Ask Nancy

by Nancy Burner, Esq.  and Robin Burner Daleo, Esq.

Question: My mother is 85 years old and in good health. She has $75,000 in a joint bank account. If she becomes ill and needs Medicaid, is that money protected? Is there any way she can gift those monies to me and still be eligible for Medicaid if she requires care in a Nursing Home?
Answer: First, to answers your questions, monies held in a joint bank account are presumed to be 100% the property of the applicant unless it can be proven that the money does not belong to t the applicant. Should your mother transfer or gift that that money within five years of needing nursing home care, a penalty will be assessed for that transfer. It is important to note that there is no look-back when applying for Community Medicaid (care in the home) and therefore a transfer in that instance would not create a penalty. When, and if, your mother applies for Medicaid, she is only permitted to have $14,850.00 in liquid, non retirement assets. She is also permitted to have qualified or “retirement” funds in any amount so long as she is taking a monthly distribution, an irrevocable pre-paid burial account in any amount is also an exempt asset. The money in the joint bank account will be deemed 100% belonging to her despite the fact that the account is held jointly with you. You can overcome that presumption if you are able to prove that you deposited those monies into the account and that they belonged to you prior to the deposit. As is in most cases, assuming that these funds belong to your mother and your name exists on the account for convenience purpose, the entire account will be considered hers.
The rule is different if the funds were held in a joint stock account. There is no presumption that the account belongs solely to your mother. Each one of you is deemed to own one-half of the joint stock account. So, if you mother transferred her $75,000 bank account to a joint stock account, she will effectively be transferring one-half to you at the time the new account is set up.
Nevertheless, the Medicaid transfer penalty rules would apply if your mother were to transfer assets belonging to her from any type of account, resulting in a period of time that your mother will be ineligible for Medicaid to cover her stay in a nursing home if she applies anytime in the next five years. The look back period for determining Medicaid eligibility is currently five years. There are still opportunities to spend down assets; your mother could also consider placing those assets in a trust with the hope that she does not require nursing home care in the next five years. Additionally, certain transfers are exempt under the current Medicaid regulations. Issues like the one that you raised highlights the importance of early planning to ensure that assets are protected in the event of a catastrophic event.

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