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Wisconsin Department of Health and Family Services |
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Wisconsin Department of Health and Family Services |
When a person conveys a life estate (4.5.8.1.5) to himself/ herself and designates a remainder person (4.5.8.1.5), the amount of remainder interest is considered an asset transfer. If the transfer was for less than fair market value, treat it as a divestment.
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Example 1: Mrs. W., age 82, conveys her home into a life estate. She holds the life estate, and the remainder person is her son. Within 36 months she enters a nursing home and applies for MA. The home's fair market value was $67,500. Mrs. W. received no payment from her son, the remainder person. The divested amount is $40,300.86 ($67,500 x .59705). |
It is also divestment if the life estate holder transfers the life estate interest for less than fair market value.
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Example 2: Jim conveyed his home into a life estate 12 years ago. Now he wants to enter an institution and get MA. So he gives the life estate to his friend Barney, the remainder person, and receives no compensation in return. This is a divestment. What is the divested amount? The home's fair market value is $125,000. Jim is age 75 at the time of the divestment. The divested amount is $65,186 ($125,000 x .52149). |
To determine the value of an individual’s share of a jointly owned life estate which was divested:
Divide the home’s fair market value (FMV) by the number of owners.
Go to chapter 8.1.02 and get the life estate figure which corresponds with each person’s age.
Multiply the life estate figure for each person by their share of the FMV.
Add the results together for each person who divested.
Use the value of the home and age of the person when the home was sold or given away.
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Example 1: A husband and wife give away their life estate. The home’s FMV is $50,000. He is 73. She is 67. Half of $50,000 is $25,000. (73) .55571 x $25,000= $13,892.75 (67) .65098 x $25,000= + $16,274.50 $30,167.25 $30,167.25 is the value of the life estate. |
This page last updated in Release Number : 02-01
Release Date :01-01-02
Effective Date : 01-01-02
