SSR 70-9: SECTION 204(d)(7). -- UNDERPAYMENT -- STATUS OF COUNTY WELFARE AGENCY UNDER INDIANA'S SMALL ESTATE STATUTE

20 CFR 404.503

SSR 70-9

J, a retirement insurance beneficiary, died intestate in Indiana with no

widow, children, or parents surviving him. Retirement insurance benefits

were still due him. According to the provisions of section 204 of the Act

the amount of benefits unpaid at death constitutes an underpayment. Since

J was a recipient of public assistance, the X County Department of Public

Welfare has requested the underpayment as his "legal representative." The

welfare agency's claim is based upon its purported status as a distributee

of J's estate under section 7-201 of Burns Indiana Statutes (Indiana small

estate statute).

Section 204(d)(7) of the Act provides, as pertinent here, that in the

absence of any surviving spouse, child, or parent of the decedent, payment

of the amount due the decedent may be made to the "legal representative"

of his estate. Qualification as "legal representative" depends on whether

or not the party can give the Social Security Administration good

acquittance.

The question to be resolved here is whether the X County Department of

Public Welfare can give the Administration good acquittance for the

underpayment and thus qualify for such underpayment as "legal

representative" of the estate within the meaning of section 204(d)(7) of

the Social Security Act, as amended.

The Indiana "small estate statute," (section 7-201) provides in pertinent

part that:

estion to be resolved here is whether the X County Department of

Public Welfare can give the Administration good acquittance for the

underpayment and thus qualify for such underpayment as "legal

representative" of the estate within the meaning of section 204(d)(7) of

the Social Security Act, as amended.

The Indiana "small estate statute," (section 7-201) provides in pertinent

part that:

The Social Security Administration may pay underpayments owed to a "legal

representative" or persons entitled under a proper affidavit if the

affidavit received specifically sets forth the existence of the conditions

enumerated in section 7-201 supra. Where there is no widow, the Indiana

statute provides that distributees must submit in the affidavit

allegations of their right to receive such money. Distributees are defined

in section 6-103 of Burns Indiana Statutes as "those persons who are

entitled to real and personal property of a decedent under his will or

under the statutes of intestate succession."

Assuming that a county is considered a "person" under the statute, it

still must be determined whether a county can be deemed a distributee

under the Indiana rules of intestate succession enumerated in section

6-201 of Burns Indiana Statutes. If a person dies without a will and

leaves no heirs, a county under section 6-201(c)(8) does not have any

intestate inheritance rights; such rights, acquired through the process of

escheat by the State, are reserved only to the State, and the State alone

can be a "distributee" of a decedent's estate.

ana rules of intestate succession enumerated in section

6-201 of Burns Indiana Statutes. If a person dies without a will and

leaves no heirs, a county under section 6-201(c)(8) does not have any

intestate inheritance rights; such rights, acquired through the process of

escheat by the State, are reserved only to the State, and the State alone

can be a "distributee" of a decedent's estate.

It has been suggested that even though the State alone has the legal

status of "distributee" under Indiana's small estate statute, the State

(or county) welfare department may act as agent for the State in receiving

the underpayment payable in this case under section 204(d)(7) of the

Social Security Act. This suggestion is based upon an implied comparison

with the authority granted the welfare agency under the Indiana Public

Welfare Act to collect claims against the estates of deceased public

assistance recipients on behalf of the State. However, this is not a

tenable comparison for the following reasons:

(1) The Indiana Public Welfare Act, from which the county public welfare

agencies derive this authority, is separate and distinct from the State

law of intestate succession, under which the State may, through the

process of escheat, have rights of inheritance in a decedent's estate.

Authority granted by the first statute confers no authority in connection

with any rights arising under the second. (2) A county welfare

department's authority with respect to enforcement of claims for

reimbursement for old-age assistance furnished appears to be essentially

that of a creditor and exists irrespective of whether the State is or is

not a "distributee" through the process of escheat in a particular case.

tatute confers no authority in connection

with any rights arising under the second. (2) A county welfare

department's authority with respect to enforcement of claims for

reimbursement for old-age assistance furnished appears to be essentially

that of a creditor and exists irrespective of whether the State is or is

not a "distributee" through the process of escheat in a particular case.

(3) The county welfare departments, creations of Indians statute, must be

considered to have only such authority, direct and incidental, as is

granted them by statute. Thus, since those departments do not appear to

have been given authority with respect to situations where, through the

process of escheat, the State may be considered to be a "distributee" of

the estate of an underpaid decedent under section 6-201, Burns Indiana

Statutes, the above-mentioned Indiana small estate statute affords no

basis for payment of an underpayment to such a department in such

cases.

Finally, it is not clear from the pertinent Indiana statutes whether, in

those cases where the State could be considered to be a "distributee" of a

decedent's estate through the process of escheat because of failure of

natural heirs, there is anyone who could receive an underpayment on behalf

of the State. For these reasons, it held that the X County

Department of Public Welfare cannot qualify for the underpayment as the

"legal representative" of J's estate within the meaning of section

204(d)(7) of the Social Security Act, as amended.