TN 34 (01-93)

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 his or her lifetime. Upon his or her 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. Life Estate - A life estate confers upon one or more persons (grantees) certain rights in a property for his/her/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. 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 his or her 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 his or her 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 his/her 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

Mr. Heath, now deceased, had willed to his daughter a life estate in property which he had owned in fee simple. The will also designated Mr. Heath's two sons as remaindermen. Ms. Heath has the right to live on the property until her death at which time, under the terms of her father's will, the property will pass to her brothers 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 he or she:

• is an heir or relative of the deceased;

• receives income from the property; or

• has 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 he or she manages 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 his or her 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