Transfer of Income 510-05-80-30

(Revised 1/1/08 ML #3120)

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(N.D.A.C. Sections 75-02-02.1-33.1 and 75-02-02.1-33.2)

When an individual’s income is given or assigned in some manner to another person, and adequate compensation is not received, such a gift or assignment is considered a transfer of income for less than fair market value.

In determining whether income has been transferred, do not attempt to ascertain in detail the individual’s spending habits during the 36 or 60 month look back period. Absent some reason to believe otherwise, assume that ordinary household income was legitimately spent on the normal costs of daily living.

However, attempt to determine whether the individual has transferred lump sum payments actually received in a month. Non-recurring lump sum payments, while counted as income in the month received for eligibility purposes, would be counted as assets in the following month if they were retained. Recurring lump sum payments would be counted as income over a prorated period. Disposal of such lump sum payments before they can be counted as income or assets constitutes an uncompensated transfer of income. Also, attempt to determine whether amounts of regularly scheduled income or lump sum payments, which the individual would otherwise have received, have been transferred. Normally, such a transfer takes the form of a transfer of the right to receive income. For example, a private pension may be diverted to a trust and no longer be paid to the individual.

When income or the right to income has been transferred, a penalty for that transfer must be imposed.

When a single lump sum is transferred (e.g., a stock dividend check is given to another person in the month in which it is received by the individual), the penalty period is calculated on the basis of the uncompensated value of the lump sum payment.

When a stream of income, (e.g., income received on a regular basis, such as a pension) or the right to a stream of income is transferred, determine the total amount of income expected to be transferred during the individual’s life, based on an actuarial projection of the individual’s life expectancy, and calculate the penalty on the basis of the projected total income. (The Life Expectancy Table can be found at Appendix O.)