431-2        PERSONAL PROPERTY

431-2 A.   JOINT ACCOUNTS

All funds in a jointly owned checking or savings account to which each owner has unrestricted access are totally available to each owner of the account.

The only exception to this rule is that if each owner of the account is eligible for SSISupplemental Security Income or APAAdult Public Assistance , the funds in the account are prorated equally to each owner.  This exception does not apply to situations where the other joint owner receives another type of assistance such as Temporary Assistance.

An APAAdult Public Assistance applicant or recipient who is an owner of a joint account may argue that some or all the funds in the account do not belong to him or her.  To establish non-ownership of the funds, the APAAdult Public Assistance client must:

1. Provide a written statement that explains why some or all of the funds in the account do not belong to him or her.  If the client indicates that only some of the funds do not belong to him or her, the client must specify what portion of the funds are not his or hers; and
    
2. Provide a corroborating statement from the other account owner(s).  If the other owner(s) of the account is (are) not competent to provide such a statement, a statement from a third party who is familiar with the situation is acceptable; and
    
3. Change the account designation to either remove the individual's name from the account, or show that the owner(s) have restricted access to the account.

Once this is done, any funds determined to be owned by the other account holder(s), and that the individual can no longer withdraw from the account, were not and are not a resource to the individual.

431-2 B.   TIME DEPOSITS

A time deposit is a contract between an individual and a financial institution where the individual agrees to leave funds on deposit for a specified period and the financial institution agrees to pay interest at a specified rate for that period.  Certificates of deposit and savings certificates are common forms of time deposits.

Withdrawal of a time deposit before the specified period expires incurs a penalty.  This penalty does not prevent the time deposit from being a resource, but does reduce its value as a resource.

In some situations, the terms of a time deposit will prohibit early withdrawal altogether; in such cases, the time deposit has no value as a resource until it can be withdrawn.

The resource value of a time deposit is the amount that the owner would receive upon withdrawing it at the first moment of the month.

431-2 C.   STOCKS

Shares of stock represent ownership in a business corporation.  Many stocks are sold publicly.  Their value shifts with demand and may fluctuate widely.  The value of publicly traded stock is the amount that the stock can be sold for as of the first moment of the month.  Broker fees do not reduce the value that stocks have as a resource.

Some stocks may be held within close groups and traded very infrequently.  The sale of such stock is often handled privately and may be subject to restrictions.  As a rule, such stocks cannot be converted to cash within 20 working days.

Verification:  The closing price of publicly traded stock may usually be found in the next day's regular or financial newspaper.  If the case worker is unable to determine the value of a stock from this source, the APAAdult Public Assistance client is responsible for providing proof of the value of the stock.  The preferred evidence for stock that is not publicly traded is a letter or other written statement from the firm's accountants giving their estimate of the stock's value.

431-2 D.   SAVINGS BONDS

U.S. Savings Bonds are obligations of the Federal Government.  Unlike other government bonds, savings bonds are not transferable; they can only be sold back to the Department of the Treasury.  U.S. Savings Bonds cannot be redeemed for six months after the issue date specified on the bond.

U.S. Savings Bonds are not resources during the six-month mandatory retention period.  They are resources as of the first moment of the seventh month.  The value of a savings bond increases over time, sometimes even after the maturity date is reached.  However, after maturity, the value of a series H and HH bond is its face value.

If more than one individual owns a U.S. Savings Bond, the co-owners own equal shares of the value of the bond.   A U.S. Savings Bond is not a resource to a co-owner if another co-owner has and will not relinquish physical possession of it.

431-2 E.   MUNICIPAL, CORPORATE, AND GOVERNMENT BONDS

A bond is a written obligation to pay a sum of money at a specific future date.  A municipal bond is the obligation of a state or locality (county, city, town, village, or special purpose authority such as a school district).  A corporate bond is the obligation of a private corporation.  A government bond, as distinct from a U.S. Savings Bond, is a transferable obligation issued or backed by the Federal Government.

Municipal, corporate, and government bonds are negotiable and transferable.  Their value as a resource is their fair market value.  Their redemption value, which is available only at maturity, is immaterial.

Verification.  Bonds are usually bought and sold through brokers, security dealers, or other investors.  They may sell for more or less than their face value or purchase price, depending on a variety of factors.  The APAAdult Public Assistance applicant or recipient is responsible for providing proof of the value of any bonds.

