E Transfer of an Income Stream

Policy

When a person gives up the right to a stream of income (for example, a pension), the amount of uncompensated value is the lifetime value of the income that would have been received. 

The transfer date is the date that the income stream was assigned to someone else or otherwise given up.

Whether or not the assignment results in a transfer depends on whether the assignment is revocable or irrevocable. 

A revocable assignment of income or resources is not a transfer.  Instead, the assets are considered "constructively received".

·  Constructively received resources (MA703C).

·  Constructively received income (MA604B).

Irrevocable Assignment: "Irrevocably assigned" means a resource or income has been placed in another's name and only that person can take the action needed to make the resource or income available to the customer.

·         If a customer irrevocably assigns a resource to another party, the assignment is a transfer.  When a person irrevocably assigns the right to all future payments from a source, the total long-term value of the transferred income is added together to determine the amount of the transfer.

·         When a person irrevocably assigns some income payments, but does not assign the right to all future payments from that source, the assigned payments are considered  constructively received income and are counted as the customer’s income.

Definitions

Proof

When a countable stream of income has been transferred, documents need to be provided to prove:

·         The date of the transfer;

·         The person who owned the item both before and after the transfer;

·         The type of assignment; revocable or irrevocable assignment.

Legal Authority