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The divested amount is $87,000 - $33,618.54 = $53,381.46. 17.2.7.11 Life Estate – Divestment by Joint Owners The transfer of a life estate on a property by joint owners without receiving FMV based on their share is an unallowable divestment and results in a penalty period. To determine the life estate value, or share, for each individual, divide the property’s FMV by the number of life estate holders. Then calculate the life estate value by multiplying the individual share of the FMV by the number in 39.1 LIFE ESTATE AND REMAINDER INTEREST table corresponding to the individual's age at the time of the transfer or termination of the life estate. Example 19 Marie and George transferred ownership of their home to their three sons and retained a life estate on the property. The FMV of the home at the time of the transfer was $140,000. At the time George was 82 and Marie was 68. One year later, George applied for Long Term Care Medicaid. This is an unallowable divestment and results in a penalty period. Since the transfer occurred in the look back period, the worker must determine the amount of the divestment and the penalty period. To calculate the total divestment, the worker must first determine the life estate values. $140,000 divided by 2 = $70,000 George's age at the time of the transfer was 82. Multiply 70,000 x .40295 (see 39.1 LIFE ESTATE AND REMAINDER INTEREST for this value.) = 28,206.50 Marie's age at the time of transfer was 68. Multiply 70,000 X .63610 = 44,527.00 The total life estate value for both Marie and George is $72,733.50. The divested amount is the FMV minus the life estate value ($140,000 - $72,733.50 = $67,266.50). 17.2.7.12 Life Estate – Termination and Payment of Less than FMV The termination of a life estate by its holder before their death without receiving the FMV of the life estate is an unallowable divestment and results in a penalty period. The divested amount is the life estate value at the time of termination minus the amount received by the life estate holder. To determine the life estate value, the FMV of the property is multiplied by the number corresponding to the age of the life estate holder at the time the life estate was terminated (see SECTION 39.1 LIFE ESTATE AND REMAINDER INTEREST). Example 20 Marion, age 83, gave her home to her son John, retaining a life estate. The FMV of the house at the time of the transfer was $87,000.

Two years later, Marion applied for Long Term Care Medicaid. Since the transfer of her home occurred in the look back period, it is an unallowable divestment and results in a penalty period. Marion served a divestment penalty period for this divestment.

Marion is the life estate holder. John is the remainder person.

John sold the home for the current FMV of $102,000, and Marion terminated the life estate. John took the proceeds from the home and bought another house. He did not pay Marion for the value of the life estate which is an unallowable divestment and results in a penalty period. The divestment amount is the life estate value at the time the life estate was terminated.

To determine the life estate value, multiply $102,000 (value of the house at the time the life estate was terminated) by .33764. (The number is from the table in SECTION 39.1 LIFE ESTATE AND REMAINDER INTEREST corresponding to Marion's age, 86, at the time the life estate was terminated.)