TN 14 (04-18)

A. PS 17-119 State Law Survey of Conservatorship/Blocked Accounts in Atlanta Region

Date: July 20, 2018

1. Syllabus

The Regional Chief Counsel (RCC) opinion provides a comprehensive list of State laws, in the Atlanta Region, on the ability of individuals to access funds in conservatorship/blocked accounts for the purpose of support and maintenance for Supplemental Security Income (SSI) claimants and recipients.

2. Opinion

QUESTION

You asked for a comprehensive list of state laws in the Atlanta Region on the ability of individuals to access funds in conservatorship/blocked accounts for the purpose of support and maintenance for Supplemental Security Income (SSI) claimants and recipients.

DISCUSSION

Introduction

A “conservatorship account” (sometimes referred to as a “blocked account”) is a financial account in which a person or institution has been appointed by a court to manage and preserve the assets of an individual (i.e., a claimant, recipient, or other person whose resources are deemable to the claimant or recipient) that are held in the account. See Program Operations Manual System (POMS) SI 01140.215A.1, A.2. The Social Security Administration (SSA) assumes, absent evidence to the contrary, that funds in a conservatorship account are available for the individual’s support and maintenance (and are, therefore, that individual’s resource) if state law requires that funds in a conservatorship account be made available for the care and maintenance of an individual. See POMS SI 01140.215B.1. However, state law may not specifically address the issue, or state law may specifically prohibit the use of funds held in a conservatorship account for the individual’s general support in certain circumstances. See id.

Thus, SSA needs regional instructions regarding any presumptions about conservatorship accounts for each state. We note that in the states in the Atlanta Region, not all states have laws that specifically discuss conservatorship accounts. However, each state does allow for the appointment of persons similar to conservators and the creation of financial accounts similar to conservatorship accounts.

Alabama

Under Alabama law, a court may appoint a conservator for the estate and affairs of a minor or a person unable to manage property and business affairs effectively if the court determines that the minor or person has funds or property that requires management or protection and the funds are needed for health, support, education, or maintenance and that protection is necessary or desirable to obtain or provide funds. See Ala. Code § 26-2A-130 (2017). The appointment of a conservator vests in the conservator title as trustee of the property of the protected person, and the protected person generally cannot transfer or assign his or her interest in the property vested in a conservator. See Ala. Code § 26-2A-148 (2017). A conservator is given numerous powers over the property of a protected person, including the power to distribute the property of the protected person. See Ala. Code §§ 26-2A-152, 26-2A-153 (2017). In particular, “[a] conservator may expend or distribute income or principal of the estate without court authorization or confirmation for the health, support, education, or maintenance of the protected person and dependents.” Ala. Code § 26-2A-153(a). In addition, a conservator must expend or distribute sums reasonably necessary depending on the specific circumstances of the protected person, including the protected person’s accustomed standard of living. See Ala. Code § 26-2A-153(a)(2).

Thus, under Alabama law SSA may assume that funds in the conservatorship can be made available for the support and maintenance of the SSI claimant or recipient.

Florida

Although Florida has a chapter under its domestic relations law titled “Conservatorship,” the chapter is limited to conservatorships for persons who are absentees. See Fla. Stat. Ann. §§ 747.01 - .052 (West 2017). “Absentee” includes persons serving in the Armed Forces of the United States or similar entities during a time of hostilities who are reported as missing in action or who disappears under circumstances indicating her or she may have died. See Fla. Stat. Ann. § 747.01. Because “absentee” does not include persons who might be eligible for SSI, Florida’s formal conservatorship law is not applicable here. However, Florida guardianship law appears to address the circumstances under which a party may have control of the funds or assets of a person who is not an “absentee.” See Fla. Stat. Ann. §§ 744.101 - .653 (West 2017).

