Elder & Disability Law Office, Ltd., John Belconis
350 South Northwest Highway, Suite 300
Park Ridge, IL 60068                
(847) 430-3652 

Is It Effective Medicaid Planning to Add Someone’s Name to
Your Bank Account?

No one likes to be the bearer of bad news? Unfortunately, sometimes it cannot be avoided.
Consider the following situation:

Mrs. Bradley comes in to see you. Her husband was diagnosed with Alzheimer’s disease three years ago, and the disease has now progressed to a point where he requires long-term care. When he was initially diagnosed, Mrs. Bradley talked to some friends of the family. She was informed by them to have her children’s names added to her bank accounts and mutual funds as a way of protecting 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 Illinois, the Department of Human Services states that adding someone else’s name to a bank account does not transfer the ownership of that account. If Mrs. Bradley had a bank account with a balance of $40,000 and she added her daughter’s name to the account, the State would say that her daughter’s name was there only for the purpose of convenience. No gift has been made, from a Medicaid standpoint, even though the child’s name has been added. The entire account still belongs to Mrs. Bradley.

This is the case whether it is for bank accounts, certificates of deposit, savings bonds, mutual funds or any other liquid assets. The law states
that there is no gift until the child actually takes
the money out of the account. In using this same example, Mrs. Bradley adds her daughter’s name to the account three years ago. When her daughter later takes some money out of the account, and transfers it into her account, then the gift has occurred.
The rule is different for real estate. If someone else’s name is added to real estate, then once the deed is signed and recorded, the gift has transpired. For instance, let’s say that Mrs. Higgins owns a house valued at $200,000. If she adds her son’s name to the house and has the deed recorded, then a $100,000 gift will be complete at the time the deed is recorded.

The timing of the gift is critically important in determining whether the gift will cause any ineligibility for Medicaid benefits. In certain circumstances it may make more sense to wait to file a application rather than filing the application immediately. Whether or not it is beneficial to add someone else’s name to real estate or financial assets depends upon the facts and circumstances of each particular case. Be sure to seek the advice of a competent attorney before proceeding.

If you have any questions please don’t hesitate to give us a call at (847) 430-3652.

Disclaimer-This newsletter does not constitute legal advice. This information is provided for educational and informational purposes only. Nothing is meant or intended to create an attorney client relationship. For specific legal advice relating to your situation contact a competent attorney in your jurisdiction.