Are Joint Accounts Protected for Medicaid Eligibility Purposes?

All too often a parent will add a child’s name to bank accounts. Often the parent does this as a matter of convenience, to keep the accounts out of probate, or from a mistaken belief that the accounts are then protected from Medicaid and nursing homes. Generally, the parent does not know the potential problems created by adding the child to the accounts, but there are a few issues that should be considered before creating this type of account.

When a child’s name is added to an account that child becomes an owner along with the parent. The child could draw out the entire account balance and use the money for himself. Further, if the child gets divorced, the account might be considered by the divorce court as an asset of the child’s to be divided in the divorce proceedings. Even if the court ultimately decides that the spouse of the child is not entitled to any of the account, the account might be tied up in expensive litigation for a long period of time.

Another thing most people don’t realize when they put a child on an account is that the ownership is usually joint with rights of survivorship. This means that when the parent dies, the account does not pass through the parent’s Will, but instead, the surviving child automatically owns the account. If there is only one child, this might not be a big deal. However, if a parent has multiple children and the parent’s Will leaves the parent’s assets equally to all of the children, then the parent’s intention will not be followed insofar as the co-owned accounts legally go to just one child—the child who was on the account. 

Furthermore, adding a child to an account does not help with regard to Medicaid and nursing home planning. The entire account balance will still be considered by Medicaid as being owned by the parent except to the extent that the child can prove she actually contributed some of her own money to the account.

Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

Jackie Bedard
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