Attorney General's Opinion
Attorney General, Richard Blumenthal
June 23, 1993
Honorable Audrey Rowe
Department of Income Maintenance
110 Bartholomew Avenue
Hartford, Connecticut 06106
Dear Commissioner Rowe:
By your letter of May 4, 1992, you requested our opinion on several questions about the exclusion of irrevocable funeral accounts from consideration as assets in determining eligibility for your Department's programs. Essentially, you asked whether the monetary limit Conn. Gen. Stat. §42-207 places on such accounts is a requirement for their validity. If it is, you asked whether the limit may be exceeded either by creating an account outside the state and then transferring it to the state or by creating multiple irrevocable accounts whose total amount exceed the limit.
We conclude that the limit is a requirement for the validity of such accounts. Therefore, it cannot be exceeded by the creation of an out-of-state account which is then transferred to this state. Nor can it be exceeded by the setting up of several such accounts the total amount of which exceed the limit set in Conn. Gen. Stat. §42-207.
To be eligible for the entitlement programs the Department of Income Maintenance (the Department) administers, an individual must meet certain income and resource requirements mandated by the Social Security Act (the Act) and federal and state regulations enacted pursuant to it. Thus, when an individual applies for benefits under one of these programs, the Department evaluates the applicant's income and resources. If the income and resources exceed the prescribed amount, the applicant is ineligible to receive benefits.
The Act does not specifically define the term "resources". Therefore, the determination of whether an applicant has an interest in property that constitutes a "resource" is initially a question of state law. State of Washington v. Bowen, 815 F.2d 549, 557 (9th Cir. 1987); Cannuni v. Schweiker, 740 F.2d 260, 264 (3rd Cir. 1984). Once it is determined that an applicant has an interest in property under state law, the Act limits what property interests may be counted as resources in determining eligibility. Generally, under any of the Social Security Act programs, the property must be "available" to the applicant. The property is available to the applicant when it is in the applicant's possession and when the applicant has a legal right to obtain the property for his support. See 20 C.F.R. §416.1201(a)(1); 45 C.F.R. § 233.20(a)(3)(ii)(D).
Consistent with this definition of "resource" as an asset that may legally be obtained by the applicant for his or her support and maintenance, the Department's regulations as contained in the Uniform Policy Manual (UPM) exclude funds held in irrevocable funeral accounts from consideration in determining eligibility for the Department's various programs, since these accounts cannot be liquidated during the life of their owners. See, for example, UPM 4000.01. Your request arose because Conn. Gen. Stat. §42-207 limits the amount that may be put in irrevocable burial accounts in this state to three times the highest amount payable for the burial of public assistance recipients. According to your letter, this amount is currently equal to three times twelve hundred dollars or thirty-six hundred dollars. In light of this legislatively mandated limit, you have posed the following scenarios and asked for our advice on how to proceed in them.
The first scenario is when an individual purchases an irrevocable funeral account in Connecticut and the funds in the account exceed three times the amount paid for the burial of public assistance recipients. You asked whether you should in such a situation exclude the funds in this account or whether the account is invalid and therefore revocable. The second scenario is when an individual purchases an irrevocable funeral account in another state for four thousand dollars. He moves to Connecticut and wants to transfer the account to a funeral home here. You asked whether you may exclude the entire account if this is done or if the individual is considered to be entering into a new account here in Connecticut and therefore subject to the thirty-six hundred-dollar limit. The third scenario concerns whether the intent of Conn. Gen. Stat. §42-207 was to allow an individual to have only one irrevocable account. If an individual is allowed to purchase more than one irrevocable account the total amount of which can exceed the thirty-six hundred-dollar limit, you asked whether the Department should exclude the funds in only one of the accounts.
Conn. Gen. Stat. §42-207 provides:
An irrevocable funeral contract may be entered into in which the amount held in escrow may be disbursed only upon the death of the beneficiary provided such a contract shall not exceed three times the highest amount payable for the burial of public assistance recipients and that all interest accumulates to the escrow account and is also inaccessible to the beneficiary. Such irrevocable funeral contracts may be transferred from one funeral service establishment to another upon request of the beneficiary. The purchase of an irrevocable funeral contract shall not preclude an individual from purchasing other funeral contracts that are revocable.
This statute created a vehicle for individuals to set aside funds for their funeral expenses which would qualify as excludable assets under federal and state public assistance eligibility rules should it become necessary for them to apply for public assistance. It enables an individual to create an account which he cannot liquidate and which therefore will not qualify as an available resource under federal and state law. Conn. Joint Standing Committee Hearings, Human Services, Pt. 1, 1988 Sess. pp. 5-6, 27-28 (February 9, 1988) (Testimony of Commissioner Heintz and Carlton Erickson). See also 29 H.R. Proc., Pt. 12, 1986 Sess., pp. 4246, 4248 and 4256-4257 (April 28, 1986) (Remarks of Rep. Cappelletti and Rep. Dyson); 29 S. Proc., Pt. 29, 1986 Sess., pp. 3632-3633 (May 5, 1986) (Remarks of Sen. Markley). However, in doing so, it limits the amount an individual can so set aside to three times the amount paid for the burial of public assistance recipients. This limit is a condition for the validity of such accounts. The statute provides that: "An irrevocable funeral contract may be entered into in which the amount held in escrow may be disbursed only upon the death of the beneficiary provided such a contract shall not exceed three times the highest amount payable for the burial of public assistance recipients ..." Conn. Gen. Stat. §42-207, (emphasis added). The proviso means that an irrevocable funeral contract which exceeds three times the amount paid for the burial of public assistance recipients is void.