Under Florida guardianship law, a guardian of an incapacitated person is a fiduciary and may exercise only those rights that have been removed from the ward and delegated to the guardian; the guardian shall act within the scope of the authority granted by the court and as provided by law. Fla. Stat. Ann. § 744.361(1), (2). A guardian, if authorized by the court, shall take possession of all of the ward’s property and rents, income, issues, profits from it and the proceeds of any sale, lease, or mortgage of the property. See Fla. Stat. Ann. § 744.361(12) (West 2017). The guardian may use the ward’s assets and income from the property for care, support, maintenance, and education of the ward or the ward’s dependents, as provided under terms of guardianship plan or by law or as authorized by the court. See Fla. Stat. Ann. §§ 744.361(12), 744.397(1); see also Fla. Stat Ann. § 744.444 (without obtaining court approval, a plenary guardian of the property or a limited guardian of the property within the powers granted by the order appointing the guardian or an approved annual/amended guardianship report may pay reasonable living expenses for the ward (but no authorization to pay funds for living expenses of minor ward if one or both parents are alive)).

Thus, before assuming the funds are available for support and maintenance of the SSI claimant or recipient, SSA should review the court order/initial plan to determine the scope of authority granted by the court.

Georgia

Under Georgia law, a conservator shall receive, collect, and make decisions about the property of a minor or ward except as otherwise provided by law or by the court and must “[p]rovide for the support, care, education, health, and welfare of the [minor or ward].” Ga. Code Ann. §§ 29-3-21(a), (b)(5), 29-5-22(a), (b)(5) (West 2017). In addition, a minor or ward for whom a conservatorship is created has the right to have his or her property “utilized as necessary to provide adequately for the [minor’s or ward’s] support, care, education, health, and welfare.” Ga. Code Ann. §§ 29-3-20(a)(3), 29-5-20(a)(3) (West 2017). A conservator may use any income from the property/funds within the conservatorship for the support, care, education, health, and welfare of the minor or ward. See Ga. Code Ann. §§ 29-3-22(a)(1), 29-3-30(c), 29-5-23(a)(1), 29-5-30(c) (West 2017). However, the conservator must have approval from the court of a budget for expending funds/resources in excess of the income from the property. See Ga. Code Ann. §§ 29-3-22(a)(1), 29-5-23(a)(1).

Thus, under Georgia law, SSA may assume that the funds in the conservatorship can be made available for the support and maintenance of the SSI claimant or recipient. However, SSA should obtain the court order granting the conservatorship to check for any restrictions on the disbursement of the assets of the minor or ward.

Kentucky

Under Kentucky law, any interested person or entity may petition the district court for appointment of a conservator for a minor who owns property requiring management or protection. See Ky. Rev. Stat. Ann. § 387.025(2) (West 2017). Similarly, any interested person or an individual needing conservatorship may petition the district court for the appointment of a limited conservator or conservator. See Ky. Rev. Stat. Ann. § 387.530(1) (West 2017). A guardian must expend or distribute income or principal of the ward’s estate for the support, care, and education of the ward, but the district court may limit or restrict the guardian’s exercise of this power. See Ky. Rev. Stat. Ann. § 387.065(4) (West 2017). In addition, a guardian cannot provide for the support, care, or education of a ward if a parent is legally obligated and financially able to provide support, care, and education. See Ky. Rev. Stat. Ann. § 387.065(6). A conservator must generally use the income and principal of the account for the support, care, and education of the minor. A conservator generally does not require court authorization to use funds for these purposes, but a court may require the court’s order before the conservator withdraws funds and a court may restrict access to the account’s funds. Ky. Rev. Stat. Ann. §§ 387.065(4)-(6), 387.122, 387.125(1), 387.137.

Thus, in Kentucky, SSA may assume that the funds in a conservatorship account can be made available for the support and maintenance of the SSI claimant or recipient. However, SSA should obtain the court order granting the conservatorship to check for any restrictions on the disbursement of the assets of the minor or ward.

