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West Virginia Income Maintenance Manual Chapter 5
West Virginia Income Maintenance Manual Page 88 Chapter 5 Assets
5.7.2.D Transfer with Retention of a Life Estate A transfer of property with the retention of a life estate interest is treated as an uncompensated transfer. To determine if a penalty is assessed and the length of the penalty, the Worker must compute the value of the transferred asset and of the life estate, then calculate the difference between the two. • Step 1: To determine the value of the transferred asset, subtract any loans, mortgages or other encumbrances from the CMV of the transferred asset. • Step 2: Determine the age of the life estate holder as of his last birthday and the life estate factor for that age found in Appendix A of this chapter. Multiply the CMV of the transferred asset by the life estate factor. This is the value of the life estate. • Step 3: Subtract the Step 2 amount from the Step 1 amount. The result is the uncompensated value of the transfer. • Step 4: Divide the Step 3 amount by 100% current federal poverty level (FPL) for the AG size. The result is the number of months the penalty covers. 5.7.2.E Transfer to Purchase an Annuity Establishment of an annuity is sometimes treated as a transfer of assets, depending on whether or not the annuity is actuarially sound. The average number of years of expected life remaining for the individual who benefits from the annuity must coincide with the life of the annuity for it to be actuarially sound and, thus, not treated as an uncompensated transfer of assets. If the individual is not reasonably expected to live longer than the guarantee period of the annuity, the individual will not receive CMV. The annuity is not, then, actuarially sound and a transfer of assets for less than CMV has taken place. The transfer is considered to have occurred at the time the annuity was purchased. Only the amount that is not actuarially sound is treated as an uncompensated transfer. Life Expectancy Tables are found in Chapter 24, Appendix D. Annuity Example 1: A 30-year-old father who won $500,000 in the lottery, purchases a $500,000 annuity that is to be paid over 40 years. His life expectancy, according to Chapter 24, Appendix D, is 44.06 years. The annuity is actuarially sound, so no transfer of resources has taken place.