Should I Add My Name to My Parents’ Bank Accounts?

As your parents age, it may seem like a good idea to add your name to all of their bank accounts. In the event of unexpected incapacity or death, then, the bank accounts would not need to go through probate; the accounts would simply become your sole property. However, depending on your situation, there may be some disadvantages to adding your name to all of your parents’ bank accounts, in terms of Medicaid eligibility and creditors. You always should talk to an experienced estate planning lawyer in order to determine whether adding your name to your parents’ bank accounts is a good idea in your situation.

First, applicants for Medicaid long-term care coverage must meet certain income and asset requirements in order to be eligible for coverage. If you have a joint account with your mother, the state will consider the money in that account to be your mother’s sole asset, even though your name is also on the account. By counting the proceeds of joint accounts as assets belonging to your mother, the state may determine that she owns too many assets to qualify for Medicaid. The only way around this presumption is to use financial records to show the state that all of the money in the account was contributed by your mother, not you. This can be a difficult burden to prove, and often will result in lengthy and expensive appeals before the state finds your mother eligible for Medicaid.

When the state considers a Medicaid application, it also looks back at any transfers of assets that your parent made prior to the application. The presence of certain transfers of assets within a certain time frame can disqualify a parent from Medicaid coverage. If you own a joint account with your parent, and you transfer money out of the account, the state may be able to deny you Medicaid coverage. The same rule applies if you remove your mother’s name from the account; it will appear that your mother improperly transferred assets to you, which, again, affects Medicaid coverage.

The other problem with joint bank accounts is that any funds in the account become subject to the claims of creditors who are trying to collect debts incurred by either party. Therefore, suppose that you add your mother’s name to your bank account and she makes monthly deposits in that account. A credit card company then sues you for failing to pay your credit card balance. In this situation, your mother’s income or assets become vulnerable to the creditor trying to collect a debt from you.

Having access to your parents’ bank accounts is only one aspect of the planning that you are likely to find necessary as your parents begin to age. If you are in this situation, we have the knowledge and resources to assist you. Call Legacy Law Center today and learn how our Michigan estate planning attorneys can advocate on your behalf.