Mississippi

Under Mississippi law, a court “may appoint a conservator to have charge and management of the property of” a person who “is incapable of managing his own estate by reason of advanced age, physical incapacity or mental weakness.” Miss. Code Ann. § 93-13-251 (West 2017). A “conservator shall have the same duties, powers and responsibilities as a guardian of a minor, and all laws relative to the guardianship of a minor shall be applicable to a conservator.” Miss. Code Ann. § 93-13-259 (West 2017); see also Miss. Code Ann. § 93-13-261 (West 2017) (stating “the person whose property or person is in the charge of such conservator shall be limited in his or her contractual powers and contractual obligations and conveyance powers to the same extent as a minor”). Applying Mississippi guardianship law, a court may determine the amount of funds that a conservator may expend for the support and maintenance of the person for whom the conservatorship is established. See Miss. Code Ann. § 93-13-35 (West 2017). The court also may authorize the sale of the person’s property if the income from the person’s estate does not cover necessary expenses, and a conservator cannot make any expenditure in excess of the person’s income without a previous court order authorizing such expenditures. See id.; see also Miss. Code Ann. § 93-13-263 (West 2017) (stating “[i]f there be any persons dependent upon the person for whom the conservator has been appointed, the court shall provide for their support and maintenance from the assets of said estate and the conservator shall be directed to make the necessary support and maintenance available from the assets of said estate”). A conservator has the duty “to apply so much of the income, profit or body thereof as may be necessary for the comfortable maintenance and support of the [person for whom the conservatorship is established] after obtaining an order of the court fixing the amount.” Miss. Code Ann. § 93-13-38(2) (West 2017). A conservator empowered to purchase a home for the person for whom the conservatorship is established and pay the person’s debts. See id. However, if the person for whom the conservatorship is established is a minor and had a parent, the court must determine whether the expense of maintaining and educating the minor must be borne by the guardian. See Miss. Code Ann. § 93-13-37 (West 2017).

Thus, in Mississippi, SSA cannot assume the funds in a conservatorship account are available for the support and maintenance of the SSI claimant or recipient. SSA must review the court order establishing the conservatorship and any subsequent court orders concerning the authority of the conservator to use the funds of the SSI claimant or recipient.

North Carolina

Under North Carolina law, the statute lays out the specific powers of a general guardian or guardian of the estate (a legal designation that the agency considers equivalent to a conservator), which includes an appointee, who takes possession of the individual’s estate for the individual’s use to expend estate income for the support, maintenance, and education of the individual’s minor children, spouse, and dependents and who can petition the court for prior approval of expenditures from the estate principle for these purposes. N.C.G.S.A. § 35A-1251(1), (21).

Thus, it may be presumed that funds under conservatorship are to be made available for the maintenance and support of the protected individual.

South Carolina

Currently in South Carolina, a guardian/conservator may expend or distribute sums from the principal of an estate without court authorization or confirmation for the support, education, care, or benefit of the protected person and his dependents in accordance with certain principals. See Code of Laws of S.C. § 62-5-425. Thus, the funds under conservatorship are countable as a resource for the protected individual.

Beginning January 1, 2019, a guardian serving as a fiduciary, is obligated to apply the money for the benefit of the minor/incapacitated person, but the court must explicitly set forth the rights and powers vested in the conservator (if the powers are not entrusted to the conservator, they are retained by the protected individual). See S.C. Statute § 62-5-103(B) (2017 amendment); § 62-5-304(A) (for minors); § 62-5-407(A), (B) (for incapacitated adults)); § 62-5-304(B) (2017 amendment). Subject to rights and powers retained by the ward and except as modified by order of the court, the guardian has the following duties, rights and power: if entitled to custody of his ward, providing for the care, comfort, and maintenance of the ward. See § 62-5-309(A) (2017 amendment); § 62-5-423 (A)(2) (a conservator may expend or distribute sums from the estate without further court authorization for the health, education, maintenance, and support of the protected person and his dependents in accordance with certain principles as outlined in the statute).

Thus, in South Carolina, SSA may currently assume that the funds in a conservatorship account can be made available for the support and maintenance of the SSI claimant or recipient. However, beginning in January 2019, SSA should obtain the court order granting the conservatorship to check for any restrictions on the disbursement of the assets the claimant.

