Section 205(j) of the Act provides that when it appears that the interest of a beneficiary would be served thereby, certification of payment may be made either for direct payment to such beneficiary or for his use and benefit to a relative or some other person. Payments are considered for the use and benefit of the beneficiary when, among other purposes, they are used for the support of a person whom the beneficiary is legally obligated to support. Thus, § 404.1607 of the Social Security Administration Regulations No. 4 (20 CFR 404.1607) provides that where current maintenance needs of a beneficiary are being reasonably met, part of the beneficiary's payments may be used for the support of the legally dependent spouse, a legally dependent child or a legally dependent parent of the beneficiary. Whether C's child is a legally dependent child depends on applicable State law, in this case that of Illinois. Chapter 68, § 52 of Smith-Hurd Illinois Annotated Statutes defines which persons are legally liable for support of dependents, and in pertinent part states: (b) A mother is liable for the support of her child or children under 18 years of age, or 18 years of age or over if such child is unable to maintain himself and is likely to become a public charge, whenever the father of such child or children is dead, cannot be found or is incapable of supporting such child or children, and if she is possessed of sufficient means or able to earn such means, she may be required to pay for the support of such child or children a fair and reasonable sum according to her means, as may be determined by the court having jurisdiction of the mother in a proceeding instituted under this Act. (c) The natural parents of a child born out of wedlock and the parents by adoption of such a child are severally liable for support of such child in accordance with the applicable laws of this State whenever such child is unable to maintain himself and is likely to become a public charge, but the liability of the natural father shall not be enforceable unless he has been adjudicated to be the child's father by a court of competent jurisdiction, or he has or shall acknowledge paternity of the child in open court or by a verified written statement. And further, the 1967 Illinois Public Aid Code § 10-2 states: The parents are severally liable for the support of any child under age 18, or age 18 or over if the child is unable to maintain himself and is, or is likely to become, a public charge. The term "child" includes a child born out of wedlock. The question to be resolved, therefore, is whether under these sections of Illinois law the illegitimate child of an adult childhood disability beneficiary may be considered a "legally dependent child" within the meaning of that phrase in section 404.1607 of the Social Security Administration Regulations cited above. Under Illinois law, a natural parent is legally obligated to support his or her minor child born out of wedlock where the child is likely to become a public charge, regardless of the mental capacity of the parent, as long as the parent has the financial capacity to provide the child's support. Accordingly, it is held that the child of the beneficiary is a "legally dependent child" for whose support conserved benefits may properly be expended within the meaning of the cited regulations, provided the current and reasonably foreseeable maintenance needs of the beneficiary are met. SECTION 205 (j).-REPRESENTATIVE PAYEE-USE OF CONSERVED BENEFITS FOR SUPPORT OF "LEGALLY DEPENDENT PARENT" OF BENEFICIARY 20 CFR 404.1604, 404.1607 SSR 68-60 A representative payee in receipt of disability insurance benefits for the use an benefit of her son, a mental patient in a Veterans' Administration hospital, has accumulated $7,000 in benefits on her son's behalf. Under applicable State law, a child is liable for the support of his destitute parents if he has the means of providing it. Held, use of part of the conserved benefits for the parent's own support, to the extent required to meet her ordinary and necessary living expenses is proper, if she is found to be destitute, so long as the beneficiary's current and foreseeable needs are being met. Support of a "legally dependent parent" of the beneficiary is within the purview of section 404.1607 of Regulations No. 4 of the Social Security Administration. R, residing in Vermont, was named representative payee pursuant to section 205 (j) of the Social Security Act, as amended, for her adult son, N, a disability insurance beneficiary, also a resident of Vermont. N is a mental patient at a Veterans' Administration facility, where he will probably remain for the rest of his life. R has accumulated $7,000 on N's behalf from the benefits she has been receiving as representative payee for him and has asked whether the money accumulated on N's behalf or part of it is available for her own maintenance, in the light of N's condition. Section 205 (j) of the Act provides that when it appears that the interest of a beneficiary would be served thereby, certification of payment may be made either for direct payment to such individual or for his "use and benefit" to a relative or some other person acting as representative payee. In interpreting the phrase "use and benefit" in the Act, section 404.1607 of Social Security Regulations No. 4 (20 CFR 404.1607) states, in pertinent part, that if current maintenance needs of the beneficiary are being reasonably met, part of said payments may be used for the support of a legally dependent spouse, child or parent of said beneficiary. (As defined in section 404. 