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Will Creating Joint Accounts Disqualify Seniors from Medicaid Benefits?

by Jeffrey Asher, Estate Planning Expert
September 16, 2011

Question: Should I put my mother’s/father’s/loved one’s bank accounts in my name too, as joint tenants?

Answer: The answer is that it depends.  It depends on why you are asking and what the purpose is for making the account jointly owned.
 
Putting an account into joint name could mean two things:  First, it could mean true joint ownership “with right of survivorship”.  Right of survivorship means that when mom or dad, or whoever your loved one is, dies and your name is on the account as a joint owner, then the account is yours.  You get the account by, what is called, operation of law, because you are a joint owner with the right of survivorship.  One of the problem with joint ownership with right of survivorship is when there are other family members (e.g., brothers or sisters) who did not expect you to inherit the account when mom or dad, or the loved one, dies, and you did not contribute any money into the account in the first place.  In that case, you might have a problem explaining why you inherited the account by operation of law as a joint owner.
 
Which leads us to the second meaning behind putting an account into joint name.  This could mean making the account a “convenience account”.  Sometimes it is good to have the caregiver on the account, even as joint owner, for the convenience of having someone on the account who can manage the money, speak with the bank, and write checks to pay bills.  However, by all outward appearances the two types of joint accounts look the same.  Unless the account registration specifically says the word “convenience” in it, it would be difficult to distinguish the two.  Therefore, while mom or dad may have intended to create a convenience account, unless the bank has specific instructions, the joint owner would still have the right of survivorship when mom or dad died. 

In most instances, a properly prepared and signed Power of Attorney would avoid these problems, but still give the account owner and his or her caregiver the necessary authorization to act on the account.  The Power of Attorney would give the agent named in the Power of Attorney the authority to manage the money, speak with the bank, and write checks to pay bills, without all of the mess that joint ownership creates.
 
A big reason why you might not want to name yourself on mom or dad’s account as joint owner is because it might affect mom or dad’s application for Medicaid benefits.  Medicaid is a need-based government program that, among other things, provides medical and health care services for people who have less than the maximum threshold of assets, with each state having its own definition of what that maximum threshold for assets is.  To be eligible, not only does a person have to have less than the maximum threshold of assets, but the person cannot gift assets away to bring their assets below the threshold.  Joint ownership will usually not exempt an asset from Medicaid’s calculation of available resources, and adding yourself onto mom or dad’s account as a joint owner would probably be deemed a gift of that account to you, if not done properly.  If so, then the act of making the asset jointly owned would disqualify mom or dad from Medicaid.
 
The bottom line is that changing the name and/or registration on any account is tricky business, that may have severe ramifications if not done properly.  Be sure to fully understand why you want the account changed, and what will happen once the account is changed.

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Jeffrey Asher is a prominent Trusts & Estates and Elder Law attorney in Westchester County and New York City. Mr. Asher concentrates primarily in the areas of Estate Planning, Probate and Estate Administration, Elder Law, Medicaid Planning, and Special Needs Planning. Mr. Asher provides comprehensive legal services, tailored to meet your specific needs.

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