Tennessee

Under Tennessee law, conservatorship “is a proceeding in which a court removes the decision-making powers and duties, in whole or in part, in a least restrictive manner, from a person with a disability who lacks capacity to make decisions in one or more important areas and places responsibility for one or more of those decisions in a conservator or co-conservators.” Tenn. Code Ann. § 34-1-101(4)(B) (West 2017). A conservator is a person or entity “appointed by the court to exercise the decision-making rights and duties of the person with a disability in one or more areas in which the person lacks capacity as determined and required by the orders of the court.” Tenn. Code Ann. § 34-1-101(4)(A); see also Tenn. Code Ann. § 34-1-101(7) (stating that a conservator is a fiduciary). The ability of the conservator to use the funds placed under conservatorship will depend on the specific rights and duties laid out in the letters of conservatorship or court order establishing the conservatorship. See Tenn. Code Ann. §§ 34-1-104(a), 34-1-113(a)-(c), 34-1-122, 34-3-107(a)(2) (West 2017); see also In re Conservatorship of Melton, No. E2014-01384-COA-R3-CV, 2015 WL 4594126, at *4 (Tenn. Ct. App. July 31, 2015) (stating the authority, rights and responsibilities of a conservator are not independent of the court, as a conservator acts as the court’s agent). The Court can grant the conservator the power to pay bills and expenses of the person with a disability, but the specific powers of the conservator will be based on the letters of conservatorship or court order. Tenn. Code Ann. § 34-1-113(a), (b), 34-1-129, 34-3-107(a)(2) (West 2017); see also Tenn. Code Ann. § 34-1-109(b) (West 2017) (stating that “the fiduciary’s faithful performance oath shall include a promise to timely file each required inventory and accounting and to spend the assets of the minor or person with a disability only as approved by the court”); Tenn. Code Ann. § 34-3-108 (West 2017) (allowing for the modification of a conservator’s duties by court order).

Thus, in Tennessee, SSA cannot assume the funds in a conservatorship account are available for the support and maintenance of the SSI claimant or recipient. SSA must review the letters of conservatorship and court order(s) to determine the scope of authority granted to the conservator by the court.

Sincerely,

M~

Regional Chief Counsel

By: K~

Assistant Regional Counsel

B. PS 17-118 Alleged Abandonment of Life Estate Interest in Real Property and Transfer of Property via Quitclaim Deed for Determining Resources of Supplemental Security Income Applicant

Date: July 19, 2017

1. Syllabus

The Regional Chief Counsel (RCC) opinion examines whether the number holder abandoned his life estate interest in real property prior to 2017 and whether the property belonged solely to number holder’s sister prior to the execution of a quitclaim deed in March 2017. The RRC concluded that the information provided is insufficient to find that the number holder abandoned his life estate interest in the property at any time prior to March 2017, when he executed the quitclaim deed. The doctrine of abandonment is generally not applicable under South Carolina law for real property. The quitclaim deed executed by NH to his sister meets all the requirements for a valid transfer of an interest in real property under South Carolina law.

Additionally, if the number holder did not abandon his life estate interest prior to March 2017, can monies expended by number holder’s sister to restore and maintain the property and pay taxes be viewed as a secured loan by number holder’s sister to the number holder in the nature of a mortgage on the property, reducing the value of the number holder’s life estate interest? The RCC found is no basis for construing the expenditures of the number holder’s sister as a secured loan to the number holder for the purpose of reducing the value of his life estate.

2. Opinion

QUESTIONS

You asked whether the number holder abandoned his life estate interest in real property prior to 2017 and whether the property belonged solely to number holder’s sister prior to the execution of a quitclaim deed in March 2017. Additionally, if the number holder did not abandon his life estate interest prior to March 2017, you asked whether monies expended by number holder’s sister to restore and maintain the property and pay taxes can be viewed as a secured loan by number holder’s sister to the number holder in the nature of a mortgage on the property, reducing the value of the number holder’s life estate interest.

OPINION

The information provided is insufficient to find that the number holder abandoned his life estate interest in the property at any time prior to March 2017, when he executed the quitclaim deed. In addition, there is no basis for construing the expenditures of the number holder’s sister as a secured loan to the number holder for the purpose of reducing the value of his life estate.