431-2 F.   TRUST PROPERTY

1. Definitions

Trustee.  A trustee is a person who holds legal title to property for the use or benefit of another.  In most instances, the trustee has no legal right to revoke the trust or use the property for his or her own benefit.

Trust beneficiary.  A trust beneficiary is a person for whose benefit a trust exists.

Trustor/grantor.  A trustor/grantor is a person who creates a trust.

Totten trust.  A Totten trust is a trust in which a trustor makes himself or herself trustee of his or her own funds for the benefit of another.  The trustor/trustee can revoke a Totten trust at any time.  Should the trustor/trustee die without revoking the trust, the principal reverts to the beneficiary.

Trust principal.  The trust principal is the amount placed in trust by the trustor plus any trust earnings paid into the trust and left to accumulate.

Trust earnings.  Trust earnings are amounts earned by trust property.  They may take such forms as interest, dividends, royalties, rents, etc.  Trust earnings are unearned income to the person (if any) legally able to use them for personal support and maintenance.

2. Trust funds and resources

1.  Individual cannot revoke trust

The trust principal is not a resource to an individual who is not legally empowered to revoke the trust and use the principal for his or her own support and maintenance.  Revocability of a trust depends on the terms of the trust agreement and/or on state law.  If a trust is irrevocable, the trust principal is not anyone's resource

2.  Individual can revoke trust

The trust principal is a resource to anyone who can revoke the trust and who can access the principal thereafter, whether or not he or she actually does so.

If a trust is revocable, generally the right to revoke is reserved with the trustor.  A trust beneficiary will not usually have the authority to revoke the trust.  Therefore, the trust principal is not likely to be his or her resource unless the trust itself gives him or her access to the property without trustee intervention. Occasionally, a trustee has the legal authority to revoke a trust.

The trustor/trustee of a Totten trust has the authority to revoke the trust at any time, therefore, the trust principal is his or her resource.

Special Needs or Pooled Trust

A trust that meets the Medicaid criteria for a special needs or pooled trust under Aged, Disabled and Long Term Care (ADLTC) Medicaid Manual Section 527 is not a resource.  This exemption applies to trusts established on or after January 1, 2000.

Qualifying Income Trusts (also known as a Miller’s Trust)

The SSISupplemental Security Income and APAAdult Public AssistanceAdult Public Assistance programs do not recognize a QITQualifyinf Income TrustQualifying Income Trust.  Therefore, a beneficiary may be eligible for Medicaid but not SSISupplemental Security Income or APAAdult Public AssistanceAdult Public Assistance cash assistance.  If funds are retained in a QITQualifyinf Income Trust and those funds exceed the APAAdult Public Assistance program’s resource limit, there is no eligibility for APAAdult Public Assistance. For more information about QITQualifyinf Income Trust see ADLTC MS 526.

3. Trust funds and income

Individual cannot revoke trust

Trust disbursements from an irrevocable trust that are paid to a beneficiary in cash are income; it does not matter whether the disbursements are from the trust principal or the trust earnings.

Trust earnings and disbursements are not income to the trustor or trustee unless designated as belonging to the trustor or trustee under the terms of the trust.  Trust earnings are not income to the beneficiary unless the trust dictates, or the trustee allows, payment to the beneficiary.

Individual can revoke trust

If an individual can revoke a trust and thereby receive the trust principal, the trust is a resource to the individual.  Disbursements from the principal of a revocable trust are never income, but represent the conversion of a resource.  Trust earnings from a revocable trust are income to such an individual.

4. Verification

The client's access to a trust shall be determined by viewing the trust documents.  It is the client's responsibility to provide these documents.  If the trust document is unclear, the case worker shall refer the trust document to the APAAdult Public Assistance Policy Specialist for an opinion.

431-2 G.   RETIREMENT FUNDS

Retirement funds are annuities or work-related savings plans designed to provide income when employment ends.  A retirement fund may be a pension, disability, or retirement plan administered by an employer or union.  A retirement fund may be an individual retirement accounts (IRA) or a plan for a self-employed person, sometimes called a Keogh plan.

Retirement funds fall into three general categories:

• A retirement savings account that is owned and can be accessed by the individual;
   
• A pension plan established by an employer; and
   
• A deferred compensation plan.

