SECTION 358.350. Life Estates and Remainder Interest

The Texas Health and Human Services Commission (HHSC) counts both a life estate and a remainder interest in property as resources, except as described in paragraph (3) of this section.

(1) Life estates. A life estate provides a person, for the person's lifetime, certain rights in a property, while transferring ownership of the property to another person. The duration of a life estate is measured by the lifetime of the owner of the life estate, or by the occurrence of some event. The contract establishing a life estate, however, may restrict one or more rights of the owner of the life estate. The owner of a life estate does not have fee simple title to the property nor the right to sell the entire property. In most situations, the owner of a life estate has the right to:

(A) possess the property;

(B) use the property;

(C) get profits from the property; and

(D) sell his or her life estate interest.

(2) Remainder interest. A remainder interest, which is created when a life estate is established, gives a person owning a remainder interest the right to ownership of the property upon the death of the owner of the life estate. A person owning a remainder interest in the property has the right to sell his or her remainder interest unless the person is prohibited from doing so by a legal restriction.

(3) Exclusion for life estates and remainder interests. Life estates and remainder interests are not counted as resources if:

(A) the property is the person's home and can be excluded under §358.348 of this division (relating to Exclusion of a Home);

(B) a contract restriction prevents the person from disposing of the person's interest;

(C) the property is producing income and may be excluded under 20 CFR §§416.1220, 416.1222, and 416.1224; or

(D) the property is placed for sale and the person is in an institutional setting.

(4) Determination of value. If a person has a life estate or remainder interest that is not excludable under paragraph (3) of this section, HHSC determines the value of the resource according to the age of the owner of the life estate and the equity value of the property. The person has the right to rebut HHSC's determination of the value of the resource. To do so, the person must present a statement from a knowledgeable source.

(5) A purchase of a life estate before April 1, 2006, is not considered a transfer of assets, unless the purchase price of the life estate exceeds the fair market value (FMV) of the life estate. If the purchase price of the life estate exceeds the FMV of the life estate, the transfer-of-assets provisions in Division 4 of this subchapter (relating to Transfer of Assets) apply.

(6) A purchase of a life estate on or after April 1, 2006, is a transfer of assets, subject to the transfer-of-assets provisions in Division 4 of this subchapter, unless the person purchasing a life estate in another person's home resides in the home and continues to reside in the home for at least one year after the date of purchase.

Source Note: The provisions of this §358.350 adopted to be effective September 1, 2009, 34 TexReg 5497