5722 Transfers of Specific Resources -
Scheduled
Receipt of Compensation After Date of Transfer - If
the full value of a transferred resource is scheduled for receipt
after the date of transfer, the transfer is considered an uncompensated
transfer if adequate compensation is not expected to be received within
the expected lifetime of the individual. Expected lifetime is determined
at the time of the transfer, unless otherwise indicated. Appendix
Item T-4,
Life Expectancy Table, shall be used to determine life expectancy
for any such transfers.
Trusts
- Unless specifically exempt as per 5721
(3), a transfer of real or personal property to an irrevocable trust
or similar irrevocable legal device shall be considered a transfer
without adequate compensation if the trust principal cannot be made
available to the individual under any circumstances (see 5620).
This provision is not applicable to exempt irrevocable burial trusts
(see 5430 (1) and (8)).
This provision also applies to transfers of resources to a pooled trust
described in 5621(2) where the individual establishing the trust is
age 65 or older. The trust may be exempt as a resource,
but the transfer to the trust is considered an uncompensated transfer.
Disclaimer
of Inheritance and Spousal Elective Share - If the individual
or spouse disclaims or gives up his or her rights to an inheritance,
the fair market value of the assets which would have been available
to the individual are considered transferred without adequate compensation.
The date of the decedent’s death is the date of transfer. In addition,
failure to take the full spousal elective share available following
a spouse’s death shall also be considered an uncompensated transfer.
The transfer disqualification is applicable following a confirmation
that no further action can be taken to pursue the asset. Current recipients
must pursue the full share as a potential resource per 2124.1(4).
Life Estate (see 5333) - If an individual or spouse
purchases a life interest in the home of another or transfers either
a life or remainder interest in his or her own property an inadequate
transfer has been made if the individual did not receive fair market
value for the transfer.
For transfers of a life or remainder
interest in his or her own home, the fair market value of the
life estate, as determined in 5333,
must be established, considering the ownership portion retained
by the individual or spouse. Failure to receive the fair market
value results in an inadequate transfer.
For a purchase in the life interest
of another’s home, in addition to receiving fair market value
for the transfer as described in item (a), the individual must
reside continually in the home for a period of at least one year
after the date of purchase. This requirement is applicable only
to purchases on or after February 8, 2006.
Promissory Notes, Loans, Contract
Sales, Mortgages (see 5430
(5)) - If the individual or spouse purchases a promissory note,
mortgage or loan in exchange for the transfer of an asset, the repayment
terms of the agreement must be actuarially sound or the transaction
is considered an uncompensated transfer. For this provision, a purchase
includes a direct transfer of personal or real property in exchange
for a repayment agreement or contract. These provisions also apply
to contract sales of property.
Absent a repayment agreement, the entire amount used to purchase the
note, loan or mortgage is considered a gift and subject to transfer
of property provisions. The following repayment terms must be met
to be considered an actuarially sound transfer:
the full value must be realized
within the individual’s life expectancy as per 5722
(1);
provides payment in equal
amounts during the term of the loan, with no deferred or balloon
payments; and
prohibits the cancellation
of the balance upon the death of the lender.
If the note does not meet the above conditions, it is a transfer
for inadequate consideration.
Transfers
in Exchange for Services - If an individual or spouse
transfers money in exchange for services, the payments must be made
under the terms of a contract, as specified in this section, or the
transfer is considered a transfer for inadequate consideration.
Services provided by family
members - There is a general presumption that family members who
perform personal services for other family members do so without
any expectation of reimbursement. In the event payment was expected,
a written contract must be executed prior to service delivery.
The contract must include the specific services to be provided,
the reimbursement rate and the form of reimbursement to be delivered.
The contracted amount must be consistent with the market rate
for such services. If there is no established rate, the federal
minimum wage shall be used. Transfers made outside of a contracted
agreement or which do not meet these terms are considered inadequate.
NOTE: Reimbursement for items and supplies necessary
are not services and would be considered under these provisions.
For example: lumber, shingles and other home repair items; plumbing
equipment to repair a leaky faucet; food for meal preparation.
Services Provided by Non-Family
Members - Payments for services provided outside of a contracted
agreement in accordance with 5430
(5) are considered a transfer without adequate consideration.
Transfers of Income - A transfer of a lump sum or ongoing source of income is considered an uncompensated transfer if the action to refuse the income was initially taken within the 3-month period immediately preceding the date of the application.