“Is It Effective Medicaid Planning to Add Someone’s Name to Your Bank Account?”
Don’t you hate to be the bearer of bad news? We all do. Unfortunately, sometimes we just can’t avoid it.
Consider the following situation:
Mrs. Jones comes in to see you. 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 friends of the family and they told her to go ahead and add the kids’ names to her bank accounts and mutual funds as a way to protect those assets from Medicaid. Now that her husband is in the nursing home she wonders whether she did the right thing. Unfortunately, you have to break the bad news to her.
In South Carolina, as in most states, Medicaid says that adding someone else’s name to a bank account or mutual fund does not transfer the ownership of that account. In other words, if Mrs. Jones had a bank account with $20,000 and she added her daughter’s name to the account, the State would say that her daughter’s name was added for convenience purposes. In other words, the entire account still belongs to Mrs. Jones. So even though the child’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. In other words, using this example, if Mrs. Jones added her daughter’s name to the account three years ago, there has been no gift made. If her daughter later takes some money out of the account, and moves it into her own name, then the gift is made at the time the daughter takes the money out of the account.
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 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 $60,000. 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. And remember a gift in the amount of $30,000 would cause her to be ineligible for South Carolina Medicaid for approximately 9 months in South Carolina. How this figure, 9 months, is determined will be the subject of another newsletter.
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 see the advice of a competent elder law attorney before proceeding.
Elder Law Today is written by Jackson E. Fields, Jr., Attorney at Law. This newsletter is published as a service of the Fields Law Firm, P.A. This information is for general informational purposes only and does not constitute legal advice.
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