Mom added my name and my sister's name on her checking, savings acct and 2 $10,000 CD's. Is this considered part of our income and will we be taxed?

I spoke to a lawyer about this recently. My sister and I are on my Mom's savings account (as co-owners). We do not have to pay taxes on the interest. Being on the account as co-owners will make things easier when Mom dies. But, at the same time, either one of us could take the money and run. I am actually writing checks against that account for Mom's evening care. When it comes to paying down assets for Medicaid, they will look at who actually contributed to that account. In this case, it would be Mom. They will also go back 5 years to see when those names were added. In the case of my sister, she was on it for longer than 5 years. I was added about 2 years ago. If my sister withdraws money from that account, and Medicaid questions it, she can just say that she had been on the account for [however long].

If she added you to the accounts you would have had to sign a signature card. Did that happen? Did you have to provide id's to the bank? Maybe she changed her accounts to "Payable on Death" status to daughter's?

I'm not sure what your mother's reasons were for adding your sister's names to these accounts, but with all respect to your sister and bearing in mind the less than unimpeachable behaviour of some debt collection agencies I should do what you can to get her removed again, pronto.

Your mother may have some idea of helping your sister, perhaps? Nothing wrong with that if she really can afford to do so; but if she wants to do it, then she must do it advisedly and be certain it won't affect any future Medicaid application.

Exactly how is the account titled? Ask one of the bank reps, as there are different means of titling an account to create different relationships.

As to the tax issues, it's my understanding that the individual who's first named on the account will be attributed with the interest. That's the reason I asked that my name be lisedt first; the nominal interest wouldn't affect me as my income is too low.

First of all, I would ask mom exactly what she did in "adding you to the accounts." Did she make you co-owners, or give you signing authority or what? Then I would talk to the bank and ask just what authority they believe you have as "being on the account." If you and your sister are co-owners, then she may be able to simply clean out the accounts. And I believe that any money she owes would come out of the accounts as she is considered a co-owner. I don't believe this would be considered income to you, but it might raise your asset level too high to qualify for help from the government. Also, there is the gifting issue should your mom need Medicaid within the lookback period.