1. RETIREMENT SAVINGS ACCOUNTS

The following types of retirement savings accounts are individually owned, and money may be deposited and withdrawn at will. These accounts are available, countable resources regardless of an individual's employment status:

• Individual Retirement Accounts (IRA s);
   
• Keogh plans; and
   
• Simplified Employer Pension Plans (SEP s), which are considered IRAIndividual Retirement Account by banks and the IRSInternal Revenue Service.

2.   PENSION PLANS

Pension plans (including PERSAlaska's Public Employees Retirement System and SBSAlaska's Supplemental Benefit System ) that are established by an employer are exempt while the individual is employed with that employer. Pension plans include:

• 457 plans (plans for state and local governments and other tax-exempt organizations);
   
• 401(k) plans (generally a cash-or-deferred arrangement and generally limited to profit-making firms);
   
• Federal Employee Thrift Savings plan;
   
• Section 403(b) plans (tax-sheltered annuities available to employees of tax-exempt organizations and state and local educational organizations); and
   
• Section 501(c)(18) plans (retirement plans for union members consisting of employee contributions to certain trusts that were established before June 1959).

Availability of Pension Plan Money:

If an individual is no longer working for the employer who established the pension plan, and is not yet eligible for periodic payments from the plan, it is a countable resource if the individual has the option of withdrawing the money as a lump sum.

When the money in a pension plan cannot be immediately withdrawn and used to meet the needs of the applicant, the account balance is considered unavailable if:

1. The individual demonstrates that they have applied for and are pursuing access to the account balance; and
    
2.  Receipt of the money cannot be expected in the month for which eligibility is being determined.

If the individual is eligible for periodic payments from a pension plan, the individual must apply for such payments under development of income requirements.  In this situation, the account balance is not a resource, but the periodic payments are counted as income.

If an individual refuses or fails to make a reasonable effort to secure this money, either as a lump sum or as periodic payments, the balance is considered available.

3. DEFERRED COMPENSATION PLANS

Deferred compensation plans are evaluated based on whether the individual can access the money while still employed with the employer that established the account.

If the individual can access the money while still employed, the deferred compensation plan is considered available and countable.

For other deferred compensation plans, such as the one offered by the State of Alaska, the individual may not withdraw the money while still employed. Such plans are treated as pension plans.

4. VALUE OF RETIREMENT FUNDS

The value of any retirement fund is the account balance minus any expected penalties or fees for withdrawal.

Any retirement fund belonging to an ineligible spouse is excluded as a resource.  (See manual section 460-4A.)

431-2 H.   INHERITANCES

An inheritance is cash, a right, or a noncash item received as the result of someone's death.  An inheritance is considered an available resource the month after it is received, unless otherwise excluded.  Noncash items are not counted as income when received, but they must be evaluated as a resource the month after they are received.

431-2 I.     PROMISSORY NOTES, LOANS, AND PROPERTY AGREEMENTS

1. Definitions

Promissory note.  A promissory note is a written, unconditional agreement where one party agrees to pay a specified sum of money at a specified time to another party.  It may be given in return for goods, money loaned, or services rendered.

Loan.  A loan is a transaction where one party advances money to, or on behalf of another party, who promises to repay the lender in full, with or without interest.  The loan agreement may be written or oral.  A written loan agreement is a form of promissory note.

Property agreement.  A property agreement is a pledge of a particular property for the payment of a debt within a specified time period.  Property agreements on real estate are generally referred to as mortgages, but also may be called land contracts, contracts for deed, escrow contracts, or deeds of trust.  Personal property agreements are commonly known as chattel mortgages.

2. Resource value

Generally, promissory notes, loan agreements, and personal and real property agreements can be sold to a third party.  If it is saleable, the note, loan, or property agreement is a resource in the amount of the outstanding principal balance, unless evidence is established that it has a lesser fair market value.  If the fair market value is less than the outstanding principle balance, the resource value is the fair market value.  

If the item is not saleable, it is not a resource.  A promissory note, loan, or property agreement may be assumed to be unsalable if there is a legal bar to its sale.

3. Installment payments

Notes and property agreements frequently provide for installment payments to the owner of the note or agreement.  If the note or agreement is a resource, that portion of any payment received representing payment on the principal is also a resource, and is not treated as countable income.  The portion of any payment representing interest on the principal is unearned income in the month that it is received.

If a note or agreement is not a resource because it is not saleable, the total payment received, whether applied toward principal or interest, is unearned income.

