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Title 8: Medicaid Page 113 Iowa Department of Health and Human Services Employees’ Manual Chapter D: Resources Specific Non-MAGI-Related Resources September 13, 2024 Life Estates or Remainderman Interest Life Estates or Remainderman Interest (Cont.) The right to receive the property when the life estate ends also has value and can be sold. As with a transfer of the life estate, the transfer of the remainder interest does not change the life that controls the life estate. When the life estate ends, the remainderman then owns the entire property. It is no longer divided into a life estate and remainder interest.

Mrs. A, a nursing facility resident, has a life estate. She reports that the property held in the life estate was sold. Request documentation to determine if both the life estate and the remainder interest were sold, or if just the life estate or the remainder interest was sold.

If just the remainder interest was sold, Mrs. A continues to hold a life estate in the property. If both the life estate and the remainder interest were sold, Mrs. A is entitled to that portion of the sale proceeds that represent the value of the life estate. If only the life estate was sold, Mrs. A is entitled to all of the proceeds.

The owner of the entire, undivided property can divide the property into the two parts and can:

 Keep the life estate and transfer the remainder interest;  Transfer the life estate and keep the remainder interest;

 Transfer both the remainder interest and the life estate to two different people.

If the life controlling the life estate is likely to be short, the value of the life estate is smaller and the value of the remainder interest greater. Conversely, if the life controlling the life estate is likely to be long, the value of the life estate is greater and the value of the remainder interest smaller.

Procedure: Request verification of:  What portion of the life estate the client owns,  Which portion has been sold or transferred, and  The date of the transaction.