Lawriter - OAC - 5160:1-3-05.17 Medicaid: life estates.

5160:1-3-05.17 Medicaid: life estates.

(A) This rule describes the treatment of life estates for the purposes of determining eligibility for medical assistance.

(B) Definitions.

(1) "Date of signature" is the date on which an individual with authority to transfer the property actually signed.

(2) "Life estate" means an ownership interest in property wherein one person holds the right to possess, use, and obtain profits from the property as long as he or she lives, while another person holds the actual ownership interest in the property.

(a) A life estate is a form of legal ownership.

(b) It is usually created through an instrument such as deed or will or by operation of law.

(c) A life estate instrument often identifies remaindermen who will take possession of the property upon the expiration of the life estate.

(d) A life estate owner owns the property only for the duration of the life estate.

The owner can sell only his or her interest in the life estate. The owner cannot take any action concerning the interest of the remainderman.

(3) "Recording date" means the date that the deed is recorded with the county auditor, county recorder, or other appropriate government agency charged with the responsibility for recording real estate transfers and titles.

(4) A "remainderman" has an ownership interest in the physical property but normally does not have the right to possess and use the property until termination of the life estate.

(C) Unless specifically prohibited by the instrument establishing the life estate or remainder interest:

(1) The life estate owner has the right to possess, use, and obtain profits from the property and to sell his or her life estate interest.

(2) The remainderman has the right to sell his or her interest in the physical property even before the life estate interest expires.

(D) Categories of life estates.

(1) Life estates established with the individual's property.

(a) A life estate held by an individual falls within this category if the life estate is established with property that the individual held an ownership interest.

(b) If the individual has the right to transfer or sell the life estate, the life estate's fair market value is considered a countable resource unless it qualifies as an excluded resource as described in rule 5160:1-3-05.14 of the Administrative Code.

(2) Life estates not established by the individual.

(a) A life estate held by an individual falls within this category if the life estate is established with property that the individual did not hold an ownership interest in at the time of the establishment of the life estate.

(b) If the individual has the right to transfer or sell the life estate, the life estate's fair market value is considered a countable resource unless it qualifies as an excluded resource as described in rule 5160:1-3-05.14 of the Administrative Code.

(E) If the life estate is the individual's principal place of residence, as described in rule 5160:1-3-05.13 of the Administrative Code, the fair market value of the life estate is excluded as a resource.

(F) Effective date of the creation of a life estate.

(1) For life estates that are recorded within six months after the date of signature, the date of signature is the date of transfer.

(2) If a life estate is recorded more than six months after the date of signature, the individual must produce documentation from other sources verifying that the transfer occurred on the date of signature rather than the date of recording.

(a) Such documentation may consist of financial records from lending institutions, tax records from governmental agencies, or records from other agencies or private or public instititutions.

(b) The individual may provide statements of persons holding a remainder interest, or other persons who participated in the creation of the life estate.

(G) Calculating the fair market value of a life estate.

(1) The administrative agency must first determine the fair market value of the property as established by the county auditor. If a valuation by a county auditor is unavailable, the value shall be based upon a valuation by the appropriate governmental agency charged with the responsibility for valuation of real property.

(2) The administrative agency must deduct from the fair market value of the property all liens and encumbrances that have been placed against the property.

(3) The administrative agency must deduct from the fair market value of the property all liens and encumbrances that have been placed against the life estate.

(4) After the deductions, the balance is the equity value of the property.

(5) The administrative agency must multiply the equity value of the property by the product that corresponds to the life estate owner's age at the time of determination for medical assistance on the following life estate table:

