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FMV, and the agreement is verified with a lease that existed during the time the institutionalized person received room and board from the relative. 17.2.6.12 Trusts Established by a Will A trust established by a will is an allowed divestment and doesn’t result in a penalty period. 17.2.6.13 Regulated Gambling Losses Money lost from participating in gambling at a casino, racetrack, or other regulated gambling is an allowed divestment and doesn’t result in a penalty period. 17.2.6.14 Irrevocable Annuities An irrevocable annuity purchased, created, or substantively changed during the look back period or after eligibility is established may be an allowed divestment. “Substantively changed” means action was taken that changes the course of payments made under an annuity or the treatment of the income or principal of an annuity. See SECTION 16.7.4.5 ANNUITY DISCLOSURE REQUIREMENT FOR LONG-TERM CARE for information about what types of transactions constitute a substantive change. To be an allowed divestment, the annuity must name the Wisconsin Department of Health Services Estate Recovery Program as a remainder beneficiary (see SECTION 16.7.4.6 REMAINDER BENEFICIARY DESIGNATION REQUIREMENT FOR LONG-TERM CARE) and meet at least one of the following criteria: 1. The annuity was created through a retirement account conversion. This includes annuities created from funds in a Roth IRA, 408 IRA, or other employer-sponsored retirement plan. 2. The annuity is an individual retirement annuity, defined as follows: • It is considered an individual retirement annuity according to Sec. 408(b) of the Internal Revenue Code of 1986 (IRC), or • It is deemed IRA under a qualified employer plan according to Sec. 408(q) of the IRC. 3. The annuity was purchased from a life insurance company or other commercial company that sells annuities as part of its normal course of business, and meets all of the following criteria. a. Non-assignable The owner cannot transfer or sign over title, rights, or interested to a third party. b. Currently issuing equal monthly payments The annuity is currently issuing substantially equal monthly payments to the institutionalized person or spouse with no balloon, deferred, or graduated payments. Payment amounts may vary due to changes in interest rates. c. Full payback (period certain) The annuity is a period-certain annuity that returns the full principal and interest within the annuitant’s life expectancy as listed in the Period Life Table. d. Actuarially Sound The number of months that annuity payments will be issued should be less than the number of months of the individual’s life expectancy (multiply figure from the Period Life Table by 12). Note: Annuities that provide for indefinite “lifetime payments” may not return the full principal and interest within the member’s life expectancy and are not actuarially sound.