An agreement may be rendered illegal and unenforceable by legislation in form of statutory or constitutional provision, by common law as embodied in judicial precedent, or by dicates of public policy. May Department Stores, Co. v. First Hartford Corp., 435 F. Supp. 849, 852 (D.C. Conn. 1977). Every contract made for doing anything that is prohibited by statute is void, though not made so in terms by statute. Funk v. Gallivan, 49 Conn. 124, 128 (1881); Sagal v. Fylar, 89 Conn. 293, 295-296 (1915); Tator v. Valden, 124 Conn. 96, 102-103 (1938). A contract in violation of statute or contrary to public policy is not enforceable. Crystal Amusement Corp. v. Northrop, 19 Conn. Sup. 498, 499 (1955). See also Habetz v. Condon, 224 Conn. 231, 238-239 (1992) (the purpose of the home improvement act, Conn. Gen. Stat. §§20-418 through 20-432, would be frustrated if contractors could operate in violation of it and still obtain the restitutionary value of the services they had performed); Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 247 (1992) (in the absence of bad faith, a homeowner is privileged to repudiate a home improvement contract that violates the act); In re Maiorino, 15 B.R. 254, 257 (1981) (contracts will not be enforced to the extent that they conflict with the Bankruptcy Code); Rupert's Oil Service v. Leslie, 40 Conn. Sup. 295, 297 (Conn. Super. 1985) (court has power to declare unenforceable a consumer contract made in violation of a statute enacted to protect consumers from fraud).
Therefore, the answer to your first question is that an irrevocable funeral account with more than three times the amount the Department pays for the burial of public assistance recipients is not a valid irrevocable account under Conn. Gen. Stat. §42-207. Since such account is void ab initio, the owner is entitled to recover the amount in it. Therefore it may be treated as a countable resource for public assistance eligibility determination purposes. The applicant has the legal right to liquidate such account. Accordingly, the amount in the account qualifies as an "available resource".
However, nothing in Conn. Gen. Stat. § 42-207 prevents an applicant for public assistance from revoking the contract and entering a new one that meets the statutory limit. Therefore, applicants may be advised to revoke a contract that exceeds the statutory limit and enter a new one that conforms with the limit. Once this is done, the only amount that may be counted in determining the applicant's eligibility for public assistance would be the amount by which the old contract exceeded the limit. The individual will then be eligible for public assistance if that amount, together with other countable assets, does not exceed the asset limit for the program applied for.
Your second question concerns a situation where an individual establishes in another state an account with more than three times the amount paid for the burial of public assistance recipients in this state, moves to Connecticut and transfers the out-of-state account to a funeral director in this state. You asked whether you should exclude the entire amount in the account in such a situation or treat the account as a Connecticut account subject to the monetary limit set in Conn. Gen. Stat. §42-207.
By referring to property that an individual "owns" or "has the right, authority or power" to liquidate, regulations and case law defining the term "resources" for purposes of eligibility for assistance under the Social Security Act refer to an individual's right under state law. They do not purport to define property rights as a matter of federal law. Navarro v. Sullivan, 751 F.Supp. 349, 350 (E.D.N.Y. 1990); Buchbinder v. Bowen, 709 F.Supp. 389 (S.D.N.Y. 1989); McCassell v. Sullivan, 1989 U.S. Dist. LEXIS 14400, *1, *7 (S.D.N.Y. 1989). Therefore, it is appropriate to refer to state property law in determining the validity of and the rights conferred by an irrevocable funeral account located in this state. Cannuni v. Schwieker, 740 F.2d 260, 264 (3rd Cir. 1984); Rosenfeld v. Secretary of Health and Human Services, 563 F.Supp. 1192, 1196 (E.D.N.Y. 1983); McCassell v. Sullivan, supra, at *5 - *6.
If the account is transferred to this state, the account would be held in a Connecticut bank by a Connecticut funeral director on behalf of a Connecticut resident. Therefore, Connecticut law would apply. See Cannuni v. Schwieker, 740 F.2d at 264. The answer to your second question, then, is that you may treat accounts transferred from other states to this state as you would treat any other Connecticut account.
Your third and final question is whether Conn. Gen. Stat. §42-207 allows an individual to have more than one irrevocable account and, if so, if you may exclude the amount in only one of such accounts. The statute provides that "The purchase of an irrevocable funeral contract shall not preclude an individual from purchasing other funeral contracts that are revocable." Conn. Gen. Stat. §42-207 (emphasis added). By providing that the purchase of an irrevocable funeral contract does not preclude the purchase of other revocable contracts, the legislature evinced an intent to make the purchase of an irrevocable contract preclusive of the purchase of other irrevocable contracts. This interpretation is buttressed by the legislature's use of the singular in referring to the "irrevocable funeral contract" and its use of the plural in referring to "other revocable funeral contracts". E.R. Wiggins Builders Suppliers v. Smith, 121 Vt 143, 149 A.2d 360, 362 (1959); Winchester v. Connecticut State Board of Labor Relations, 175 Conn. 349, 361 (1978). Therefore, an individual may only purchase one irrevocable funeral contract. Where an individual purports to have more than one account pursuant to such contract, the total amount of which exceeds the statutory limit, the Department may recognize only one of them for public assistance eligibility purposes.
First, the limit of three times the amount paid for the burial of public assistance recipients that Conn. Gen. Stat. §42-207 imposes is a prerequisite for the validity of an irrevocable funeral contract. Therefore, any account that exceeds that limit is an "available resource" and may be counted in determining public assistance eligibility. Second, that limit applies to all Connecticut located escrow accounts created pursuant to an irrevocable funeral contract, regardless of where the contract was originally entered into. Third, preventing the circumvention of the limit by the creation of multiple "irrevocable" funeral accounts is consistent with the intent of Conn. Gen. Stat. §42-207.
Please contact us if we can be of further help to you in this matter.
Very truly yours,
Patrick B. Kwanashie
Assistant Attorney General