California recognized the concept of “separate property” of a spouse. Property acquired by the spouse prior to marriage is separate property. Property acquired during marriage is separate property if purchased with funds which are the separate property of the owner, such as funds received by gift, inheritance, or the sale of separate property. Funds awarded to a married person in a civil action for personal injuries are the separate property of that person. Under the California State Plan, the separate property owned by one spouse is not considered in determining the eligibility of the other spouse. In addition, one spouse’s share of community property is not considered in determining the eligibility of the other spouse.

Example: Kevin Leary was converted by California as an aged individual with an ineligible spouse. Kevin's ineligible spouse inherited $5000 and placed the inheritance in a savings account. Under the State Plan, the inheritance is the separate property of the ineligible spouse and is not considered in determining the eligibility of the individual.

Example: Mary Joplin was converted by California as a blind individual with an ineligible spouse. Mary and Mary's spouse have a joint savings account of $2600. One-half of the savings account, or $1300, is the spouse’s share of community property. As Mary's share of $1300 is under the State dollar limitation of $1500 for a blind individual, Mary meets the grandfathered dollar limitation.

Under the State Plan, a person can hold or possess property and yet not “own” it. It is presumed that the person who holds property, or in whose name it stands, “owns” it, but this presumption can be rebutted by evidence showing that there is no right to use the property, to receive the proceeds, or to dispose of it. Thus, the rights to possess, use, control, and dispose of property is a criterion of ownership and must be considered along with possession of legal title.

Real or personal property owned by the recipient (or in which the recipient owns an interest with any other person) used as a home is excluded in determining countable resource values. The State of California placed no limit on the value of the home.

1. a. 

   The home may be a single dwelling or one with multiple units, provided that the units not occupied by the recipient are yielding income consistent with their rental value. However, if the units have little or no net rental income, but are being rented as continuously as possible, the home and units remain excludable. This provision applies to units attached to the “home” and to rental units contiguous to the “home”.

2. b. 

   A home includes any property right the recipient may have in a home or institution in which the recipient is living. A property right in a home or institution may result from an advance payment to the institution, such as a property assignment, accommodation, or founder’s fee.

3. c. 

   Retention of two pieces of property for use as a home is permissible under the State Plan only when the recipient’s health condition will not permit the recipient to live in either one the entire year. If a recipient owns two dwellings, and only one may be excluded as a home, the second dwelling must meet the requirements for Property Necessary for Self-Support (discussed in SI SF01220.310H) in order to be excluded.

The recipient who does not own a suitable home, or who sells a home to purchase another, may use any real property, or the proceeds from the sale of real property, to buy a home. Any such property, or the proceeds from the sale of such property, is considered a “home” and excluded if two conditions are met:

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  The recipient has a definite plan to use the property by converting it to another piece of property or by transferring title within six months for the purpose of providing the recipient with a home.

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  The property or the proceeds received from the sale of the property are used to purchase a home or apply on the balance due on a home already purchased within one year from the date of the sale. Such proceeds may also be applied to the costs of moving necessary furnishings and repair and alteration to the home, or an amount may be retained within the set dollar maximum applicable to the recipient.

This means that real property and the proceeds from the sale of real property may be evaluated as a “home” for up to 18 months after initiation of a plan to purchase a home within the two time periods identified above.

Example: Dr. Newman, a recipient converted by California, owns a home worth $30,000. Dr. Newman decides to sell the home to buy a condominium and sells the home for $310,000 on August 4, 2014. As the condominium is still being built, Dr, Newman deposits $310,000 in a savings account and moves to a rented apartment. Under the State Plan, the $310,000 is excluded as a countable resource for one year from the date of sale, or until August 4, 2015. If the recipient buys the condominium within the one-year period, the requirements of the exclusion are met. After the year has expired, or after Dr. Newman buys the replacement home, if Dr. Newman retains any savings/cash above the applicable dollar limit, Dr. Newman would be ineligible under the provisions of the State Plan.

Example: Tammy Fletcher, converted by California, inherits a ranch in the San Fernando Valley. Tammy does not own a home and ponders whether to sell the newly acquired ranch in order to buy a home. According to the State Plan, Tammy has six months to execute the intention of selling the ranch in order to purchase a home. During those six months, the ranch is excluded as a countable resource. Tammy may sell the ranch and place the proceeds in a bank and Tammy has one year from the date of the sale to purchase a home. During this one year, the proceeds in the savings account are excludable as a countable resource.

