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6.9 Asset Transfers Involving Life Estates A. Life estate means a legal arrangement entitling the owner of the life estate (sometimes referred to as the “life tenant”) to possess, rent, and otherwise profit from real or personal property during their lifetime. The amount of a life estate that is countable depends on when it was established, whether the applicant has the legal right to sell the home, and the portion of the proceeds of the sale, if allowed, that are available. B. For all Medicaid LTSS applications and renewals after January 1, 2006, the establishment of a life estate for a home is treated as a transfer of assets. 1. Disqualifying transfer – A life estate may be a disqualifying transfer in the following instances: a. Applicant/beneficiary owns the property – When an applicant or beneficiary has an ownership interest in a home and establishes a life estate on his or her own behalf, the remainder interest is a disqualifying transfer. The remainder interest is the equity value of the property minus the value of the life estate as determined in accordance with § 6.5.3(B)(3) of this Part. b. Applicant/beneficiary purchases property – When an applicant/beneficiary purchases a life estate in the home of another person, and the payment made exceeds the FMV of the life estate, the difference between the amount paid and the FMV is treated as a disqualifying transfer. This transfer is disqualifying even if the applicant/beneficiary lives in the home of the life estate for one (1) year or more. c. Applicant/beneficiary gifts the property – In instances in which the applicant/beneficiary makes a gift or transfer of a life estate interest, the value of the life estate, as calculated under § 6.5.3(B)(3) of this Part, is considered a disqualifying transfer of assets. 2. Allowed transfer – When an applicant or beneficiary establishes a life estate for fair market value, the purchase price is an allowed transfer if he or she resides in the home for at least one (1) year after the life estate is established. If the home held in the life estate is not excluded in accordance with the provisions set forth in §§ 6.5.3(B)(1) and (2) of this Part, the value of the life estate is counted as a resource in determining Medicaid LTSS eligibility. C. A home held in a life estate may be excluded as a resource for Medicaid LTSS eligibility determination, providing the provisions of § 6.5.3(B)(3) of this Part have been met.