5722 Transfers of Specific Resources -

 

  1. 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.
     

  2. 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.
     

  3. 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).
     

  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.

    1. 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.

    2. 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.

  5. 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:
     

    1. the full value must be realized within the individual’s life expectancy as per 5722 (1);
       

    2. provides payment in equal amounts during the term of the loan, with no deferred or balloon payments; and
       

    3. 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.
       

  1. 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.
     

    1. 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.
       

    2. 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.
       

  2. 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.


  3. Exempt Assets - A constructive or step transaction transfer of an otherwise exempt resource is considered an uncompensated transfer if adequate consideration is not received.

    1. Constructive Transfer – An uncompensated transfer will be deemed to have occurred where the individual uses countable resources to purchase an exempt resource and retains legal title to the resource but allows another individual the full use, enjoyment and possession of the resource.

      Example: An individual purchases a new vehicle in their own name for $20,000 and immediately gives possession of the vehicle to another family member for their exclusive use. Even though the individual still retains legal title to the vehicle, an uncompensated transfer has occurred.

    2. Step Transaction – An uncompensated transfer will be deemed to have occurred where a countable resource was used to purchase an exempt resource that is then transferred to another individual. The steps in the transfer process are ignored to look at the ultimate outcome of the transaction.

      Example: An individual uses $20,000 in savings to purchase a new vehicle in their own name and then immediately transfers title to the vehicle to another family member. A $20,000 uncompensated transfer will be deemed to have occurred because the ultimate outcome of the transaction was that $20,000 in savings was gifted away.