Proceeds of a property sale in the form of a trust deed, promissory note, or mortgage continue to be evaluated as a “home.” Therefore, the proceeds are excluded after a home is purchased as long as all payments from the negotiable instrument (including the principal and interest) are applied on the balance due on the home or for the cost of necessary repairs, moving expenses, or necessary furnishings. The term “balance due”, as used in this exclusion, is limited to principal and interest payments on the home. If the payments from the negotiable instrument are not all used to apply to the balance due on the current home, the instrument is a countable resource, the market value of which is applied to the dollar maximum.

NOTE: If, under this provision of the State Plan, a trust deed (or other negotiable instrument) is excluded as a resource, the interest portion of the payment received by the recipient is countable income. The portion of the payment received that is principal is not income (it is resources).

Example: Brenda Corriveau is a recipient converted by California. During a redetermination, the SSA field office (FO) learns that Brenda owns a trust deed with a face value of $25,000 and from which Brenda receives a monthly payment of $225. The FO learns that Brenda sold some property and is using the payment from the trust deed to pay the mortgage note on Brenda's current home. The mortgage payment on the current home is $230. As the payment from the trust deed is all applied to the balance due on the current home, the trust deed is an excludable resource. The FO also learns that, of the $225 payment, $125 is principal and $100 is interest. In this instance, the recipient has $100 countable unearned income.

Example: Tony Roberts, converted by California, decides to sell ,Tony's home in San Francisco and buy another in Walnut Creek. Tony sells the home and receives $5000 cash and a trust deed with a face value of $15,000. Tony receives a monthly payment on the trust deed of $175, of which $100 is interest and $75 is principal. Tony buys a home in Walnut Creek, paying $5000 down with a monthly mortgage (principal and interest only) payment of $190. As all of the payments received from the trust deed are being applied to the balance due on the second home, the trust deed is excludable as a countable resource under the State Plan. The $100 interest portion of the payment is, however, countable unearned income.

Mark Sarabia, converted by California, completes a redetermination during which the FO learns Mark holds a trust deed that generates monthly payments to Mark of $236. Mark's month principal and interest payment on the home in which Mark now resides is $175. Mark does not apply the excess payment from the trust deed to the balance due on Mark's current home. In this instance, the trust deed cannot be excluded as a countable resource under the State Plan because not all of the payments derived from the trust deed are applied to the balance due on the current home. The market value of the trust deed will have to be determined and the value so established is a countable resource. In addition, the FO will have to determine how much of the $236 payment is interest, as the interest is countable unearned income.

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  The total county assessed value (not the assessed market value) of the property does not exceed $5000.

               AND

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  The property is yielding a minimum net return of six percent (6%) per year on the assessed market value of the property.

  NOTE: If the recipient and/or spouse are not the sole owners of the property, only their proportionate share of the county assessed value is considered.

Example: Barbara Russell is an aged recipient converted by California. Barbara owns a two-unit building that Barbara is renting out and lives elsewhere. Barbara receives total gross rental income of $250 per month and Barbara's net return per year is $1500. The assessed market value of the property is $16,800; the county assessed value is $4200. As the county assessed value is under $5000, the first condition is met. As Barbara nets $1500 per year, Barbara meets the six percent net annual return requirement ($16,800 x 6% = $1008). The income-producing property is, therefore, excludable as a countable resource under the State Plan. The net rental income is countable income and is calculated according to federal income rules.

Example: Joseph Pacheco is an aged recipient converted by California. Joseph is living in Los Angeles and owns a home in Sacramento Joseph is currently renting out at $250 per month. The assessed market value of the Sacramento property is $26,000; the county assessed value is $6400. As the county assessed value is over $5000, the property is not excluded as a resource under the State Plan. The tax-assessed market value of the real property is a countable resource under the State Plan (see SI SF01220.310I).

For income producing property held by an AB convertee or in combination with the AB convertee's spouse, there is no assessed value limit in order to apply the exclusion, but the property must yield a minimum net return of six percent (6%) per year on the on the assessed market value of the property.

If the property is vacant for a portion of the year, only the prorated percentage of net return that represents the period of occupancy will be used.

The value of an interment plot, vault, or crypt retained for the use of the owner is excluded.

The following burial reserves are excluded when the total amount paid for all such items does not exceed $1000:

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  money or securities placed in an irrevocable trust for funeral, cremation, or interment expenses

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  life or burial insurance purchased specifically for funeral, creation, or interment expenses, which is placed in an irrevocable trust or which has no loan or cash value available to the insured during the insured's lifetime

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  securities issued by a licensed cemetery authority which, by their terms, are convertible only into payment for funeral, cremation, or interment