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$102,000 X .33764 = $34,439.28

The divested amount is $34,439.28 (see SECTION 17.3.4 PENALTY PERIOD BEGIN DATE FOR MEMBERS).

Example 21 When James was 75 years old, he sold his home to his son Robert. The home was worth $95,000. Robert paid James $50,000 for the home and James retained a life estate. The life estate value is $49,541.55 (95,000 X .52149) (see SECTION 39.1 LIFE ESTATE AND REMAINDER INTEREST). Since James received both $50,000 from Robert and retained a life estate worth $49,541.55, the total value he received is more than the FMV of the home. Because the value he received is greater than the FMV of the home, it is not a divestment. 17.2.7.13 Life Estate – Divestment by the Remainder Person The sale of property for FMV by a remainder person that gives the estate holder more than FMV for their life estate interest is an unallowable divestment and results in a penalty period for the remainder person. Example 22 Fey is a remainder person and owns a property on which her mother holds a life estate. Fey sells the property for FMV but gives her mother $10,000 more than the amount she owes to buy out her mother’s life estate. If Fey applies for Long Term Care Medicaid in less than 5 years, this $10,000 is considered an unallowable divestment and results in a penalty period for Fey. 17.2.7.14 Purchase of a Life Estate in the Home of Another Person The purchase of a life estate interest in another individual’s home is an unallowable divestment and results in a penalty period, unless the purchaser verifies that both: • The purchaser resided in the home for a period of at least 12 consecutive months after the date of purchase as detailed in 17.2.7.14.2 Residence Requirement, • The purchaser paid FMV for the life estate interest. If the 12-month residence requirement is not met at the time of the application for Long Term Care Medicaid, the full purchase price of the life estate is used to determine the divested amount. The divestment penalty remains in effect until one of the following, whichever is earlier: • The end of the penalty period. • The date the purchaser meets the residence requirement. There is no pro-ration of the divestment penalty period for living in the home for part of the 12 months. 17.2.7.14.1 Couple Holds Life Estate in Another Person’s Home When a couple jointly holds a life estate in another person’s home, the institutionalized person must reside in the home for 12 consecutive months, or their portion of the life estate value is an unallowable divestment and results in a penalty period. See 17.2.7.11 Life Estate - Divestment by Joint Owners for instructions on calculating the spouse’s portion of the life estate value. 17.2.7.14.2 Residence Requirement These four rules determine if a person has resided in the home for 12 consecutive months: