Real Property Life Estate Promissory Note Examples Example

Example One Transfer & Life Estate • August 2012, Otis Owner, age 72, transferred

Example One Transfer & Life Estate Answer $160, 000. 00 x. 11871 $ 18,

Example One Transfer & Life Estate, cont’d • Nellie Niece sells the home January

Example One Transfer & Life Estate, cont’d Answer $165, 000 FMV 1 year later

Example Two Promissory Note Example • 75 year old male applicant, Steuben County, transferred

Example Two Promissory Note Example (cont’d) • • Private rate at NH $11, 500

Example Two Promissory Note Example Answer Total transferred amount is $105, 000. The $105,

Example Two Promissory Note Example Answer Prohibited transfer of $100, 000 Since Client is

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Real Property Life Estate & Promissory Note Examples

Example One Transfer & Life Estate • August 2012, Otis Owner, age 72, transferred his home to Nellie Niece, retaining life estate. • FMV at time of transfer = $160, 000 • Mortgage = $20, 000 • Countable resources: $7, 750 • No burial fund • Determine the Uncompensated Value for the transfer of the home

Example One Transfer & Life Estate Answer $160, 000. 00 x. 11871 $ 18, 993. 60 FMV of home Life estate multiplication factor 1. 0% @ age 72 Value of life estate $160, 000. 00 20, 000. 00 - 18, 993. 60 $ 121, 006. 40 FMV of home Mortgage Value of life estate Gross uncompensated value $14, 850 - 7, 750 $ 7, 100 MA level Countable resources MA resource deficit $ 121, 006. 40 7, 100. 00 - 1, 500. 00 $ 112, 406. 40 Gross uncompensated value MA resource deficit Burial fund exemption Uncompensated value

Example One Transfer & Life Estate, cont’d • Nellie Niece sells the home January 2013. Otis Owner (now age 75) agrees to give up his right to life estate. • FMV now $165, 000 • Now has $13, 400 countable resources • Has an irrevocable burial trust which includes $1500 of non burial space items • Determine Uncompensated Value for early termination of the life estate

Example One Transfer & Life Estate, cont’d Answer $165, 000 FMV 1 year later X. 11329 Life estate multiplication factor 1% @ age 73 $18, 692. 85 Value of life estate @ early termination -1, 450. 00 Resource deficit $17, 242. 85 Uncompensated value

Example Two Promissory Note Example • 75 year old male applicant, Steuben County, transferred $105, 000 cash to his son 1 month prior to applying for NH MA • Also $105, 000 was used to purchase a promissory note on the same day • Payments of $10, 500/m for 10 months began immediately § Payments are actuarially sound, and contract states that if the father passes away, payments will continue to the estate

Example Two Promissory Note Example (cont’d) • • Private rate at NH $11, 500 Other countable Income: $1, 750/m Countable resources at application: $13, 000 Client has an Irrevocable Burial Fund containing over $1500 in non-burial space items • Determine if client is “otherwise eligible” and length of penalty period Date 3 -21 -16

Example Two Promissory Note Example Answer Total transferred amount is $105, 000. The $105, 000 used to purchase a promissory note will be returned to the father in payments and meets the DRA criteria. This leaves a prohibited transfer of $105, 000 $12, 250 Countable income 20 Unearned income disregard $12, 230 Remaining income 825 MA Level for 1 $11, 405 Remaining Income (using community rules to determine otherwise eligible Compared to $11, 500 medical bills, applicant is otherwise eligible

Example Two Promissory Note Example Answer Prohibited transfer of $100, 000 Since Client is otherwise eligible and in a Nursing Facility In this scenario, the penalty period would start the month of application $ 14, 850 MA resource level 13, 000 Countable resources 1, 850 Resource deficit $105, 000 1, 850 $103, 150 ÷ 11, 145 9. 25 Date 3 -21 -16 Transfer MA resource deficit Uncompensated value Steuben regional rate Months of penalty