BACKGROUND

According to a May 1997 Deed of Distribution, the mother of M~, the number holder (NH), died on January XX, 1996. The Deed of Distribution granted NH a life estate in real property located at Y~, South Carolina, with the remainder to his sister.

On March 29, 2017, NH’s sister provided an affidavit related to the period since September 1, 2013. The affidavit indicated that neither NH or his sister have ever resided on the property. At the time of their mother’s death, a renter resided at the property, but the renter subsequently moved out due to the poor condition of the property. NH’s sister averred that, in 2013, no one was renting the property because it had become dilapidated and uninhabitable. NH’s sister alleged that since their mother's death, she had paid all the property taxes, insurance, and maintenance expenses for the property. NH’s sister stated that, in 2013, she decided to remodel the home. She claimed that she expended more than $28,000.00 in renovation costs and the work took 2 years to complete. She alleges that NH did not contribute to the renovations, as he did not have the means to contribute. She stated that she rented the home to a tenant on January XX, 2015. She also averred that she assumed that NH had abandoned his life estate in the property and, thus, was not entitled to any of the rental proceeds. Rather, NH’s sister claimed that she acted as the sole landlord of the property and retained all rental income for herself. In addition to the renovation expenses she paid, NH’s sister alleged that she also paid $5200.00 in property taxes, $4838.56 for insurance, $1214.00 for pest control, $2546.41 for utilities, and $3000.00 for general maintenance and repair, such as yard care and plumbing.

NH applied for Supplemental Security Income (SSI) on September 5, 2013. The Social Security Administration (SSA) found that NH met the medical requirements for SSI, but in a February 2017 notice, SSA notified NH that he did not meet the non-medical rules because his resources were greater than $2000.00. The notice explained to NH that he owned a life estate valued at $28,940.46, which rendered him ineligible for SSI.

On March 3, 2017, NH executed a quitclaim deed transferring all interest and rights he had in the property located at Y~, South Carolina to his sister “for and in consideration of FIVE DOLLARS AND NO/100 ($5.00) dollars, LOVE AND AFFECTION.” The deed was subsequently filed and recorded in the Register of Deeds office in York, South Carolina.

On March 30, 2017, NH filed a request for reconsideration of SSA’s February 2017 resource denial. NH stated that he did not have resources of more than $2000.00 and that in 2013, he gave up the life estate that his mother had left to him because he did not have the resources to maintain the property in a habitable condition.

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 (2017). “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).

SSA evaluates transfers of resources to determine their validity and effect. See Program Operations Manual System (POMS) SI 01150.001. A valid transfer requires a legally binding agreement and results in the transferor no longer owning the property. See POMS SI 01150.001(B)(1).

The quitclaim deed executed by NH on March XX, 2017, indicates NH and his sister both reside in South Carolina; moreover, the property is located in South Carolina. Therefore, we turn to South Carolina law to determine:

1) whether NH can be found to have abandoned his life estate interest at an earlier date; and,

2) whether expenditures by NH’s sister for maintenance of the property can be charged against the value of NH’s life estate, to reduce his equity, and thus, the value amount of his resources.

The quitclaim deed executed by NH to his sister on March XX, 2017, meets all the requirements for a valid transfer of an interest in real property under South Carolina law. To validly and effectively convey an interest in any land or real estate from one person to another, the deed should identify the grantor, the grantee, and the consideration given in exchange for the transfer, and contain a description of the property being transferred and an affirmative statement by the grantor that he releases all interest in the property to the grantee. See S.C. Code Ann. § 27-7-10 (2017). Additionally, the deed must be executed in the presence of and subscribed by two or more witnesses. See id. In this case, the deed executed by NH identifies NH as the grantor and his sister as the grantee, states that the transfer is made in consideration of five dollars, love, and affection, and contains a detailed description of the property. The deed states that NH relinquished all interest he had in the property to his sister, and the deed was signed by three witnesses. Although not required for a valid transfer of property under South Carolina law, NH’s quitclaim deed was also filed and recorded in the Register of Deeds office in York, South Carolina, giving it additional reliability through public record notice. See Spence v. Spence 628 S.E.2d 869, 876 (S.C. 2006) (holding “[t]he proper execution and delivery of a deed is effective to convey real property from grantor to grantee. As between grantor and grantee, a properly drawn deed is valid and dispositive of their respective ownership and rights in the property regardless of whether the deed is publicly recorded”). Thus, NH validly transferred his interest in the property to his sister as of March XX, 2017, for the sum of five dollars, love and affection.

