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39. Selling or giving resources away

Prior to Modified Categorical Eligibility [ACL 09-24 (households with minor children) and ACL 11-11 (remaining CalFresh households)], household were not eligible unless they were below a resource limit. (See Section 36.)  Since there currently is no resource limit, the rules regarding selling or giving away resources no longer apply. However, for periods prior to February 2011 (July 2009 for households with children), the former rules would apply. The old rules therefore are listed below.

General authority: See 7 U.S.C. § 2015(h) ; 7 C.F.R. § 273.8; MPP § 63-501.1; MPP § 63-501.5-.6.

When a person applied for food stamps, the food stamp office asked the person if s/he sold or gave away any resources in the last three months. [7 C.F.R. § 273.8(h)(1); MPP § 63-501.61.]  If the person did, the food stamp office would have determined whether the person got rid of the resource in order to get food stamps. This requires a finding of intent. If the food stamp office made this finding, then the person was not able to get food stamps for a period of time, as a penalty. [See, e.g., Czerwiak v. Wing, 667 N.Y.S.2d 544 (App. Div. 1997) (credibility issues presented by testimony of petitioner and her mother that resources exceeding $2,000 were not available and transferred for other purpose; household should not be disqualified because someone outside the household transferred an asset).] The same thing happened if a recipient gets rid of a resource after starting to get food stamps. [7 C.F.R. § 273.8(h)(1), (4); MPP § 63-501.61.]

 

For example, if someone gave away an $8,000 car so that she could get food stamps, the food stamp office would have denied the application (see the chart at end of section). Doing so might prevent the household from getting food stamps for as long as one year.

However, the penalty did not apply every time someone got rid of a resource. A person could still have been eligible for food stamps after selling or giving away something if:

  • the person did not get rid of the resource so that he could get food stamps, but rather did it for some other reason. (For example, if someone had $3,500 in cash and gave $2,000 to his brother so he could have an emergency operation, the applicant could get food stamps if otherwise qualified.) [7 C.F.R. § 273.8(h)(2)(iv); MPP § 63-501.624).];  or if the person gave the funds to his brother to repay the brother for a loan.
Examples from the courts, and then some: A person has the right to show that she transferred the resources for some reason other than getting food stamps. See, e.g., Harrison v. Commissioner, Dep’t of Income Maintenance, 529 A.2d 188 (Conn. 1987). The food stamp office cannot require a person to produce any particular form of evidence to prove this other purpose. Randall v. Lukhard, 709 F.2d 257 (4th Cir. 1983), cert. denied 469 U.S. 872 (1984). See also Meier v. State Dep’t of Soc. Servs., 417 N.W.2d 771 (Neb. 1988) (applicant conveyed real estate not to become eligible for public assistance but to avoid probate); Russell v. New Mexico Human Servs. Dep’t, 653 P.2d 1224 (N.M. Ct. App. 1982) (house sold to repay children who contributed to mortgage payments); Kruk v. Blum, 428 N.Y.S.2d 719 (App. Div. 1980) (property transfer before disability is not sufficient to deny eligibility); Memoli v. Toia, 414 N.Y.S.2d 24 (App. Div. 1979) (recipient not aware of resource rules). A person does not have to have written proof of the other purpose. Randall v. Lukhard, 729 F.2d 966 (4th Cir. 1984). See also Buckner v. Maher, 424 F.Supp. 366, 374 (D. Conn. 1976), aff’d, 434 U.S. 898 (1977). See also, Williams v. Department of Health and Rehab. Servs., 522 So. 2d 951 (Fla. Dist. Ct. App. 1988) (mobile home purchased for household’s use, though contract did not list household as owner); Eisenhandler v. D’Elia, 495 N.Y.S.2d 711 (App. Div. 1985) (money used to buy one-third interest in daughter’s house); Cruz v. New Mexico Dep’t of Human Servs., 666 P.2d 1280 (N.M. Ct. App. 1983) (transferred house subject to resulting trust, meaning household had no valuable interest in it).
  • the thing the person got rid of did not count as a resource (which is to say, it was “excluded”). [7 C.F.R. § 273.8(h)(2)(i); MPP § 63-501.621.]   (See the section about resource exclusions for more information.) For example, a person could still get food stamps if she gave away the house she lives in. [For other examples, see Dauer v. Perales, 497 N.Y.S.2d 430 (App. Div. 1986); Pinkston v. Weinberg, 435 N.Y.S.2d 27 (App. Div. 1981) (car actually belonged to third party); Troll v. Toia, 414 N.Y.S.2d 371 (App. Div. 1979); Fluette v. D'Elia, 414 N.Y.S.2d 26 (App. Div, 1979); Case v. Berger, 392 N.Y.S.2d 515 (App. Div. 1977).];  or
  • the thing the person got rid of counts as a resource but was not worth enough, either by itself or when added to other resources, to keep the household from being eligible. [7 C.F.R. § 273.8(h)(2)(i); MPP § 63-501.621); see, e.g., McPhaul v. Toia, 391 N.Y.S.2d 690 (App. Div. 1977) (car not valuable).]  For example, someone could still get food stamps if she gave a friend $200 when the household’s total counted resources are only $700. (And remember, categorically eligible households do not have to meet a food stamp resource test (see the section of this guide about resource exclusions for related information); or
  • the person sold or traded the resource at its fair market value or close to its fair market value. [7 C.F.R. § 273.8(h)(2)(ii); MPP § 63-501.622.]; or
  • the person got rid of the resource more than three months before applying for food stamps. [7 C.F.R. § 273.8(h)(1); MPP § 63-501.61.]; or
  • the person sold or gave the resource to someone else in the food stamp household. [7 C.F.R. § 273.8(h)(2)(iii); MPP § 63-501.623; Flannagin v. Baggiano, 462 So. 2d 931 (Ala. Civ. App. 1984).]

If the person sold, traded or gave away a resource to try to get food stamps and the transfer does not meet one of these exceptions, above, the food stamp office would then have decided how long the penalty period would have been, in which the household would not have been eligible for food stamps by going through the following steps:

  • find the value of the property that was sold or given away.
  • subtract any loans or other obligations on the property given away [7 C.F.R. § 273.8(c)(2); MPP § 63-501.12.]  and any other part of it that does not count as a resource (such as the first $4,650 that you can deduct from the fair market value of some licensed vehicles). [7 C.F.R. § 273.8(c)(2), (i)(4); MPP § 42-215.41.]
  • subtract the fair market value of anything received in exchange for the property given away. [7 C.F.R. § 273.8(h)(2)(ii), (4); MPP § 63-501.622.]
  • add all other countable resources, including the value of anything received in exchange for the property given away, if that is a countable resource. [7 C.F.R. § 273.8(h)(4); MPP § 63-501.64.]
  • subtract the resource limit for the household ($3,000 if someone in the household is over 60 and $2,000 for all other households). [7 C.F.R. § 273.8(h)(4); MPP § 42-207.]
  • take the total from the preceding steps and check it against the following chart to see how long the food stamp office can keep the household off food stamps:
Amount by which household is over resource limit Months household must stay off food stamps
$0 to $249.99 1
$250 to $999.99 3
$1,000 to $2,999.99 6
$3,000 to $4,999.99 9
$5,000 or more 12