20 CFR 404.357, 404.361, and 404.363
Where the burial expenses of a worker who died fully insured, and not survived by an eligible spouse, are paid to the funeral home by a union pursuant to a plan contained in the union's constitution, and where any amount remaining under the plan after payment of the burial expenses was payable to beneficiaries designated by the deceased, held, the named beneficiaries, rather than the union or the worker's estate, are equitably entitled to the lump-sum death payment based on the worker's earnings record.
R died fully insured on July 10, 1966. He was not survived by a widow. X Union, of which he was a member in good standing, provided, pursuant to its constitution, a plan for payment of the burial expenses upon the death of each member in good standing. The amount of the benefit is based on years of membership. A member may name one or more beneficiaries; however, the proceeds of the benefit go first to the person who paid the burial expenses of the deceased, or to the funeral home upon authorization of the beneficiary. Any amount remaining after payment of such expense is paid to the named beneficiaries.
In this case, R had designated Y and Z as beneficiaries. Upon their authorization, the union paid the burial expenses directly to the funeral director and paid the remaining balance of the amount payable under the plan to the designated beneficiaries, Y and Z.
Under section 202(i) of the Social Security Act, as pertinent here, upon the death of a fully or currently insured worker, a lump-sum death payment of $225 or three times the worker's primary insurance amount, whichever is less, may be paid to the worker's surviving spouse if the latter was living in the same household with the worker when he died. If there is no such spouse and if all burial expenses incurred by or through a funeral home have been paid, payment of the lump sum may be made to any person or persons equitably entitled thereto, to the extent and in the proportions that they paid such burial expenses. Section 404.363(c) of Social Security Administration Regulations No. 4 (20 CFR 404.363(c)). Under section 404.361 of Regulations No. 4 (20 CFR 404.361), an estate of a deceased worker may be a "person equitably entitled" to a lump-sum death payment. However, the term "person or persons equitably entitled" does not include, among others, any of the following:
* * * an organization paying the expenses of burial of a member * * * to the extent that the payment by such * * * organization is pursuant to a plan, system, or general practice of such * * * organization; * * *.
Section 404.306(d)(3) of Regulations No. 4 (20 CFR 404.360(d)(3)).
Since the organization which actually paid the burial expenses pursuant to its plan is ineligible under the above regulation to be equitably entitled to a lump-sum death payment, and since there is no surviving spouse, the question presented is who may be considered equitably entitled to the lump-sum death payment.
Where no equitable entitlement can be established by an organization which makes payment of the burial expenses of a member under a plan, system, or general practice, as in this case, payment of the burial expenses is presumed to have been made on behalf of and in recognition of the right of the named beneficiary or beneficiaries and, in the absence of named beneficiaries, of the worker's estate, to the funds used to pay the burial expenses. Accordingly, the named beneficiary or beneficiaries or, in the absence of a named beneficiary, the worker's estate may be deemed equitably entitled.
Since Y and Z were named by R as beneficiaries under the union plan for payment of burial expenses, it is held they are equitably entitled to the lump-sum death payment.
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