4. Verification

The APAAdult Public Assistance applicant or recipient is responsible for providing proof of the value of any promissory note, loan, and property agreement.  If the client contends that the value of the item is less than its outstanding principal balance, evidence of its fair market value may be obtained from knowledgeable sources engaged in the business of making such transactions.  Such sources include banks or other financial institutions, private investors, and real estate brokers.

431-2 J.   LIFE INSURANCE

A life insurance policy is a contract.  Its purchaser (owner) pays premiums to the company (insurer) that provides the insurance.  In return, the insurer agrees to pay a specified sum of money to a designated beneficiary upon the death of the insured (the person on whom, or on whose life, the policy exists).  Life insurance policies which have a cash surrender value are generally called "whole life" insurance policies.

The cash surrender value of all life insurance policies on the life of the same insured person is a resource to the owner of the policies if the combined face value of the policies exceed $1,500.  If the insurance policies are on the life of different insured persons, only the face values of the policies on the same insured person are combined to determine if the combined face value of the policies exceeds $1,500.  (Refer to section 432-2B for an explanation of the limited life insurance exclusion for policies whose face value is less than $1500.)

Example 1:

Mr. Evans is the owner of a whole life insurance policy on himself.  The policy has a face value of $10,000 and a cash surrender value of $1,700.  He also owns a separate insurance policy on himself with a face value of $1,000 and a cash surrender value of $500.

The $10,000 policy is a resource in the amount of its $1,700 cash surrender value because its face value exceeds $1,500.  The $1,000 policy is also a resource in the amount of its $500 cash surrender value because its $1,000 face value, in combination with the face value of the $10,000 policy, exceeds $1,500.  The resource value of both policies is $2,200 ($1,700 + $500 = $2,200).  This resource value may be reduced by the amount of any allowable burial exclusion if Mr. Smith designates one or both of the policies as a burial fund.  (See manual section 432-2D for an explanation of the burial fund exclusion.)
 

Example 2:

A similar situation to example 1, except that the smaller $1,000 whole life insurance policy owned by Mr. Evans covers the life of his wife instead of himself.  The face value of the $1,000 policy is not combined with the face value of the $10,000 policy because it is on a separate insured person.  The cash surrender value of the $1,000 policy is not counted as a resource because its face value does not exceed $1,500.

Term insurance with no cash surrender value and burial insurance are not resources and are not taken into account in determining the combined face value of all life insurance policies.  Burial insurance is insurance with terms that preclude the use of policy proceeds, including any cash surrender value, for any purpose other than payment of the insured's burial expenses.
 

431-2 K.   RETROACTIVE PAYMENTS

Except for retroactive SSISupplemental Security Income and RSDIRetirement, Survivors, and Disability Insurance (Social Security) benefits, retroactive benefit payments are a countable resource in the month after the month they are received.  Examples of retroactive benefits payments that are considered countable resources the month after they are received include:  Retroactive APAAdult Public Assistance benefits, retroactive VADepartment of Veterans Affairs benefits, etc.  Refer to section 432-4A for an explanation of the limited resource exclusion allowed for retroactive SSISupplemental Security Income and RSDIRetirement, Survivors, and Disability Insurance (Social Security) benefits.

431-2 L. CROWDFUNDING

Crowdfunding is the practice of obtaining needed funding by soliciting contributions from a large number of people, typically by from the online community.  e.g. go fund me.  If the client sets up the account themselves and has access to it, it is countable income in the month received and a countable resource the following month.

If the client is a recipient of funds from a crowdfunding account, it is countable income in the month received, except for any funds directly paid to vendors on behalf of a client.

431-2 M.   VIRTUAL CURRENCY/CRYPTOCURRENCY

Virtual currency/cryptocurrency, such as bitcoin, is a non-exempt, non-excludable resource.  It is not considered legal tender nor is it considered a household goods or personal effect.  It can be used to obtain goods or services, but some virtual currency can be exchanged for real currency.

If the client does not know the value of their virtual currency/cryptocurrency, the caseworker should request a current account statement showing the number of virtual coins owned.  If the virtual currency is listed on an exchange, the value should be determined by using that exchange.  If the virtual currency is not held on an exchange, utilize https://coinmarketcap.com/ to determine the value.  The exchanges website and the exact exchange rate at the time of verification must be documented in case notes.