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Transfer of Property for Cash and Basic Food

Revised May 15, 2008

Purpose: This category describes how to compute the period of disqualification when a client transfers property to qualify for cash and food assistance benefits and when the disqualification can be shortened for cash assistance programs.

WAC 388-488-0005 Transfer of property to qualify for cash assistance WAC 388-488-0010 Transfer of property to qualify for food assistance

WAC 388-488-0005 Effective September 1, 1998 WAC 388-488-0005 Transfer of property to qualify for cash assistance This rule applies to cash assistance programs only and does not affect Medicaid eligibility for a person who is not institutionalized. For transfer of property for institutional medical see WAC 388-513-1365. An assistance unit is disqualified from receiving benefits when it transferred or transfers real or personal property for less than its market value in an attempt to qualify for benefits: Two years prior to the date of application;  During the application process; or Anytime while receiving benefits. When an assistance unit transferred property for less than its fair market value in an attempt to qualify for benefits, the disqualification period: For applicants, begins the first day of the month the property was transferred. For recipients, begins the first day of the month after the month the property was transferred. To determine the number of months an assistance unit will be disqualified, divide the uncompensated resource value of the transferred property by the state gross median income. The uncompensated resource value is the equity value minus the amount the client received when transferring a resource. An assistance unit can provide evidence to clarify the reasons for transferring the property when the department presumes that the assistance unit transferred the property in an attempt to qualify for benefits. The benefits received by an assistance unit are not affected by the transfer of separate property of a spouse who is not a member of the assistance unit. An assistance unit’s disqualification period can be reduced when the client: Verifies undue hardship will exist if the benefits are denied such as an eviction; Secures a return of some or all of the transferred property or the equivalent value of the transferred property; Verifies an unforeseen change in circumstances such as extensive hospitalization; or Is responsible for and can verify medical expenses. When a disqualification period has been adjusted and the client is otherwise eligible, benefits will be authorized . Any benefits authorized because of the reason(s) in subsection (6) of this section, are not considered an overpayment. This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

CLARIFYING INFORMATION Adequate consideration exists when the reasonable value of the goods or services received in exchange for the transferred property is equal to the value of the property transferred. The market value of the transferred item acts as the guide to the value. Acceptable reasons a client may have transferred property for less than its market value include, but are not limited to: The client transferred the property because they were a victim of fraud, misrepresentation or coercion.  The client must attempt and continue to attempt to recover the property or its equivalent value; The client was not receiving assistance at the time of the transfer and the client did not foresee a need for assistance; The property was transferred to a spouse because of a divorce or legal separation settlement approved by or ordered by a court; The client held the title only as a trustee for the use and benefit of another person and the client did not have beneficial interest; The transfer was to clear title to the property in which the client did not have beneficial enforceable interest; The client can show that the transfer would not have affected their eligibility for benefits if they had retained the property; The child(ren) in the assistance unit transferred their income or resources, up to $4,000, into an irrevocable educational trust, designated for that child's future educational use; The client’s attorney suggested the client accept the amount to finalize the settlement; The client has little or no business knowledge or experience; or The client and their family had to move to accept employment or training or to retain a cohesive family unit.

WORKER RESPONSIBILITIES Determine the number of months the assistance unit will be disqualified if the client's explanation is unacceptable.  To calculate the number of disqualification months:  Determine the uncompensated value of the transferred property. The uncompensated value is equal to the value of the transferred property minus: Encumbrances (amount owed); and The amount received. Determine the state median income for a family of the same size as the assistance unit for the month and year they transferred the property. Adjust the state median income for those months the assistance unit size changed. Divide the uncompensated value of the transferred property by the state gross median income and round down the result to obtain the number of full months in the disqualification period. If the resultis less than one month, there is no disqualification period. Document in ACES how the number of disqualification months were calculated. Click to view the State Median Income chart for: 2008 2003 1998 2007 2002 1997 2006 2001 1996 2005 2000 1995 2004 1999 1994

EXAMPLE A client and her child were approved for TANF on 9-1-97. The client owned a second home when she was first approved for assistance but never declared it to the department. The client paid $30,000 for the home and owed $20,000 on the mortgage. On 12-20-97 the department discovers the client owned the home and proposes a 12-31-97 termination. The client responds by 12-30-97 and provides evidence that she quit-claimed the home to her sister, free and clear, on 11-30-97. The sister will be making all future mortgage payments on the home. The quick-sale value of the home on 11-30-97 was $40,000. Result: The client gave the home to her sister to maintain eligibility for benefits. Determine the Uncompensated Value In this example; the reasonable value of the transferred home is $40,000, minus the encumbrances, $20,000, and minus the amount the client received, $0. The transferred property’s uncompensated value is $20,000. Determine the State Gross Median Income For a two-person assistance unit, the state gross median income was $2,801 in 1997. Determine the Number of Months in the Disqualification Period Divide the uncompensated value of the transferred home, $20,000, by the state gross median income of $2,801 for 12-97. This equals’ 7.14. Round 7.14 down to 7. The disqualification period in this example lasts 7 months. Determine the Beginning and Ending Month of the Disqualification Period. This disqualification period starts 12-1-97 and ends 7 months later on 6-30-98 because this client was a recipient at the time of the transfer. If the client had applied for benefits on 12-2-97 and told the department she had transferred the home on 11/30/97, the disqualification period would begin on 11-1-97.  The assistance unit would be ineligible for 7 months, through 5-31-98. Determine if an Overpayment Exists If a recipient transfers a non-exempt resource that would make the recipient ineligible for cash assistance, establish an overpayment for the period of time the client received assistance while owning the resource. If the client received cash assistance after transferring the resource, establish an overpayment for assistance received during the disqualification period. In the example above, the client was ineligible for benefits from 9-1-97 through 11-30-97 due to excess resources and for the month of 12-97, as 12-97 was a disqualification month.