1604 of the Regulations, "current maintenance" means, in the case of a beneficiary receiving care in an institution, the customary charge made by the institution to individuals it provides with care and services like those it provides the beneficiary, as well as charges made for current and foreseeable needs of the beneficiary which are not met by the institu tion.) Thus, the question to be resolved here is whether R may be considered a "legally dependent parent" within the meaning of section 404.1607 of the social security regulations cited above. Whether a parent in a particular case is legally dependent on his or her child would depend on State law, in this case the law of Vermont. Title 15, Vermont Statutes Annotated, sections 202, 204, and 205, provide in pertinent part as follows: an adult child Section 202. Penalty for desertion or nonsupport. possessed of sufficient pecuniary or physical ability to support his parent, who unreasonably neglects or refuses to provide such support when the parent is destitute, unable to support himself and resident in this state, shall be imprisoned at hard labor not more than two years or fined not more than $300.00 or both. Should a fine be imposed, the court may order the same to be paid in whole or in part to the * * *, parent, Section 204. Temporary Orders. At any time before the trial, upon application of the complainant and upon Section 205. Order for payment; probation; recognizance. Before the trial, with the consent of the respondent, or at the trial on The above-quoted section 202 clearly imposes upon an adult child an obligation to support his parents under the stated conditions and specifies the possible penalties for failure to fulfill such obligation. The parent to whom such obligation is owed by virtue of that statute would be a "legally dependent parent" within the meaning of the cited Social Security Adminis tration regulations. Accordingly, it is held that R, if in fact destitute, is a "legally dependent parent" for whose support a portion of C's benefits may properly be expended under the cited regulations, so long as C's current maintenance needs are being met. (For this purpose, support means only that portion of the benefits required for R's ordinary and necessary living expenses.) SECTION 205 (j).-REPRESENTATIVE PAYEE-USE OF CONSERVED FUNDS FOR PREPAID BURIAL PLAN 20 CFR 404.1603 and 404.1604 SSR 70-41 Where a representative payee uses a social security beneficiary's conserved benefits to purchase a prepaid funeral plan for him, held, such expenditure of conserved funds may be considered proper under sections 404.1603 and 404.1604 of Regulations No. 4 of the Social Security Administration if the contract is valid under applicable State law, the current needs of the beneficiary are being met and the cost of the plan is reasonable in the light of the beneficiary's financial situation. Pursuant to section 205 (j) of the Social Security Act, N was named representative payee for her husband, O, who is confined to a State mental hospital. N used part of O's conserved benefits, which were in excess of his current needs, to purchase a prepaid funeral plan for him. Section 205 (j) of the Act provides that when it serves the interests of a beneficiary, payment of the beneficiary's benefits may be certified to a relative or some other person to use on the beneficiary's behalf. Section 404.1603 of Regulations No. 4 of the Social Security Administra tion (20 CFR 404.1603) provides, as pertinent here, that payments certified to a representative payee on behalf of a beneficiary shall, subject to review by the Administration, be applied only for the use and benefit of such beneficiary in the manner and for the purposes determined by him to be in the beneficiary's best interest. Section 404.1604 provides that benefit payments so certified on behalf of a beneficiary shall be considered as having been applied for the use and benefit of the beneficiary when they are used for the beneficiary's current maintenance-i.e., to replace current income lost because of the disability, retirement, or death of the insured individual. Where the beneficiary is receiving care in an institution, current maintenance includes the customary charges made by the institution to individuals it provides with care and services like those it provides the beneficiary and charges made for current and foreseeable needs of the beneficiary which are not met by the institution. The issue to be resolved in the instant case is whether or not a contract for purchase of a prepaid burial plan by N on O's behalf is a proper expenditure of his conserved benefits under sections 404.1603 and 404.1604 of Regulations No. 4, supra. The facts show that N paid $500 to the Y Funeral Home for the funeral contract. Under State law, payments made under this type of contract are to be deposited in the Y Funeral Home Trust Fund of the X Bank, and held for the benefit of the purchaser until the obligations of the contract are fulfilled according to its terms. The contract provides in part as follows: In consideration of the sum of $500.00 paid, or to be paid by the PURCHASER to the FUNERAL DIRECTOR and providing the amount contained in the County Welfare Board Social Welfare Fund at the time of the death of the PURCHASER is in no less an amount than that agreed upon between the parties, the FUNERAL DIRECTOR shall furnish the funeral service consisting of professional services, funeral home facilities and merchandise. An allowance of $ is included for interment charges. If at the date of the PURCHASER'S death the Fund established is insufficient to cover the services and merchandise specified above, according to the prices being charged by the FUNERAL DIRECTOR to the general public at such date, then the funds on deposit shall be used by the FUNERAL DIRECTOR to provide services and merchandise of a type and quality as may be purchased for the total amount of funds on deposit in the SOCIAL WELFARE FUND at the date of PURCHASER'S death. While N, as a person confined in a State mental institution, is disqualified under applicable State law from receiving old-age assistance, the contract here entered into is an old-age assistance contract form, and purports to guarantee him a funeral out of the Social Welfare Fund maintained by the Commissioner of Public Welfare or in an amount allowed by the county for old-age assistance burials, in the event the amount in the special bank fund is less than the amount allowed by the county for such burials. Since, in the instant case, O's current needs are being met out of his current benefits, and the cost of the funeral plan is reasonable in view of his financial status, held, N as representative payee may properly use a portion of O's conserved benefits to purchase the prepaid funeral for him, pursuant to sections 404.1603 and 404.1604 of Regulations No. 4 of the Social Security Administration. SECTION 205 (j).-REPRESENTATIVE PAYEE-INVESTMENT OF CONSERVED BENEFITS IN FEDERAL CREDIT UNION-APPLICABILITY OF STATE LAW 20 CFR 404.1605 SSR 68-9 Where conserved social security benefits must be invested in accordance with rules applicable to investment of trust estates by trustees in State of beneficiary's domicile, and parents of child-beneficiary were divorced under decree whereby mother, prior to her death, had legal custody of child but father continued to have parental rights and responsibilities, and after mother's death, child lived in France and father lived in New York held, since domicile of child is considered to be that of surviving parent with parental rights (here, child's father) after death of parent with legal custody, child's accumulated benefits must be invested in accordance with New York law regarding investment of trust funds by trustees and further held, proposal to invest child's accumulated social security benefits in shares of credit union would be improper under such law. C became entitled to child's insurance benefits on the earnings record of her deceased mother in January 1961. Her father, A, then living in New York State, was selected as representative payee for C, who had been living in France with maternal relatives since before her mother's death. C's parents had been divorced in 1954, with the mother receiving custody of C. A continued to act as representative payee and to administer the benefits because of his sustained active interest in his child's welfare and education, until October 1965. At that time the child's benefits were made payable to C's maternal aunt in France with whom C was living. During the years that A acted as representative payee, he sent part of the child's benefits to France for her maintenance and support, and deposited the rest in a bank account. When the change of payee took place, A was permitted to retain and continue to administer the conserved funds, amounting to $1,122.69, which he had decided to invest in a teachers' Federal credit union in New York State, for C's future education. Under section 404.1605 of Regulations No. 4 of the Social Security Administration, (20 CFR 404.1605) funds certified to a relative or other person on behalf of a beneficiary which are not needed for the current maintenance of the beneficiary, shall be conserved or invested on the beneficiary's behalf. Preferred investments are U.S. Savings Bond, but such funds may also be invested in accordance with the rules applicable to investment of trust estates by trustees in the State of the beneficiary's domicile. Since, in this case, there has been an investment of conserved funds by the representative payee in other than U.S. Savings Bonds, two questions must be determined: (1) which State is the beneficiary's domicile? and (2) is the form of investment, i.e., shares in a teachers' Federal credit union, proper under the rules applicable to investment of trust estates by trustees in that State? |