EFFECTIVE/PUBLICATION DATE: 03/28/97
PURPOSE: To clarify the Social Security Administration's (SSA) longstanding policy that State law must be taken into account in determining the point at which an inheritance becomes income for purposes of the Supplemental Security Income (SSI) program.
CITATIONS (AUTHORITY): Section 1612(a)(2)(E) of the Social Security Act; Regulations No. 16, Subpart K, sections 416.1102, 416.1121(g), and 416.1123(a).
PERTINENT HISTORY: The point at which something becomes income under the SSI program derives from the regulatory definition of income at 20 CFR 416.1102. Income is something an individual receives and can use to meet food, clothing, or shelter needs. An implicit requirement of this definition is that, for property other than cash to be considered income, the individual who receives it must have the legal right, authority, and power to convert it to cash (by selling it, for example). The point at which something becomes income is, necessarily, the point at which it first meets this criterion.
The earliest point at which a cash inheritance can be used to meet food, clothing, or shelter needs is the point at which State inheritance laws permit the heir to spend it. The earliest point at which inherited property other than cash can be used to meet food, clothing, or shelter needs is the point at which State inheritance laws permit the heir to convert the property (or his or her interest in it) to cash.
In some States, an heir cannot dispose of an inheritance until the estate is closed. When this is the case, the inheritance does not meet the regulatory criteria to be considered income until the estate is closed. In other States, an heir may receive a contingency interest in real property at the time of the decedent's death. The heir can sell this contingency interest immediately, even though perfect title to the property cannot be conveyed until the estate is closed and the value of the property may be reduced accordingly or be difficult to determine. However, when the contingency interest can be valued, this interest meets the regulatory criteria to be considered income at the time of the decedent's death.
Since State law governs the point at which inherited property first meets the regulatory criteria for being considered income, State law must be taken into account in determining the point at which inherited property becomes income under the SSI program. This includes cases in which State law permits an heir to convert inherited property to cash prior to distribution of the assets, since failure to consider such property as income unless and until the assets are distributed would not be consistent with regulations.
POLICY INTERPRETATION: The earliest point at which an inheritance can become income under the SSI program is the point at which the individual is free, under applicable State inheritance laws, to spend the inheritance (if it is cash) or to convert the inheritance to cash (if it is not cash).
EFFECTIVE DATE: This Ruling which merely clarifies SSA's longstanding policy on the treatment of inheritances is effective on March 28, 1997.
CROSS-REFERENCE: Program Operations Manual System, Part 5, Chapter 008, Subchapter 30, Section SI 00830.550.
Back to Table of Contents