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of the lender, the note can be amended to remove this language to avoid or cure a divestment penalty. If amended, it meets the criterion of not allowing the cancellation of repayment of the balance upon the death of the lender. 17.2.7 Divestments That Are Not Allowed and Result in a Penalty Period This section discusses unallowable divestments that result in a penalty period (17.3 PENALTY PERIOD). This section doesn’t include all situations in which a divestment is not allowed. For situations not listed here, the member or applicant’s intent must be evaluated individually to determine whether it is an unallowable divestment. Prior to determining whether a transfer is an allowed divestment or not, the transfer must be evaluated as a divestment based on the following: • 17.2.1 EXEMPTION OR DISREGARDED STATUS OF INCOME AND ASSETS • 17.2.2 DATE OF TRANSFER • 17.2.3 TRANSFERS THAT ARE NOT DIVESTMENT • 17.2.4 DETERMINING FAIR MARKET VALUE • 17.2.6 ALLOWED DIVESTMENTS 17.2.7.1 Transfer for Less Than Fair Market Value (FMV) The transfer of ownership of a nonexempt asset for less than FMV is an unallowable divestment and results in a penalty period. Some examples of unallowable divestments are: • Gifting money to others or making donations, even to non-profit organizations, when either: ◦ The yearly gifted amount exceeds 15 percent of the individual or couple’s annual gross income at the time the gift is transferred. ◦ The pattern of gifting is not consistent because there is a gap in the pattern or occasions. • Selling or giving away property, land, nonexempt vehicles, or other nonexempt assets for less than fair market value. • Going on vacations and paying for someone other than the community spouse or a caretaker to accompany. • Selling an exempt asset and then giving the money received to someone else. • Transferring ownership of the exempt homestead property for less than fair market value except those listed in 17.2.6.8 TRANSFER OF HOMESTEAD PROPERTY. 17.2.7.2 Making an Asset Unavailable An asset used in a way by a member or spouse that makes it unavailable and for which they don’t receive FMV in return is an unallowable divestment and results in a penalty period. Example 13 Mitch allowed his non-homestead property to be used as collateral for his son’s business loan. Mitch’s non-homestead property was considered a nonexempt asset. Because using it as collateral makes it unavailable, his use of this asset is an unallowable divestment and results in a penalty period. 17.2.7.3 Refusal To Claim Refusal to take action to claim a portion of the estate of a deceased spouse or parent despite statutory entitlement to that portion is an unallowable divestment and results in a penalty period.