432-2        PERSONAL PROPERTY

432-2 A.   ONE VEHICLE

A vehicle is any vehicle used for transportation.  Vehicles used for transportation include but are not limited to cars, trucks, motorcycles, all terrain vehicles (ATVs), boats, snowmobiles, animal-drawn vehicles, and animals.  A temporarily broken down vehicle normally used for transportation meets the definition of a vehicle.  A vehicle that has been junked or that is used only as a recreational vehicle (for example, a boat used on weekends for pleasure) does not qualify for the vehicle exclusion.

1. Exclusion Regardless of Value

One vehicle per household is excluded regardless of value if it is used for transportation of the eligible individual or couple or a member of the eligible individual’s or couple’s household.  Anyone living in the household may drive the vehicle, but it would only be evaluated as a resource if it is owned by the eligible individual or the eligible individual’s spouse.
 

Example 1:

Joe has applied for APAAdult Public Assistance.  He reports he is living with his daughter Julie.  Joe owns a van valued at $5,000 and Julie owns a Jeep valued at $10,000.  Julie uses Joe’s van to take him to his doctor’s appointments or to the store.  Joe’s van is excluded because it is used for transportation of an eligible individual.  Julie’s Jeep is not considered because her income and resources are not deemed available to her father.

Example 2:

Candice applied for APAAdult Public Assistance.  At her interview she stated she lived with her roommate, Tim.  Most of the time, Tim takes her to the store and doctors appointments in his truck.  She own’s a vehicle valued at $6,000 but only drives it occasionally.  Tim’s vehicle is not considered because his income and resources are not deemed available to her.  Her vehicle is excluded because it is used for transportation.

Example 3:

Chris is 22 and lives with his parents.  They normally drive him to appointments and other places he wants to go.  He own’s a vehicle valued at $3,000 but hasn’t driven it for a couple of years because he no longer has a license due to his medical condition.  Because Chris’s vehicle is no longer used for transportation, it is not excluded.  He is over the $2,000 resource limit.

Example 4:

Bill has applied for APAAdult Public Assistance.  He and his wife Jill own a 2006 Durango with an estimated value of $12,000.  Bill and Jill also bought their 17 year old daughter Sally a 2010 BMW for her birthday with an estimated value of $60,000. Both vehicles are registered to Bill and Jill and have been paid off.   Sally is the main driver of the BMW. Since both the BMW and the Durango are legally accessible resources to Bill and Jill, both vehicles must be evaluated as a resource when determining Bill’s eligibility for APAAdult Public Assistance.  The vehicle exclusion would be applied to the vehicle with the greater value see APAAdult Public Assistance MSManual Section 432-2A(2).

2. Applying the vehicle exclusion

The vehicle exclusion applies in the manner most advantageous to the individual.  If the individual or couple owns more than one vehicle used for transportation, the total exclusion applies to the vehicle with the greater equity value.
 

3. Other Vehicles

The countable amount of any vehicle that is not totally excluded is the owner’s equity (fair market value minus the amount owed on the vehicle), unless it can be excluded under another provision, such as:

• Property necessary for self-support (Section 432-3A),
   
• Property necessary for an approved plan for achieving self-support (Section 432-3B),
   
• Conditional benefits (Section 433-2).

The fair market value of a vehicle is the average price a vehicle of that particular year, make, model, and condition will sell for on the open market to a private individual in the particular geographic area involved.  

The vehicle value does not include optional equipment, nor does it include shells or campers that are mounted on the vehicle.  Shells and campers are considered separately as personal property.

4. Vehicles in Remote Areas

Used vehicles such as boats, snow machines, and ATVs that might be salable in urban Alaska may not be salable in remote areas.  This does not make such vehicles exempt from consideration as a resource, but may result in a determination that a vehicle has little or no market value in the community.

Caseworkers will determine fair market value and equity value for vehicles in remote areas based on:

• The local market conditions and circumstances that exist in the community, including the presence or absence of a significant cash economy.  (How much would the vehicle sell for as is, where is?  What are other vehicles of its type selling for in the community?);
   
• Accessibility of parts and repair service; and
   
• Information provided by the household.

