a partition action can be commenced so that the property can be sold without requiring consent of the coheirs. See Lugo Rodriguez v. Lugo Rodriguez, 2013 WL 6979894, fn. 4 (May 31, 2013) (English translation not available) (citing 31 L.P.R.A. § 2871 for proposition that an inheritance must be divided if one of the coheirs requests the division unless the deceased explicitly prohibited partition).

However, when there is a legal bar to sale of a property, SSA does not require an individual to undertake litigation in order to accomplish sale or access, and the property will not be considered a resource. POMS SI 01120.010. Thus, regardless of whether the Claimant has accepted her inheritance and has an ownership interest, she does not have a resource for SSI purposes since she is not legally able to transfer that interest to anyone. POMS SI 01110.100B.3.

CONCLUSION

The Claimant is unlikely to have an ownership interest in the property located in V~, Puerto Rico. However, even if the Claimant had an ownership interest in the property, the property is not a resource for SSI purposes since the Claimant cannot legally transfer that interest to anyone.

B. PS 06-075 Blocked Accounts in Puerto Rico as SSI Resource

Date: February 24, 2006

1. Syllabus

An SSI beneficiary residing in Puerto Rico was awarded a financial settlement according to the terms of a personal injury lawsuit. This opinion discusses whether the funds are a countable resource based on applicable Puerto Rico law. According to the laws of Puerto Rico, a settlement award made to a minor child must be deposited into an account held by the Secretary of the court until the minor attains the age of majority or is otherwise emancipated. Since the SSI beneficiary in this case has not yet attained the age of majority, or received an emancipation order, the funds held by the court are not accessible to either the minor or parents/guardians. Puerto Rico law does not provide a process by which to petition for release of the funds. Since the funds are not currently legally accessible to the beneficiary, or any relevant party, the account is considered “blocked” for SSI purposes and remains excluded from resource counting until such time as the minor attains the age of majority or is emancipated.

2. Opinion

You asked us to determine whether an account established with a Commonwealth of Puerto Rico Superior Court on behalf of a minor Supplemental Security Income (“SSI”) claimant as a result of a personal injury award is currently legally accessible to the claimant, or his representative payee or other individual acting on his behalf. We conclude that given the information we have before us, the account is not currently legally accessible to the claimant, or any other relevant party, and should be considered “blocked” for purposes of his obtaining SSI benefits.

FACTS

The claimant, C~ (“C.”), was born on June XX, 1988. He was injured in an accident in Puerto Rico and accordingly initiated a personal injury lawsuit in Superior Court in B~, Puerto Rico. He won the lawsuit and the jury awarded him $42,500.00 for pain and suffering.1 On April XX, 2003, the Court ordered the defendant to issue two checks: one to C~’s attorney for $11,625.00 for expenses associated with representation, and another to the Secretary of the Superior Court of B~, Puerto Rico for $30,875.00. The Court ordered the Secretary to deposit the $30,875.00 in a high-yield savings account at Banco Bilbao Vizcaya in the Secretary's name, to be held for the benefit of C. until C. reached “legal age.”2

At some point after his accident, C. moved to C~, Massachusetts with his mother. He applied for SSI benefits while living in Massachusetts.