AGE

LIFE ESTATE

REMAINDER

0

.97188

.02812

1

.98988

.01012

2

.99017

.00983

3

.99008

.00992

4

.98981

.01019

5

.98938

.01062

6

.98884

.01116

7

.98822

.01178

8

.98748

.01252

9

.98663

.01337

10

.98565

.01435

11

.98453

.01547

12

.98329

.01671

13

.98198

.01802

14

.98066

.01934

15

.97937

.02063

16

.97815

.02185

17

.97700

.02300

18

.97590

.02410

19

.97480

.02520

20

.97365

.02635

21

.97245

.02755

22

.97120

.02880

23

.96986

.03014

24

.96841

.03159

25

.96678

.03322

26

.96495

.03505

27

.96290

.03710

28

.96062

.03938

29

.95813

.04187

30

.95543

.04457

31

.95254

.04746

32

.94942

.05058

33

.94608

.05392

34

.94250

.05750

35

.93868

.06132

36

.93460

.06540

37

.93026

.06974

38

.92567

.07433

39

.92083

.07917

40

.91571

.08429

41

.91030

.08970

42

.90457

.09543

43

.89855

.10145

44

.89221

.10779

45

.88558

.11442

46

.87863

.12137

47

.87137

.12863

48

.86374

.13626

49

.85578

.14422

50

.84743

.15257

51

.83674

.16126

52

.82969

.17031

53

.82028

.17972

54

.81054

.18946

55

.80046

.19954

56

.79006

.20994

57

.77931

.22069

58

.76822

.23178

59

.75675

.24325

60

.74491

.25509

61

.73267

.26733

62

.72002

.27998

63

.70696

.29304

64

.69352

.30648

65

.67970

.32030

66

.66551

.33449

67

.65098

.34902

68

.63610

.36390

69

.62086

.37914

70

.60522

.39478

71

.58914

.41086

72

.57261

.42739

73

.55571

.44429

74

.53862

.46138

75

.52149

.47851

76

.50441

.49559

77

.48742

.51258

78

.47049

.52951

79

.45357

.54643

80

.43659

.56341

81

.41967

.58033

82

.40295

.59705

83

.38642

.61358

84

.36998

.63002

85

.35359

.64641

86

.33764

.66236

87

.32262

.67738

88

.30859

.69141

89

.29526

.70474

90

.28221

.71779

91

.26955

.73045

92

.25771

.74229

93

.24692

.75308

94

.23728

.76272

95

.22887

.77113

96

.22181

.77819

97

.21550

.78450

98

.21000

.79000

99

.20486

.79514

100

.19975

.80025

101

.19532

.80468

102

.19054

.80946

103

.18437

.81563

104

.17856

.82144

105

.16962

.83038

106

.15488

.84512

107

.13409

.86591

108

.10068

.89932

109

.04545

.95455

(H) If the individual disagrees with the county auditor's determination of the fair market value of the property as described in paragraph (G)(1) of this rule, the individual may have a licensed real estate broker perform an appraisal of the property's value, which may be substituted as the fair market value of the property in paragraph (G)(1) of this rule. Such appraisal services may be provided through the use of administrative funds if the individual is unable to obtain an appraisal due to insufficient funds of his or her own.

(I) Administrative agency responsibilities. The administrative agency shall:

(1) Determine the effective date of the creation of a life estate.

(2) Accept the statements of persons holding a remainder interest, or other persons who participated in the creation of the life estate, only upon a finding that their statements are corroborated and credible.

(3) Use the date of recording as the effective date of the creation of the life estate if the individual fails to produce documentation verifying that the transfer occurred on the date of signature.

(4) If the life estate has not been recorded, the administrative agency shall request that the individual verify transfer by recording the life estate and, unless the life estate was created within the prior six months, provide documentation as required in paragarph (E)(2) of this rule. If the individual does not provide documentation that the life estate has been recorded, disregard the life estate and consider the entire property as an available resource to the individual.

Replaces: 5160:1-3- 05.17

Effective: 9/1/2017
Five Year Review (FYR) Dates: 09/01/2022
Promulgated Under: 111.15
Statutory Authority: 5163.02, 5160.02
Rule Amplifies: 5160.02 , 5163.02
Prior Effective Dates: 9/3/77,/1/79, 10/1/79, 1/3/80, 7/1/88 (Emer.), 9/1/88, 1/1/90 (Emer.), 4/1/90, 4/1/91 (Emer.), 6/17/91, 9/1/94, 11/7/02, 10/1/06, 11/1/13, 11/2/14