If the caseworker determines that a countable vehicle is not salable in the community, the vehicle’s resource value is zero.

5. Verification

For countable vehicles, the fair market value and amount owed must be determined.

Find the fair market value of countable vehicles by using the NADANational Automobile Dealers Association Appraisal Guides on the Internet at www.NADAguides.com. (See Administrative Procedures manual section 105-15 for procedures for using the NADANational Automobile Dealers Association website.)  The fair market value is the base amount quoted as ”Average Trade-in” or ”Low Retail”.

The fair market value of a countable vehicle may also be determined using:

• Appraisal from a local dealer;
   
• Local newspaper ads, community bulletin boards, or other local advertisements giving the selling price for similar vehicles; or
   
• In remote areas, collateral contacts from a disinterested knowledgeable source such as a bank, village council, store owner, merchant, or dealer.
   

Acceptable evidence of the amount owed includes a statement from the lien holder or other reasonable evidence of the current debt on the vehicle

If the household questions the value assigned to their vehicle, discuss with them the reason they think the vehicle is worth less and document this information in the case file.  For example, they may explain that the vehicle is not running or needs significant repairs.  Accept the household’s stated value unless the explanation provided is questionable.

If the claimed value is questionable, the household must be given the opportunity to verify the lower value.  See Administrative Procedures manual section 105-1C for the definition of questionable information.

432-2 B.   LIMITED LIFE INSURANCE EXCLUSION

The cash surrender value of all life insurance policies owned by an individual on the life of the same insured person is not a resource to the owner of the policies if the combined face value of the policies does not exceed $1,500.

If the combined face value of all life insurance policies owned by an individual on the life of the same insured person exceeds $1500, the cash surrender value of the policies is a countable resource.  (See section 431-2J for related policy on countable life insurance.)

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.

432-2 C.   BURIAL SPACE EXCLUSION

A burial space or agreement which represents the purchase of a burial space held for the burial of the individual, his or her spouse, or any other member of his or her immediate family is an excluded resource, regardless of value.

The burial space exclusion is allowed in addition to the $1500 burial fund exclusion explained in section 432-2D.

Immediate family members include: parents, including adoptive parents; minor or adult children, including adoptive and step-children; brothers and sisters, including adoptive and step siblings; and spouses of these individuals.  Immediate family does not include the members of an ineligible spouse's family unless they meet one of the above definitions.

A burial space is:  

• • burial plot;

  • gravesite;

  • crypt;

  • mausoleum;

  • casket;

  • urn;

  • niche; or

  • other repository customarily and traditionally used for the deceased's bodily remains.

The term also includes necessary and reasonable improvements or additions to such spaces, including but not limited to:

• • vaults;

  • headstones, markers, or plaques;

  • burial containers (e.g., for caskets); and

  • arrangements for the opening and closing of the gravesite.

For example, a contract for care and maintenance of the gravesite, sometimes referred to as endowment or perpetual care, can be excluded as a burial space.

Some or all of a prepaid burial contract may also qualify for the burial space exclusion if the burial contract is paid up and the funeral provider is obligated to provide the service.  A prepaid (or pre-need) burial contract is an agreement where the buyer pays in advance for a burial that the seller agrees to furnish upon the death of the buyer.  Any portion of a prepaid burial contract that clearly represents the purchase of a burial space is excludable, regardless of value.  Some or all of the remaining value of the contract may be excludable as burial funds.

Example:

A prepaid irrevocable burial contract guarantees the following professional services and merchandise:

Value          Service or Merchandise

$295           services of funeral director and staff
$175           transfer of remains to funeral home
$1,250       cremation
$230          combination unit for cremains
$20            transportation to airport
$450          airline transportation
$801          misc. cash advance

The value of all services on this burial contract would be counted towards the $1,500 burial fund exclusion. The value of the merchandise (combination unit for cremains) would be exempt as burial space, regardless of value.