LAW

An individual is eligible for SSI if he or she is “aged,” “blind,” or “disabled,” as defined in the Social Security Regulations, a legal resident of the United States, and has limited income or resources.3 See 20 C.F.R. §§ 416.202, 416.1100; see also 20 C.F.R., Part 416, Subparts H to L. Accordingly, the amount of income or resources an individual has is a major factor in deciding whether the individual is eligible for SSI benefits. An unmarried individual who is aged, blind, or disabled is eligible for SSI benefits if his or her “non-excludable resources” do not exceed $2,000.00 (and all other eligibility requirements are met). See 20 C.F.R. § 416.1205. Funds held in a financial institution account (including savings and checking accounts, and certificates of deposit) 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). We determine whether an individual owns the account and can use the funds for his or her support and maintenance by looking at how the individual holds the account. This is reflected in the way the account is titled. Id. Instructions with regard to blocked accounts, otherwise known as conservatorship accounts, are set forth in the Program Operations Manual (“POMS”) SI 01140.215. These POMS instruct that “[i]f State law requires that funds in a conservatorship account be made available for the care and maintenance of an individual, we assume, absent evidence to the contrary, that funds in such an account are available for the individual's support and maintenance and are, therefore, that individual's resource.” POMS SI 0114.215.B.1. As discussed below, funds held in the name of the Secretary of the Court in Puerto Rico, for the benefit of a minor or incompetent person, are not available for that individual's support and maintenance.

The age of majority in the Commonwealth of Puerto Rico begins at age 21. 31 L.P.R.A. § 971. The law of the Commonwealth states that when a child under the age of majority receives a monetary award as a result of a legal settlement or litigation, the money shall be consigned with the court and deposited into an account held by the Secretary of the court until the minor turns 21 or is emancipated. See 4 L.P.R.A. § 365. In Puerto Rico a minor can become emancipated in 4 ways: 1) by reaching the age of majority 2) by obtaining the consent of his or her parents (only if the child is at least 18 years old), 3) by obtaining the consent of a judge (only if the child is at least 18 years old), or 4) by marriage5. See 31 L.P.R.A. § 901.

Prior to reaching the age of majority or becoming emancipated, a child may not access any money consigned to the court for his or her benefit. Additionally, neither the child's parents/guardians nor his or her beneficiaries may access the money during this time. See 31 L.P.R.A. § 616. This is supported by the plain language of 4 L.P.R.A. § 365 which consigns the funds to the court and provides no process for which to petition release of the funds. When the child reaches the age of majority, or upon earlier emancipation, the Secretary of the court is responsible for instructing the individual or his or her attorney to claim all of the funds held in the court's name for the benefit of the individual. Any funds not redeemed by the individual or his or her attorney within 5 years of the child reaching the age of majority or becoming emancipated will be turned over to the Commonwealth of Puerto Rico Department of Revenue.

ANALYSIS

Customarily, the $30,875.00 C. received from his personal injury lawsuit would render him ineligible for SSI by causing his non-excludable resources to exceed $2,000.00. See 20 C.F.R. § 416.1205. However, C. is 17 years old, and Puerto Rico law mandated that the money he received from his lawsuit be consigned to the court and held in the name of the Secretary of the Superior Court of B~, Puerto Rico until C. reaches the age of majority. According to the above-stated laws of the Commonwealth of Puerto Rico, C. cannot access any of the money awarded to him in his personal injury lawsuit until he turns 21 or becomes emancipated. C. age dictates that he currently cannot be emancipated under the first 3 prongs of the emancipation laws of Puerto Rico. It is unknown whether C. is married. We advise you to verify C.' marital status. If he is married, he would be considered emancipated under the fourth prong of the Commonwealth's emancipation laws, and, with the consent of his parents, could inform the Secretary of the Court that he is entitled to access the money being held in his benefit. If C. is not married, he cannot currently legally access the bank account. Therefore, since the account is not held in C. name, and since he is currently unable to access the account, the $30,875.00 should not be considered to be C's resource. See 20 C.F.R. § 416.1208(a).

Accordingly, the account is not currently legally accessible to C., or any other relevant party, and should be considered “blocked” for purposes of his obtaining SSI benefits. However, we advise the Agency to closely monitor C. situation to determine whether he becomes emancipated either through marriage, or through parental or judicial consent after turning 18 years old on June 28, 2006. If emancipated, C. will be able to access the account, and his non-excludable resources would therefore exceed $2,000.00, rendering him ineligible for SSI benefits.

Barbara L. S~
Regional Chief Counsel, Region III

By: Karla J. G~
Assistant Regional Counsel