However, we could find no support for the claim of NH and his sister that he abandoned his interest in the property as early as 2013. The doctrine of abandonment is generally not applicable under South Carolina law for real property, and NH’s life estate interest was not affected or transferred by NH’s “act in departing from the land and leaving it unoccupied, or otherwise ceasing to exercise dominion over it.” Fender v. Heirs at Law of Smashum, 581 S.E.2d 853, 856 (S.C. Ct. App. 2003) quoting Andrews v. McDade, 21 S.E.2d 202, 204 (S.C. 1942); see also Speake v. Kinard, 4 S.C. 54, 58 (S.C. 1872) (holding evidence that widowed life tenant had opportunity for a knowing election to relinquish life estate was required before institution of suit for dower). Although NH did not exercise his rights under his life estate, whether by design or due to inability, he nevertheless retained his life estate interest in the property until he validly transferred that interest through execution of the quitclaim deed on March XX, 2017.

Likewise, there is no basis for finding that the expenditures by NH’s sister for maintenance and renovation of the property were in the nature of a secured loan or mortgage. Nothing in the provided facts indicates any agreement between NH and his sister for such an arrangement. Indeed, both NH and his sister attested that NH had no monetary means by which he could enter into any agreement to repay such a loan or mortgage. All the evidence presented suggests that the monetary expenditures by NH’s sister were either gratuitous or a self-interested effort to protect her remainder interest in the property.

The argument for viewing the expenditures by NH’s sister for improvements as a secured loan or mortgage, reducing the equity value of NH’s property interest, is further undermined by his sister’s affidavit. NH’s sister averred that following her expenditures, she unilaterally rented the property to a tenant, acted as the sole landlord, and accepted all rent payments by the tenant. Despite owning a life estate interest in the property at the time, NH had no part in the rental arrangement and received none of the funds generated by renting the property. Therefore, even if the expenditures by NH’s sister could be viewed as a loan, she has recouped at least some of her expenditures through her sole receipt of rents paid on the property since 2013.

Moreover, South Carolina’s Statute of Frauds states:

No action shall be brought whereby:

. . .

(4) To charge any person upon any contract or sale of lands, tenements or hereditaments or any interest in or concerning them . . .

Unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith or some person thereunto by him lawfully authorized.

S.C. Code Ann. § 32-3-10 (2017) (emphasis added); see also Fesmire v. Digh, 683 S.E.2d 803, 811 (S.C. Ct. App. 2009) (holding monetary transaction for interest in condominium was subject to Statute of Frauds writing requirement); Prestwick Golf Club, Inc. v. Prestwick Ltd. Partnership, 503 S.E.2d 184, 187 (S.C. Ct. App. 1998) (indicating agreements involving an interest in real property activate the Statute of Frauds, but right to enter land to play golf was a license). Here, there is no collateral writing evidencing NH’s intention to borrow money from his sister to make improvements to the property or to encumber his life estate interest in exchange for such loaned funds. Thus, there is no basis for reducing the value of NH’s life estate based on expenditures made by his sister for maintenance and renovation of the property.

CONCLUSION

The information provided does not establish that NH abandoned his life estate interest in the property prior to March XX, 2017, when he executed the quitclaim deed, which was a valid transfer of real property under South Carolina law. There is also no basis for construing the expenditures of NH’s sister as a secured loan to NH.

Sincerely,

M~

Regional Chief Counsel

By: R~

Assistant Regional Counsel