The funeral provider is not obligated to provide burial services until a burial contract is completely paid for.  Therefore, until the contract is paid up, funds paid into the contract do not qualify for the burial space exclusion; they must be treated as burial funds.

432-2 D.   BURIAL FUND EXCLUSION

The caseworker must explore, as part of the resource determination process, the possibility that the client has set aside funds for his or her own burial or the burial of his or her spouse.  The first $1500 of funds set aside for the burial of an eligible individual are excluded as a resource.  An additional exclusion of $1500 is applied to funds set aside for the burial of a spouse.

Expenses included for the burial funds exclusion are generally those related to preparing a body for burial and any services prior to burial. They usually include things like transportation of the body, embalming, cremation, flowers, clothing, services of the funeral home director and staff, etc.

Burial funds include:

• • Revocable burial contracts;

  • Revocable burial trusts;

  • other revocable burial arrangements (including the value of certain installment sales contracts for burial spaces);

  • cash;

  • financial accounts (e.g., savings or checking accounts); or

  • other financial instruments with a definite cash value (e.g., stocks, bonds, certificate of deposit, etc.).

Usually, expenses for items used for interment of the deceased's remains are not included for burial funds exclusions purposes. Such items may be subject to the burial space exclusion.

1. Designation of burial funds

Burial funds may be designated as such by an indication on the burial fund document (for example, the title on a bank account) or a signed statement.  A signed statement must show:

• The value and owner of the resources:
   
• For whose burial the resources are set aside;
   
• The form(s) in which the resources are held (burial contract, bank account, etc.); and 
   
• The date the individual first considered the funds set aside for the burial of the person specified.
   

The designation may be made by an applicant or recipient, or by a person acting on his or her behalf.  The signer may designate the funds as having been set aside since a date before the actual signing of the statement.  However, the first month for which the burial funds exclusion is effective is the initial month of application for APAAdult Public Assistance or APAAdult Public Assistance -related Medicaid benefits.

Example:  

Jim applies for APAAdult Public Assistance on April 1, 2005.  During the interview, he states that he owns a whole life insurance policy with a face value of $10,000, and current cash surrender value of $2,000.   Jim provides a signed statement designating the life insurance policy as a burial fund.  Since the cash surrender value on the date of application is $2,000, $1,500 may be excluded under the burial fund exclusion effective April 1, 2005.  The remaining $500 counts as a resource.

2. Burial funds must be separate and identifiable

Burial funds must be kept separate from non-burial-related assets to be excluded.  Burial funds may, however, be commingled with other burial-related assets.  Burial-related assets are burial funds (both excluded and non-excluded) and burial spaces.

Example:

An individual owns a paid-up burial contract worth $4,000.  The entire value of the burial contract is a burial-related asset.  $2,000 of the contract clearly represents burial spaces (burial plot, casket, etc) and is totally excluded.  $1,500 of the remaining $2,000 is excluded as a burial fund.  The remaining $500 is counted as a resource.

Once burial funds are separated from non-burial-related assets, the burial funds exclusion is allowed the month following the month the funds are separated.

Example:

A bank account containing $3,300, $1,500 of which is designated for burial and $1,800 of which is other funds available for living expenses, is not allowable and the $1,500 may not be excluded as a burial fund.

If the $1,500 is moved to a separate account and designated as burial funds, the burial funds exclusion is allowed the month after the funds are separated.

3. Reductions in maximum burial funds exclusion

The $1,500 burial funds exclusion is reduced by the amount of other excluded assets that are available to meet the client's burial expenses.  However, excluded assets that represent burial spaces do not reduce the $1,500 burial fund exclusion.

Assets that reduce the burial funds exclusion include:

• the face value of any term life insurance on the individual; and
   
• the face value of burial insurance on the individual; and
   
• the value of any portion of an irrevocable burial contract or burial trust that does not clearly represent a burial space, and
   
• the face value of any life insurance policies on the individual which have had their cash value excluded because the face value is less than $1500.  (Refer to manual section 432-2B.)

