415.17 Transfer of Assets into a Life Estate (AAM)

415.17 Transfer of Assets into a Life Estate (AAM)

SR 08-17 Dated 02/06 Previous Policy

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Life Estate Retained Applicant/Recipient ’ s Home

When a life estate is established, the individual retains use of the asset for their lifetime but has assigned ownership of the asset to another person or entity. To determine fair market value of a life estate:

• Determine the asset ’ s fair market value at the time of transfer.

• Take into consideration the age of the individual at the time of the transfer.

• Using the Life Estate Tables in the back of this Chapter:

- Multiply the market value of the asset by the life estate factor that corresponds to the individual ’ s age at the time of the transfer to determine the value of the life estate; and

- Subtract the value of the life estate from the value of the asset transferred.

- The difference equals the portion of the asset transferred for less than fair market value.

Life Estate Retained In Another Person ’ s Home

Determine the fair market value of a life estate when an individual establishes a life estate in another person ’ s home on or after 1/1/06. If the individual has not lived in the home for more than one year, the life estate is automatically treated as a transfer of assets for less than fair market value.