Is It Effective Medicaid Planning to Add Someone's Name to Your Bank Account

Mrs. Jones came in to see me. Her husband was diagnosed with Alzheimer's three years ago and the disease has progressed to the point where he needs long term nursing home care. At the time of the diagnosis she talked to some family friends and they told her to go ahead and add the kids' names to her bank accounts and mutual funds to protect those assets from Medicaid. Now that her husband is in a nursing home she wonders whether she did the right thing. Unfortunately, she did not. In New Jersey, Medicaid says that adding someone else's name to a bank account or mutual fund does not transfer the ownership on that account. In other words, if Mrs. Jones had a bank account with $50,000 and she added her daughter Mary's name to the account, the State would say that she did so for convenience purposes. The entire account still belongs to Mrs. Jones. So even though Mary's name has been added, the practical effect, from a Medicaid standpoint, is that there has been no gift and the entire account still belongs to Mrs. Jones. This is true whether we are talking about bank accounts, certificates of deposit, savings bonds, mutual funds or any other liquid asset. The law says there is no gift until, and unless, the child actually takes the money out of the account. Using this same example, if Mrs. Jones added Mary's name to the account three years ago, there has been no gift made, even if Mary's Social Security number is used for the account and she pays the taxes on all income. If Mary later takes some money out of the account, and moves it into her own name, then the gift is made at that point in time. This general rule is not true where real estate is concerned. That's because if someone's name is added to real estate, at the time the deed is signed and recorded, then a completed gift has been made. For instance, let's say that Mrs. Thompson is a widow and she owns a house valued at $200,000. If she adds her son's name to the house and then has the deed recorded, at that time she has made a completed gift. A gift in the amount of $100,000 would cause her to be ineligible for Medicaid for 13 months. At the end of that time, however, the Medicaid ineligibility would cease... and one-half of the house's value would be protected. Whether or not it makes sense to add someone's name to real estate or financial assets depends upon the facts and circumstances of each particular case. Be sure to seek the advice of a competent elder law attorney before proceeding.

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Is It Effective Medicaid Planning to Add Someone's Name to Your Bank Account is an episode from Elder Law Today Podcast by Yale Hauptman.

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This episode was published on Aug 10, 2009.

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