"Annuitant" means a person or entity that receives the income from an annuity.
"Annuity" means a policy, certificate or contract that is an agreement between two parties in which one party pays a lump sum to the other, and the other party agrees to guarantee payment of a set amount of money over a set amount of time. The annuity may be purchased at one time or over a set period of time and may be bought individually or with a group. It may be revocable or irrevocable. The party guaranteeing payment can be an:
(1) Individual; or
(2) Insurer or similar body licensed and approved to do business in the jurisdiction in which the annuity is established.
"Beneficiary" means an individual(s) designated in the trust who benefits from the trust. The beneficiary can also be called the grantee. The beneficiary and the grantor may be the same person.
"Designated for medical expenses" means the trustee may use the trust to pay the medical expenses of the beneficiary. The amount of the trust that is designated for medical expenses is considered an available resource to the beneficiary. Payments are a third party resource.
"Disbursement" or "distribution" means any payment from the principal or proceeds of a trust, annuity, or life estate to the beneficiary or to someone on their behalf.
"Discretion of the trustee" means the trustee may decide what portion (up to the entire amount) of the principal of the trust will be made available to the beneficiary.
"Exculpatory clause" means there is some language in the trust that legally limits the authority of the trustee to distribute funds from a trust if the distribution would jeopardize eligibility for government programs including Medicaid.
"For the sole benefit of" means that for a transfer to a spouse, blind or disabled child, or disabled individual, the transfer is arranged in such a way that no individual or entity except the spouse, blind or disabled child, or disabled individual can benefit from the assets transferred in any way, whether at the time of the transfer or at any time during the life of the primary beneficiary.
"Grantor" means an individual who uses his assets or funds to create a trust. The grantor may also be the beneficiary.
"Income beneficiary" means the person receiving the payments may only get the proceeds of the trust. The principal is not available for disbursements. If this term is used, the principal of the trust is an unavailable resource.
"Irrevocable" means the legal instrument cannot be changed or terminated in any way by anyone.
"Life estate" means an ownership interest in a property only during the lifetime of the person(s) owning the life estate. In some cases, the ownership interest lasts only until the occurrence of some specific event, such as remarriage of the life estate owner. A life estate owner may not have the legal title or deed to the property, but may have rights to possession, use, income and/or selling their life estate interest in the property.
"Principal" means the assets that make up the entity. The principal includes income earned on the principal that has not been distributed. The principal is also called the corpus.
"Proceeds" means the income earned on the principal. It is usually interest, dividends, or rent. When the proceeds are not distributed, they become part of the principal.
"Pooled trust" means a trust meeting all of the following conditions:
(1) It contains funds of more than one disabled individual, combined for investment and management purposes;
(2) It is for the sole benefit of disabled individuals (as determined by SSA criteria);
(3) It was created by the disabled individuals, their parents, grandparents, legal guardians, or by a court;
(4) It is managed by a nonprofit association with a separate account maintained for each beneficiary; and
(5) It contains a provision that upon the death of the individual, for any funds not retained by the trust, the state will receive all amounts remaining in the individual's separate account up to the total amount of Medicaid paid on behalf of that individual.
"Revocable" means the legal instrument can be changed or terminated by the grantor, or by petitioning the court. A legal instrument that is called irrevocable, but that can be terminated if some action is taken, is revocable for the purposes of this section.
"Sole-benefit trust" means an irrevocable trust established for the sole-benefit of a spouse, blind or disabled child, or disabled individual. In a sole-benefit trust no one but the individual named in the trust receives benefit from the trust in any way either at the time the trust is established or at any time during the life of the primary beneficiary. A sole-benefit trust may allow for reasonable costs to trustees for management of the trust and reasonable costs for investment of trust funds.
"Special needs trust" means an irrevocable trust meeting all of the following conditions:
(1) It is for the sole benefit of a disabled individual (as determined by SSA criteria) under sixty-five years old;
(2) It was created by the individual's parent, grandparent, legal guardian, or by a court; and
(3) It contains a provision that upon the death of the individual, the state will receive the amounts remaining in the trust up to the total amount of Medicaid paid on behalf of the individual.
"Testamentary trust" means a trust created by a will from the estate of a deceased person. The trust is paid out according to the will.
"Trust" means property (such as a home, cash, stocks, or other assets) is transferred to a trustee for the benefit of the grantor or another party. The department includes in this definition any other legal instrument similar to a trust. For annuities, refer to WAC 388-561-0200.