Example:

An applicant has a $1,900 savings account.  The applicant also has a life insurance policy with a face value of $1,000 and a cash value of $750.  The cash value of the insurance policy is excluded as a resource because its face value does not exceed $1,500.  The $1,500 burial funds exclusion is reduced by $1,000 (the face value of the policy), to $500.

The applicant may designate the entire $1,900 savings account as funds set aside for burial, but only $500 of the $1,900 balance in the account qualifies for the burial funds exclusion; the remaining $1,400 value of the savings account is a countable resource.

If the applicant or recipient does not designate the entire balance of the $1,900 as funds set aside for burial, the entire $1,900 is a countable resource.

4. Increases in value of burial funds

Interest that is left to accumulate and become part of excluded burial funds, or appreciation in the value of prepaid burial arrangements, will be excluded from income and resources.  The exclusion of any increase in the value of excluded burial funds may be applied only to increases in value that have accrued since the most recent date that a recipient became eligible for assistance.

The preferred method for keeping track of excluded increases in the value of burial funds is to keep excluded burial funds separate from other non-excluded burial funds.  The caseworker may advise the client of this, but may not require it.

Example:

A client designates a $2,000 savings account as having been set aside for burial since October 1, 1986, and $1,500 of this is excluded as funds set aside for burial.

The interest that accrues to the excluded portion of the funds from that date is also excluded as income and resources.  The interest that accrues to the non-excluded portion of the funds in the account is countable as income in the month of accrual and is a countable resource thereafter.

5. Burial funds used for another purpose

If an individual uses excluded burial funds for a purpose other than the burial arrangements of the individual or the individual's spouse, it may be necessary to correct the burial fund designation to show the current amount.  The burial fund exclusion is not lost and reapplied, but merely corrected.  Re-designation is only necessary if the amount excluded falls below the previously designated amount.  If the use of burial funds does not cause the excluded amount to fall below the previously designated amount, then no re-designation is necessary.  

Example 1:  Funds fall below designated amount

Ron originally designates $1,500 as a burial fund.  After several years, interest accumulations increase the excluded amount to $1,750.  In November, Ron withdraws $500 to repair his car.  Because the remaining $1,250 in the account is below the originally designated amount of $1,500, Ron must re-designate the remaining $1,250 as a burial fund.

Ron may choose to replenish the burial funds, but the amount excluded may not exceed $1,500.

Example 2:  Funds do not fall below designated amount

Cheryl originally designates $1,500 for burial.  After several years, interest accumulations increase the excluded amount to $1,850.  During June, she uses $250 for another purpose.  The remaining amount of $1,600  ($1,500 + $100 interest) will be excluded as a burial fund for July.  Because the excluded amount has not fallen below $1,500, Cheryl does not have to re-designate the burial funds.    

432-2 E.   HOUSEHOLD GOODS AND PERSONAL EFFECTS

Household goods and personal effects are excluded from resources, regardless of their dollar value.  

1. Household goods

Household goods are:

• Items of personal property, found in or near the home, that are used on a regular basis; and
  
  
• Items needed by the household for maintenance, use, and occupancy of the premises as a home.

Household goods include, but are not limited to, furniture, appliances, tools, electronic equipment such as personal computers and television sets, carpets, cooking and eating utensils, and dishes.

2. Personal effects

Personal effects are:

• Items of personal property ordinarily worn or carried by the individual; and
  
  
• Articles otherwise having an intimate relation to the individual.
  
  

Personal effects include, but are not limited to, personal jewelry including wedding and engagement rings, personal care items, educational or recreational items (such as books or musical instruments), and items of cultural or religious significance to an individual (such as ceremonial attire).  Items required because of an individual’s physical or mental impairment (such as prosthetic devices or wheelchairs) are also considered personal effects.

3. Other personal property

Personal property that an individual acquires or holds because of its value or as an investment is not excluded under this section.  Such items include, but are not limited to, jewelry that is not worn or held for family significance, gems, and collectibles (such as an art collection).