WAC 388-488-0010 Effective September 1, 1998 WAC 388-488-0010 Transfer of property to qualify for food assistance An assistance unit is disqualified from the program when it transfers a resource to qualify or attempt to qualify for benefits: Three months prior to the month of application; or Beginning the month the household is approved for benefits.   The length of disqualification depends on the dollar amount the household is over the resource limit. The countable resources transferred are added to the assistance unit’s other countable resources. This total is compared to the resource limit. The amount in excess of the resource limit is located on the chart below to determine the length of the disqualification period. Amount Over the Resource Limit Disqualification Period $ 0 - $ 249.99 1 month 250 - 999.99 3 months 1,000 - 2,999.99 6 months 3,000 - 4,999.99 9 months 5,000 and over 12 months The disqualification period begins: For applicants, the month of application; or For recipients, the first of the month after the advance notice period expires. An assistance unit will not be disqualified for transferring the following: Excluded resources that do not affect eligibility; Resources sold or traded at or near fair market value (FMV); Resources transferred between assistance unit members of the same household including ineligible household members; and Resources transferred for reasons other than to qualify for benefits. This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

CLARIFYING INFORMATION Reasons that substantiate intent of transfer was not to qualify for food assistance: See 3.  "Acceptable reasons" under Clarifying Information for WAC 388-488-0005. Examples of resources that do not affect eligibility include, but are not limited to: Excluded resources; and Resources with a value, in addition to the household's other countable resources, which is below the assistance unit's resource limit. A recipient's period of disqualification begins the first month after the advance notice period expires.  See LETTERS Clients that were categorically eligible (CE) for food assistance benefits due to receipt of cash assistance benefits remain CE for those months.  If  a transfer of property makes a client ineligible for cash assistance in a previous month the CE status is not affected.

WORKER RESPONSIBILITIES When a property transfer has been discovered, determine the date of transfer. Assess whether the transfer occurred to qualify or remain eligible for benefits. Give the client the opportunity to respond by sending a V01G or a V04G if the evidence provided appears to substantiate a transfer to qualify for benefits, or more information is needed to make a determination.  See LETTERS. After the response has been received, determine whether the client had a valid reason to accept less than the Fair Market Value of the resource. Document the transfer of property and any disqualification on the Remarks screen.

EXAMPLE On 3/26/98 a single parent and child apply and are interviewed for TANF and food assistance.  The client owns a second car discovered by the department at the time of the interview.  There are no encumbrances on the second vehicle.  The FMV of the car is $10,000 and the department denies the application because the client is over the resource limit. The next day the client responds by selling the car to her brother for $6,000 and reports this change to the department.  The client requests a review of her application.  At this point, the department establishes a period of disqualification.  For applicants, the period of disqualification starts during the month of transfer (March). The State Median Income for a two-person household in 1998 is $2,849.  Thus $2,849 is the NUNCL for the client. Divide the uncompensated value of the transferred property by the monthly NUNCL.  $4,000 / $2,849 = 1.404 months. Round down to obtain the number of full months in the period of disqualification.  Round 1.404 down to 1.  The period of disqualification will last one month and will from March 26 to March 31. Look at eligibility for the months of April and May. Because the client is still an applicant, determine whether the client's remaining countable resource ($6,000) is within the cash and food assistance resource limits. If the applicant's remaining resources are over the resource limits, deny the application, and take no further action on the property transfer. If the applicant's remaining resources are under the limits, continue with the transfer of property assessment.

EXAMPLE A single parent and child and a child approved for TANF and food assistance on 6/2/97. During the eligibility review / recertification on 5/15/98 the department discovers that the client owns a second car and has owned the car since the date of application. The FMV of the car is $10,000. There are no encumbrances on the second car. On 5/20/98 the client responds to the worker inquiry by selling the car to his sister for $6,000. The client admits to the department that he sold the car to remain eligible for assistance. At this point, the department establishes a period of disqualification. For a recipient, it is the 1st of the month following the date of transfer. The state median income for a two-person household in 1998 is $2,849. Thus, $2,849 is the NUNCL for the client. Divide the uncompensated value of the transferred property by the monthly NUNCL. $4,000 / $2,849 = 1.404 months. Round down to obtain the number of full months in the period of ineligibility.  Round 1.404 down to 1.  The period of ineligibility will be from June 1 through June 30. If the client sold the car for $8,000 then the uncompensated value would be $2,000. $2,000 / $2,849 = .702 months. The period of ineligibility is less than one month. There is no period of ineligibility for the transfer of property. However, the $8,000 should be considered a nonexempt resource and applied toward the resource ceiling for all programs when determining eligibility. Regardless of whether a period of ineligibility is established or is not, reconstruct eligibility and determine if the second car made household resource ineligible. If so, establish the overpayment during the period cash assistance was received.  See FRAUD and BENEFIT ERRORS.

ACES PROCEDURES See Resources - Resource Transfer See Interview - (TRAN) Transfer of Resources Screen

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Modification Date: May 15, 2008

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