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Joint Accounts Can Affect Medicaid Eligibility

Couple Banking

When applying for Medicaid long-term care, the state looks at the applicant's assets to see if they qualify for assistance. While a joint account may have two names on it, most states assume the applicant owns the entire amount in the account, regardless of who deposited money into it.

In Florida, you must have less than $2,000 to your name to qualify for Medicaid. If your name is on a joint account and you enter a nursing home, the state will assume the assets in the account belong to you — unless you can prove that you did not contribute them. If you can’t meet the state’s burden of proof, you could fail their means-tested eligibility criteria for Medicaid.

Also, if you are a joint owner of a bank account and you or the other owner transfers assets out of the account, this may be considered an improper transfer of assets for Medicaid purposes. As a result, either one of you could be temporarily ineligible for Medicaid, depending on the amount of money in the account.  A similar risk arises if a joint owner is removed from a bank account.

In addition to creditor and Medicaid eligibility issues, joint accounts can pose problems related to: 

  • Conflict with your will: Joint account status typically overrides any instructions you leave in your will about whom you want to inherit your assets. Your will might state that you want to divide your assets equally among your children. But a jointly owned account belongs to the surviving owner, despite what your will says. As a result, the division of those assets may not follow the will’s terms.

  • Taxes: Adding someone other than your spouse to a bank account can trigger the federal gift tax. This might happen if a parent makes a child an account co-owner and the child makes a withdrawal above the annual gift tax exclusion amount ($18,000 in 2024).

A power of attorney will ensure family members have access to your finances in the case of your disability.  If you are seeking to transfer assets and avoid probate, a trust may make more sense.

Not all joint accounts are the same, either. Structuring an account as a “Transfer on Death” or “Paid on Death” account rather than as a “Joint With Rights of Survivorship” account will give a beneficiary access to it only after you pass away, thus skipping probate while avoiding potential gift tax issues.

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