GAO194925 Asked July 2011
If I have a joint bank account with my mother can I move her funds to a new account in my name in case she moves into a nursing home?
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I have allready completed a quik-deed on her house, but don't want to lose her life saving to a nursing home, she is still living in her house, but has Alzheimer's.
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The simple rule when it comes to planning for Medicaid benefits is:
NO GIFTING.
The quick claim deed represents an uncompensated transfer and therefore, a gift.
As stated above, if you now apply for benefits, or do so within 5 years, a penalty based on the value of the transfer will be imposed.
So, with respect to mom's bank accounts, DO NOT transfer them to an account in your name only.
When and if you are ready to apply for benefits there are tools and techniques that can be implemented to preserve her assets for her benefit while she is receiving public benefits (note I said benefit the elder, not the adult child...I'm not implying anything here, just stating a point of fact because many, as I do, object to planning that simply let's the kids abscond with cash while we all pay for mom's care).
These techniques are not subject to a 5 year look back and so do not have to implemented until you are contemplating benefit application.
Now here is some good news, the mistake you made with respect to the house can be cured by quite claiming the property back to her in her name only.
Understand that in almost all states the homestead property is not a countable asset when applying for Medicaid nursing home benefits as long as mom states an "intent to return" to the home.
If your plan is to keep mom home for the duration, then, too, the property will remain a non-countable asset.
All you will have to worry about, if she receives Medicaid home and community based services, is Medicaid Estate Recovery (the state can lay claim to the exempt home property at her demise).
Again, depending on the state you live in, there are options to avoid this as well.
Important: Are you sure you have a valid Durable Power of Attorney and Health Care Surrogate document in place?
P.S. Medicaid compliant immediate annuities are a bad deal for nursing home residents as all income goes to the facility. If care is being received at home or in an ALF they can, at times, be beneficial. This is rarely the case for an individual. Where there is a community spouse, this strategy can make more sense.
Like the others, I'm assuming your thinking that mom is going to need Medicaid to pay for her care in the future??
Each state has it's own Medicaid rules but in general the person has to have an income of under 2K a month, can own a car and a home if the value is under 500K - 750K (although the home is subject to a states Medicaid Estate Recovery Program) and LTC/SNF is medically necessary. If their over the 2K ceiling, they need to spend down, or do a Miller Trust or get a “Medicaid compliant” annuity (irrevocable, non-assignable, has equal payments, and names the state Medicaid program as the primary or contingent beneficiary to the extent of Medicaid benefits provided to the institutionalized individual). Basically get them to poverty level.
Your joint account is "commingling funds", this is sticky and can be a paperwork nightmare if she needs to go on Medicaid and you could find yourself having to document 5 years of paperwork and expenses in a very short period of time in order to have her approved and show what $$ is yours and what $$ is hers.
It seems to be that Medicaid rules does not allow money earned from work or Social Security to be “commingled” with anyone else’s money. The money of a person who is disabled cannot be commingled or deposited along with anyone else’s money if the person wants to maintain eligibility for Medicaid. This seems to mainly affect Special Needs Trust (that parents do for kids that are disabled). But with states all expecting shortfall's in revenue, they may start looking at the elderly's accounts too. You just can't be too careful when going through Medicaid application to having everything be within the requirements. Good luck.
Are you thinking in terms of having Mom qualify for Medicaid? There is a "look back" period where assets have to be accounted for. If she doesn't need care before that period is up that will be different than if she needs a long term care facility next year.
Seek the advice of an experienced professional. It will be worth the cost.
Thank you for posting.
I'm not sure what you mean my co-mingling of funds Ralph? I too have a joint account with my mother. It doesn't have much money in it and I just use it to pay her bills since her hand writing is shaky. Should I be keeping track of what is spent?
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