Social Security Ruling (SSR) 95-4c sets out a case which illustrates the resource requirement for the Supplement Security Income (SSI) program.
Ms. Chalmers was on SSI from April, 1978 through September, 1980. She received an inheritance from her parents, which was split between her and three other siblings. She formed a joint partnership with her siblings to manage the property.
In November, 1989, the Secretary of Health and Human Services (which, until 1996 included the Social Security programs0 notified Ms. Chalmers that her SSI benefits were being terminated because she had countable resources in excess of $2,000. She requested a hearing by and Administrative Law Judge.
The ALJ held that her interest in the partnership was a countable resource because she had the power to dispose of her interest in the partnership and apply it towards her support. She appealed. The Appeals Council similarly held that she had not shown that the power to partition the property was forfeited based on the mental capacity to exercise the right to partition. The property was therefore again held to be a countable resource.
Chalmers appealed to the federal district court. The court, without deciding whether or not her equitable interest in the property was a countable resource, held that her interest in the property was a countable resource because she had the legal right to liquidate it. On appeal, the Third Circuit Court agreed with the Secretary that the “power” to liquidate resources for it to be considered a countable resource means the legal authority to do so. In this holding, it was irrelevant if Ms. Chalmers lacked the actual power to make decisions regarding the liquidation of the property. Furthermore, because Ms. Chalmers could dissolve the partnership and regain her equitable interest in the property, which could then be liquidated and used for her support, it was a countable resource.
The Court noted the regulations, which defined countable property as cash or other liquid assets or real or personal property that a person owns and could be converted to cash to be used for his or her support and maintenance. If the person has the right, power or authority to liquidate the property or his or her share of the property, it is a resource. If the person does not have the right, power or authority to liquidate the property, or his or her share of it, it is not a resource.
Liquid resources were defined in the regulations as those that can be converted to cash within twenty days. If property cannot be converted to cash within twenty days, it is nonliquid. Ordinary examples of nonliquid assets are land and buildings.
Chalmers conceded on appeal that she had the “right” to liquidate her interests in the property but that her mental disability rendered her without the “power” to do so. However, the Court held that the term “power” as set out in the regulations, meant not only physical and mental ability, but also “legal authority.” In interpreting the word, the Court deferred to the Secretary’s interpretation, and also noted that the dictionary definition.
Chalmers also urged the Court to interpret the regulatory language “right, authority or power” in the conjunctive instead of the disjunctive. This the Court refused to do, noting that it would not so disturb the plain language of the statute.
Chalmers had conceded that she had the legal right to sell her one-fourth interest in the property, and also to bring an action to partition the property. The Court therefore held that the fact that she had the legal right to liquidate the property meant that it was a countable resource.
Chalmers also argued that it would not be economical or advisable for her to seek to partition the property, because any proceeds from doing so would be largely consumed by attorney fees and other transaction costs. The Court noted that this was a reasonable position, but that because there was no support for this position in the plain language of the statute, the Court declined to read into it something that was not there.
The Court noted it was sympathetic to Ms. Chalmer’s disability but that the record did not unequivocally establish that cannot establish her legal rights. Although an affidavit from her psychiatrist stated that she lacked the ability to discuss her rights with an attorney and retain an attorney to exercise her legal rights, the Court noted that she had been represented by an attorney throughout the entirety of the present proceedings.
The Court recognized the difficulty Ms. Chalmers may have experienced in exercising her rights, but did not accept her argument that she need not do so because “there are many situations in which the exercise of all of one’s legal rights is not the most sensible and advantageous course.”
This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.