Reconsideration of Collection Action

The Claims Division determined that a distributee of property from an estate was liable for the debt resulting from overpayments of Supplemental Security Income (SSI) benefits made to her deceased mother, and a reconsideration of this determination was requested. The distributee's mother received overpayments totaling $1,184.20 in SSI benefits and never repaid the funds during her lifetime, so her estate became liable for the debt. The Social Security Administration (SSA) notified the attorney for the estate that the United States must be given priority over other creditors of the estate. It was pointed out that a representative of an estate can become personally liable for a debt owed to the United States if the general creditors of the estate are paid without first satisfying the Government's claim. An agreement was made that after the estate was closed, the distributee would pay the debt from the proceeds from the sale of the decedent's house. When the SSA attempted unsuccessfully to collect the debt after the estate was closed, the Claims Division determined that the distributee was liable for the debt. The distributee, however, contended that it would be unfair for her to repay the entire debt. She argued that if the Government had filed a notice of the debt in the Probate Court having jurisdiction over her mother's estate, then her mother's debt would have been satisfied from the estate and all three beneficiaries would have shared the cost of repaying the Government. It was pointed out that the rights of the United States are different from those of a private creditor seeking to collect a debt owed by a decedent. The Government may exercise its right of action against any or all persons who have inherited the debtor's property. Although the Government may file and prosecute its claim in the same manner as any other creditor, this procedure is not required. (However, if the Government does formally submit its claim in probate proceedings, it is then bound by the determination made by the State Court.) In this case, the Government decided that it would be more economical to deal with the estate directly. The Government agreed to initiate collection action against the other liable parties if the distributee would advise as to their addresses; however, if these beneficiaries cannot be located, the distributee will be held responsible for the entire debt.