"Trustee" means an individual, bank, insurance company or any other entity that manages and administers the trust for the beneficiary.
"Undue hardship" means the client would be unable to meet shelter, food, clothing, and health care needs if the department applied the transfer of assets penalty.
Only the client’s proportionate interest in the life estate is considered when there is more than one owner of the life estate.
A client or a client’s spouse, who transfers legal ownership of a property to create a life estate, may be subject to transfer-of-resource penalties under WAC 388-513-1363, 388-513-1363 and 388-513-1365.When the property of a life estate is transferred for less than fair market value (FMV), the department treats the transfer in one of two ways:
For non-institutional medical, the value of the uncompensated portion of the resource is combined with other non-excluded resources, or
Unless the contract establishing the life estate limits one or more of these rights, the life estate owner has the right:
Of possession;
To use the property;
To sell his/her interest in the life estate; and
To receive income generated by the life estate.
WORKER RESPONSIBILITIES
To evaluate a life estate, you need to know the:
Date the property was transferred;
Name(s) of the legal owner(s) who transferred the property;
Name(s) of the new legal owner(s) of the property;
Name(s) of the life estate owner(s) of the property;
Rights of the life estate owner(s) to the property;
Current fair market value of the property; and
Client’s age as of the date the last birthday.
Determine if the life estate is an excluded resource (WAC 182-516-0300 (2)). If not, you need to determine its resource value and if adequate consideration was received for any transactions involving it. Use the life estate owner’s current age and the Life Estate Table in Appendix II (of the Long Term Care category) to determine the life estate factor of the owner. You need to know the fair market value of the property. Then:
Multiply the current fair market value of the property by the life estate factor found in the table. This is the value of the life estate;
Subtract the value of the life estate from the fair market value of the property.
This is the value of the asset that was transferred for less than fair market value; and
If the life estate is jointly owned, determine the client’s proportionate share.
If the value of the transfer for less than fair market value causes the client’s resources to be over the standard, determine a period of ineligibility for LTC cases according to WAC 182-513-1365. For non-LTC cases, deny the application for excess resources.
EXAMPLE
Diana, a disabled 20-year-old single adult, owns a duplex with a fair market value of $50,000. This month, she transferred the ownership of the property to her mother retaining a life estate interest in the property, and she is applying for medical benefits (non- LTC). Diana retains the right to live in the property for the rest of her life and has the right to any income generated by renting out the other ½ of the duplex.
To determine the value of her life estate, we look at the life estate table and multiply the life estate factor next to Diana’s age (.97365) by the $50,000 value of the property, resulting in a life estate value of $48,682.50. We subtract this from the total value of the property ($50,000) and find that she transferred $1317.50 without adequate consideration. The resource standard for 1 person (SSI related) is $2,000.00. Since Diana has no other resources, and transferred an amount less than the resource standard, she is still eligible.
$50,000.00 value of property
X . 97365 life estate factor from table
$48,682.50 value of life estate
$50,000.00 property value
- 48,682.50 life estate value
$ 1,317.50 value of transfer without adequate consideration.
EXAMPLE
Same situation as above, except Diana also has $1,000.00 in a checking account. Now, when we add the value of the transfer of resources without adequate consideration to her other assets ($1,317.50 + $1,000.00 = $2,317.50), her resources are over the standard and she is ineligible for assistance this month (the month of the transfer), but you need to consider eligibility for MI. She may want to reapply the first of next month, if MI is not an option.
EXAMPLE
(Long-term care only)
Same situation as Example 2 except that Diana has been placed into a nursing home. Diana has stated she intends to return to her home. She has $1,000 in a bank account. When we add up the total resources ($1,317.50 + $1,000.00 = $2,317.50), she is over the resource standard ($2,000.00). Given the fact that the excess is less than the private nursing home rate, do not establish a period of ineligibility. Allow her to reduce her excess by applying it to her participation. (Refer to Available Resources in the Long-term Care section, EA-Z Manual).
EXAMPLE
(Long-term Care Only)
Mike is 85 years old and going into a nursing facility for a while after a stroke. He transfers legal ownership of his farm, valued at $100,000 to his son Gordon, retaining a life estate interest in the farm so that he can live there for the rest of his life. He has no other resources. To determine if there was a transfer without adequate consideration:
$100,000 total value of property
X .35359 life estate factor of 85 year old from table
$ 35,358 value of life estate
$100,000 total value of property
- 35,359 value of life estate
$ 64,641 value of transfer without adequate consideration
